U.S. Securities and Exchange Commission
Litigation Release No. 18373 / September 29, 2003
Securities and Exchange Commission v. Vivendi Universal, S.A., Case No. M11-03 (S.D.N.Y.) (filed September 16, 2003).
SEC Obtains Order Compelling Vivendi Universal, S.A. To Escrow Payments To Former CEO Jean-Marie Messier
Court Also Halts Efforts To Collect On $23 Million Judgment In Messier's Favor
The Securities and Exchange Commission (SEC) announced that on September 24, 2003, Judge Kevin Thomas Duffy of the United States District Court for the Southern District of New York issued two orders temporarily preventing Vivendi Universal, S.A. (Vivendi) from paying over $23 million to its former CEO, Jean-Marie Messier. The orders require Vivendi to escrow any extraordinary payments that it might otherwise make to Messier and they temporarily enjoin any efforts that seek to execute on a judgment regarding the $23 million that Messier obtained in New York State Court. The orders are the result of an application that the SEC made on September 16, 2003 for an escrow order pursuant to Section 1103 of the Sarbanes-Oxley Act of 2002, and an emergency motion that the SEC filed on September 23, 2003 to halt Messier's efforts to collect on the state court judgment.
Section 1103 of the Sarbanes-Oxley Act authorizes the Commission to seek such a temporary order during an investigation into possible securities laws violations by a public company, or an officer, director, or other affiliate of a public company. Pursuant to the temporary order, the public company must escrow "extraordinary payments" that the public company likely may make to an officer, director, or affiliate.
The SEC's staff has been investigating possible violations of the federal securities laws by Vivendi and its directors, officers, partners, controlling persons, agents, or employees pursuant to a formal order of private investigation issued by the Commission on November 14, 2002. The SEC filed the Section 1103 application after Messier obtained a judgment in New York State Court on September 11, 2003 enforcing an arbitration panel's decision ordering Vivendi to pay Messier €20,555,342 (or approximately $23 million) pursuant to a termination agreement with Vivendi.
After the SEC filed its application for a Section 1103 order, Messier began efforts to collect on the state court judgment. After negotiations between the SEC, Vivendi and Messier to reach an agreement to postpone any further collection efforts failed, the SEC filed a motion on September 23, 2003 seeking an order (1) prohibiting Vivendi and others (including banks) from transferring any assets to Messier, and (2) prohibiting efforts to collect on the state judgment. At a hearing on September 24, 2003, the Court granted both the SEC's application for a Section 1103 order and the SEC's motion prohibiting further efforts to execute on or otherwise collect under the state court judgment. The Section 1103 order requires Vivendi to place the approximately €20 million in escrow, and will last for 45 days.