Part I of the article appearing in the June issue of The Metropolitan Corporate Counsel described reporting covenants at the center of recent cases involving default claims by bondholders arising out of the failure of companies to timely file their SEC reports.
I. The Recent Cases
As soon as Vitesse Seminconductor Corp. said it was under investigation for securities law violations that may delay routine regulatory filings, the Camarillo, California, maker of computer chips also learned it was about to be held up for ransom in the bond market.
(Bloomberg.com, Sept. 12, 2006) 1
In June 2004, the Securities and Exchange Commission (the "SEC") proposed amendments to Rules 16b-3 and 16b-7 in order to clarify the types of transactions that are excluded from Section 16(b) liability following the uncertainty created by the Third Circuit's decision in Levy v.