Media reports recently revealed that the U.S. Attorney’s office for the Southern District of New York was investigating 21st Century Fox Inc., trying to determine whether Fox had adequately disclosed settlements of sexual harassment claims brought against former against Fox News Chairman and Chief Executive Roger Ailes. Ailes resigned last summer after former Fox News anchor Gretchen Carlson sued him and Fox for sexual harassment; Carlson’s suit encouraged a number of additional women to come forward also alleging sexual harassment at Fox. Carlson and Fox ultimately settled her claims for a reported $20 million. It was also reported that other women had settled claims for smaller amounts, which apparently led to the current federal investigation. News of the SDNY investigation came out when a lawyer for one of the women currently suing Fox News for harassment disclosed that his client had received a subpoena to testify before a grand jury.
The reported investigation reflects the “when it rains, it pours” quality of securities enforcement. Any time a public company reveals a problem with its business, it has to worry that the disclosure will prompt an investigation by the SEC or a prosecutor (federal or state). Continue reading