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U.S. Securities and Exchange Commission

Securities and Exchange Commission

Litigation Release No. 18551 / January 21, 2004

Accounting and Auditing Enforcement
Release No. 1946 / January 21, 2004

SEC Obtains Federal Court Order To Protect Shareholders and Preserve Corporate Assets of Hollinger International, Inc.

Securities and Exchange Commission v. Hollinger International, Inc., U.S. District Court for the Northern District of Illinois, Case No. 04C0336 (N.D. Ill. 2004)

On January 16, 2004, the Securities and Exchange Commission obtained a federal court order against Hollinger International, Inc. to ensure that the work of the Special Committee of Hollinger International's board of directors - including its efforts to recover and preserve corporate assets - continues under the jurisdiction and oversight of the court, and without regard to whether there is a change in control at the company. Hollinger International consented to the entry of the order, which also permanently enjoins the company from violating the reporting and internal control provisions of the federal securities laws. The Commission filed a civil injunctive complaint against the Chicago-based Hollinger International in the United States District Court for the Northern District of Illinois alleging that, from at least 1999 through 2001, the company's Commission filings contained misstatements and omitted to state material facts regarding transfers of corporate assets to certain of Hollinger International's insiders and related entities.

Under the order, Hollinger International is required to maintain its Special Committee to, among other things, continue its investigation of alleged misconduct and its efforts to recover and maintain corporate assets. In the event the Special Committee's authority were in any way impaired, including through a change in control of the company, Richard C. Breeden (the current Counsel to the Special Committee) would serve as a court-ordered Special Monitor to protect the interests of Hollinger International shareholders. A hearing will be set at a later date to determine whether it is appropriate to require Hollinger International to pay disgorgement, prejudgment interest and civil penalties. In addition, Hollinger International has expressly agreed that the Commission may file additional charges against it at a later time, including for the same conduct alleged in the complaint.

Specifically, the Commission alleged that Hollinger International violated Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 [15 U.S.C. §§ 78m(a), 78m(b)(2)(A) and 78m(b)(2)(B)] and Rules 12b-20, 13a-1, 13a-13, 13b2-1 and 13b2-2 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1, 240.13a-13, 240.13b2-1 and 240.13b2-2].

SEC Complaint in this matter



Modified: 01/22/2004