which requires disclosures of material changes in the company's status including resignation of the directors and the terminations process in this phase  deciding whether something is extraordinary in this case when it involves the kind of structural changes the terminations are very much worth the large failure that we're involved  and that's really i didn't ask the question very well with that i'm trying to understand what's so different about how a corporation having to make a judgment about what's material to its operations and not being able to decide what's shareholders on were things like fish restructuring it is true but also things like an appearance will be made in court next friday the full panoply of of corporate events were reported in the business i would i would i would submit your honor that there was no evidence whether or not the payment that was made to the departing executives for terminations without cause was or was not made any ordinary course of its business or in the ordinary course of business for corporate appear to whatever his shell appear to the commission well your honor if indeed that is correct that is it's the commission's discretion to determine whether it's an extraordinary payment then there would be nothing  restructuring process began in november they reached agreement on what the restructuring payments that would be made to my clients they were ultimately in body in a restructuring braman to which the day before the closing and going to meet with the f c c and with us for the purpose of specifically releasing those funds in that six month period so no if your honor i don't believe they were segregated for shareholders or anyone else to make a claim to them and indeed the restructuring agree shareholders being walk with nothing and all of that and that the top people taking all the money leaving no retirement or anything for that the little people that are left after if if we were to buy your your  approach in terms of how to define tests how would be the policy reasons for the the statutory scheme the accomplished it seems that your approach with this we agree and and salutary purpose though that you see there was no evidence offered to the district court that that's what happened here exactly what was offered to the district court was just the opposite what was offered to the district court was that there were five months of bearing account for forty five days and that can be extended the consequence fuse rather small and i wonder if that plays any role in deciding just how extraordinary thousand and two and it's still in place and in december two thousand and four let me ask you it seems to me that your previous argument that the careful review and approval of these payments somehow blesses them from any kind of scrutiny and i'm wondering whether that mixes up two propositions one which is the temporary freeze if there is an extraordinary payment and the second proposition being whether or not down the road there may or may not be a disk or judgment on whether the payments would actually be made because they may be reasonable in fact although extraordinary so it seems to me under your argument that even if you had an extraordinary payment that was reasonable that it could be paid out and basically the money be gone and the s e c would never have the chance to really continue scrutiny basically the cathode of the bag so i would appreciate if you could explain what your view is between this concept of discord among you know temporary freeze reasonable payments that ma quite clear the statute doesn't speak to its purposes or doesn't speak to what happens to the funds the legislative history in contrast suggests that these payments should be at least temporarily frozen point you're presuming impropriety extraordinary does not necessarily ultimately equate to impropriety and might but not necessarily a selfie isn't this just a mechanism if you have a payment that's out of the wrongdoing and so forth the difficulty is it's not there so then we have to decide what is extraordinary and what is not and it would seem to me that the care that you described in the months of negotiation the special committee is  also the other way and light it might indicate that these were truly extra ordinary payments that is not made in the normal course of business that were material to the financial condition of the company and since judge byrne pointing company it's we're not talking about the ordinary public that's what i'm trying to sort of fathom in your argument is your act your argument proceeds as if this company isn't heavily regulated there's a publicly traded company and has to make judgments all the time about what tiriel through the company what is out of the ordinary going course of business and the whole conduct of the company admirable perhaps is that they took great care in this very large on its face a lay person would say the extraordinary amount of compensation package to determine whether it was reasonable and you take that into the statutory context which says if there's an investigation into the peers to the f c c that the company is about to make an extraordinary thing you can freeze it forty five days to find out whether anything  just why is taking the next more onerous stopped that's why i'm having trouble seeing how what you're advocating that we should do this to interfere with that process with so unclear a expect that at the district court before one ceases forty million dollars that there would be evidence offered as to what would be ordinary under the same circumstances when and where was the last time the company ever made the kind of a payment to that's three or four there's nothing in the record that would answer that question your honor because nothing was offered by the f c c is that we really should going to start with basic principles here you agree because it's a comparative term that means that extraordinary needs to be benchmarked against something correct and do you agree that it should be benchmarked against the company itself the financial dealings and history of the company it may be that a payment can be determined to be extraordinar large in relation to the assets of the company so i think and so have if if you take those two propositions then your argument boils down to whether or not this record supports a conclusion on those principles that there should be a not one of those that really doesn't quite answer the question if that's getting to the the application of the facts to some legal principle i'm just trying to get to the legal principle if the relative comparison is to the company which apparently you agree that is a reasonable interpretation of the statute right and what we need to do in your view is to really see whether the evidence supports a determination that these were extraordinary payments is that it is a boil really down to review of the evidence in the district court's judgment well i think while i think that might be one way certainly of looking at this time is the size of the letter the size of the payment is extraordinarily large relative to the assets of the company i agree with that i don't believe that that's the only way in another way to look at it would be to determine whether it's extraordinarily large in relation to happen every day by definition that an extraordinary amount i don't believe that it is yeah that happen every day well it certainly doesn't happen every day but it's also not  neither a one time event for anyone for peroration and if you know it hurts rather frequently and certainly rather frequently and last many years and for any single company could you continue down a feisty little company where you would describe that as an ordinary common  that's the meaning of extraordinary doesn't matter what the size of the payment is i mean it's certainly one you could easily see in the statute that they're talking about letting the business go on with its normal activities it normal regular payments but saying that the unusual payment the extraordinary payment the one that doesn't occur in the normal course is one that should be held up until they can look at it more carefully if that's what the statute means and any severance payment would be severed with this kind of a freeze and what i this is where i started with this question with you how do we know that that's not the meaning of edition dictionary definition well you you ok that you do you have only a few minutes left if you just tell me procedurally how this is supposed to operate is the district court supposed to have a full fledged trial with expert happens in both in the industry in which they're in and went similarly situated corporations would do like a full fledged trial seems to me would be a couple of witnesses and an injury hearing at which the facts at issue and work were tested something that did not happen advance there is virtually certainly nothing for the court should we review things for abuse of discretion all the time take a look at the law books i mean that's standard fare for reviewing courts that's bread and butter stuff plus this money doesn't go out of the company in a way that disables a company that's already gone from the company if you're giving it to departing people so this doesn't hurt the company itself the companies already made the decision to pour the south a back door the difficulty  preexisting contractual obligations from agreements that were entered into indeed if you look at the statute three investigation is one piece of it a lawful investigation is one piece of it and the payments are a separate piece of it so it's i can certainly understand why they believe that they would have to offer of extraordinary would cover all severance payments because that would be an extraordinary act regardless of the amount as i read your brief you're not taking the position that all severa automatically covered is that correct yes our view is that the test whether a particular payment is extraordinary has to be flexible and can be applied in a case by case basis so the mere fact that one particular severance package may be large doesn't mean that every severance package is going to be considered each morning i think you have to be tending circumstances and there you are you would not apply that particular definition of and i think that if you are looking at a particular issue or you have look at the circumstances under which the severance package is being made and if stayed in more than two hundred million dollars and properly recognized revenue it was amending its bylaws next attending circumstances like that it can make a severance package which under ordinary circumstances would not be considered  extraordinary as the f c c issued an authoritative definition of extraordinary no we have not and you plan to i don't think the commission will do it i think with a remedial statute like this you want it to be interpreted flexibly and if we were to give an overly prescriptive definition or interpretation where we perhaps said these forty eight kinds of payments are extraordinary and these forty are not then once we did that clever corporate lawyers are going to as we look at these payments in this context obviously if we search strictly say extraordinary i think under the what you've construed the term it could mean almost anything because a case for example recording can involve a lot of events but i gather what you're saying out of these circumstances that when you say under these circumstances you're not just saying it's extraordinary payments alone there has to be some investigation or some fraud component within the meaning of the securit could be other payments that are faced surely but because of the circumstances at the company at the end of our investigation if we fall nationally we may want to try to y not in the normal course of business the material to the company is that enough i think there's a way of doing i think where we identify extraordinary payments that we he said if they gather even this amount of payment if it had been done to somebody who got a magnificent job you wouldn't have a problem with this payment it's only because of the circumstances rather than the if appropriate we would seek to freeze the paid someone that was facially appropriate because we may be looking at the company and and believe that we are going to find financial irregularities and that that payment should be frozen while we continue our own wine making that that would make that an extraordinary payment if it was again it depends on the circumstances for example you could have are you really taking them with a payment under extraordinary circumstances rather than an extraordinary payment even though it's an ordinary payment and appropriate payment but if it's  so yes in looking at the just a taste test the hypothetical if in this company they had had three episodes over their history where a failed c e o had been discharged and given a package of thirty million dollars when he left the first two were history were the baseline of prior operations but this thirty million dollars payment in the third case arose in circumstances where management or board so that the the the recipient who's monies are being frozen is not the target of the investigation you're suggesting that the payment to the rich would not be extraordinary in history of this company would become extraordinary and freezable because of the risk of natural misconduct of the issue or the statute provides for that and i think there's a good reason and that is at the beginning of our investigation  not going to know all the people who might ultimately be implicated and so when you have a large payment be made at a time where we for example are looking at improper revenue recognition to have that money maintained for the short period of time the congress gave us to conduct an investigation i think it's maintained status quo in the way that congress would want it i take it so you even have a circumstance where you start your investigation you don't know if there's a securities violation but to serve the status quo you freeze the assets you may well end up that there is no securities violation correct that's right and in fact even though it might have appeared to be an extraordinary payment it might  of pressure and you know what is your position on whether one of the benchmarks could be other industry payments as opposed to a benchmark against the company itself that gives us a lot of concern for several reasons one we think looking at the historical payments that that particular issue or that officer or director would be an objective benchmark the information is probably going to be looked at in connection with the investigation first place and so we don't have to conduct a second degree problem with the majority decision is that we would have to go out and find a similar issue were making payments under  circumstances sure it's going to volunteer to us that they are making or have made payments that are comparable to another investigation that we're doing you know i can't say you don't want to be or you don't want to have to take that but are you saying that it isn't ever ballot meant what other companies are doing well i think in the scheme you have a continuum of relevance i think the best evidence would but even if there are places where there is evidence about severance packages it was a company that would just be a starting point because we would have today show that they are similarly situated companies or congress didn't require you know i'm asking you and i think in most cases you're probably going to have and that's just i think it's really going to be the exceptional case where there's no nexus but i think we have to have that flexibility so your position  o the investigation i appreciate that i guess what i'm suggesting now is that if you go into a situation where you know there is no nexus it's and you're simply seizing assets as leverage or because that you can when you want to stop things like the company has to have some remedy for that because we're talking about the rights of people under legal agreements terminations clauses that have nothing to do with the s b c investigation so it would seem to me that more natural statutory construction to harmonize i would require at least some nexus the status quo until you can complete your investigation to determine whether or not in fact certain persons are looting the company that it is highly unusual for public companies to be writers richard starr representing time star t v guide international i'm not here to argue per se but i am here to answer any questions or they just might have me as a representative of the issue or