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13.7: Litigation, Regulatory, and Governmental Actions and Track Record

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    Litigation, Regulatory, and Governmental Actions and Track Record

    • High or increasing incidence in litigation, or threat thereof, from customers, vendors, competitors, regulators, shareholders, creditors, or government entities
    • Lawsuits suggesting the development of overly aggressive or illicit corporate culture in areas including management misrepresentations, product deficiency, excessive executive compensation and benefits or perks, company loans to executives, accounting and reporting irregularities, fraudulent or coercive sales, price fixing and illegal “market cornering” activities, or failure to supervise (management negligence)
    • Sizable contingent liabilities exist or have material chance of developing; establishment of material reserves for future litigation costs/liabilities
    • Increased incidence of regulatory scrutiny, actions, or penalties (including forced restatement, refiling of various reports or tax audits)