Loading...

Messages

Proposals

Stuck in your homework and missing deadline? Get urgent help in $10/Page with 24 hours deadline

Get Urgent Writing Help In Your Essays, Assignments, Homeworks, Dissertation, Thesis Or Coursework & Achieve A+ Grades.

Privacy Guaranteed - 100% Plagiarism Free Writing - Free Turnitin Report - Professional And Experienced Writers - 24/7 Online Support

Legal environment of business 3rd edition melvin

20/10/2021 Client: muhammad11 Deadline: 2 Day

CASE BRIEF 7.1 In re Yukos Oil Company Securities Litigation

2006 WL 3026024 (S.D.N.Y.)

FACTS: Yukos is a Moscow-based joint-stock company whose shares trade on the Russian stock

exchange. Yukos shares also trade indirectly on multiple European exchanges and over-the-

counter in the United States.

Allegedly, Khodorkovsky was part of a select group of Russian business leaders known as

“oligarchs” who supported former Russian President Boris N. Yeltsin, but were politically opposed

to current Russian President Vladimir V. Putin.

The Tax Code of the Russian Federation prescribed a maximum income tax rate that incorporated

two components: a tax payable to the federal budget and a tax payable to the budget of the

taxpayer's local region. For example, in 2004, the statutory maximum rate was 24%, of which up

to 6.5% could be collected by the federal government and up to 17.5% by regional governments.

The Tax Code also prescribed a minimum rate for taxes payable to regional governments. In 2004,

that rate was 13.5%. However, the regional governments could offer tax benefits to reduce or even

eliminate the regional budget liability of certain categories of taxpayers. Because of this regional

variance in the effective income tax rate, taxpayers in the metropolitan regions of the Russian

Federation, such as Moscow, paid higher taxes than taxpayers in remote regions, or “ZATOs.”

The complaint alleges that from 2000 through 2003, Yukos grossly underpaid its taxes to the

Russian Federation by illegally taking advantage of the ZATOs' preferential tax treatment.

According to the complaint, Yukos booked oil sales at “well below” market prices to seventeen

trading companies, all of which were registered within ZATOs. Without taking physical

possession, the trading companies sold the oil to customers at market prices and claimed the tax

benefits of their ZATOs. However, the profits were “funneled ... back to Yukos and Yukos paid

taxes only on the initial below-market sales while reaping substantial profits from the low-tax

market-price sales.

The complaint alleges that the regional trading companies received the benefits of ZATO

registration illegitimately because “[n]o business was actually conducted by the sham companies

in the ZATOs.” This Yukos tax strategy presented enormous risk because it violated Russian law

and because the Russian Federation had prosecuted other companies that had acted similarly.

Nonetheless, the risk was not disclosed in any of the Yuko’s filings with the SEC. Also, what was

filed with the SEC was allegedly not prepared in conformity with U.S. GAAP or other standards

of financial reporting.

At a secret meeting with Khodorkovsky and other oligarchs in 2000, Putin promised not to

investigate potential wrongdoing at their companies if the oligarchs refrained from opposing Putin.

Nearly three years later, at another such meeting, Khodorkovsky allegedly voiced his opinion that

high-level officials in Putin's government should be ousted. According to the plaintiffs, Putin

reacted negatively and intimated to Khodorkovsky that the Russian Federation might investigate

Yukos' methods of acquiring oil reserves. Despite Putin's warnings, Khodorkovsky publicly

criticized Putin and financed opposition parties.

On October 25, 2003, Russian Federation authorities arrested Khodorkovsky and charged him with

fraud, embezzlement and evasion of personal income taxes. Days later, the Russian Government

seized control of Khodorkovsky's 44% interest in Yukos as security against the approximately $1

billion he owed in taxes. Concurrently, the Tax Ministry revealed that it had been investigating

Yukos' tax strategies. The Department of Information and Public Relations of the General

Prosecutors Office then announced charges that accused Khodorkovsky and others of fraudulently

operating an illegal scheme at Yukos to avoid tax liability through shell company transactions.

On December 29, 2003, the Tax Ministry concluded its audit of Yukos for tax year 2000, issued a

report that Yukos had illegally obtained the benefit of the ZATOs’ preferential tax treatment, and

owed $3.4 billion to the Russian Federation in back taxes, interest, and penalties for tax year 2000.

As a result, Yukos defaulted on a $1 billion loan from private lenders and the Russian Government

confiscated Yukos' assets, including its main production facility and billions of dollars from its

bank accounts. The price of Yukos securities “plummeted” in response to these events.

Shareholders in Yukos (Plaintiffs) filed consolidated class actions against Khodorkovsky and

others (defendants) on July 2, 2004. The U.S. plaintiffs had purchased Yukos securities between

January 22, 2003, and October 25, 2003. They allege that Yukos, its outside auditor, and certain

of its executives and controlling shareholders knowingly concealed the risk that the Russian

Federation would take action against Yukos by failing to disclose: (1) that Yukos had employed

an illegal tax evasion scheme since 2000; and (2) that Khodorkovsky's political activity exposed

the Company to retribution from the current Russian government. The plaintiffs based their claims

on the fraud provision, Section 10(b), of the Securities Exchange Act.

ISSUE: Does the act of state doctrine prohibit the court from taking the case?

DECISION: No. The court dismissed the case on other grounds, but found that the act of state

doctrine did not prohibit the court from hearing the case. The case was not one that involved

invalidating Russian actions; it was a case to decide whether the company should have been more

transparent and forthcoming about the risk of its strategy as well as the political risk in Russia.

Questions:

1. Describe how Yukos is alleged to have saved significant amounts in taxes.

2. Explain what act of the Russian Federation is in question.

3. What are the plaintiffs asking the court to decide? Does that decision require revisiting what

the Russian Federation did, and why or why not?

Homework is Completed By:

Writer Writer Name Amount Client Comments & Rating
Instant Homework Helper

ONLINE

Instant Homework Helper

$36

She helped me in last minute in a very reasonable price. She is a lifesaver, I got A+ grade in my homework, I will surely hire her again for my next assignments, Thumbs Up!

Order & Get This Solution Within 3 Hours in $25/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 3 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 6 Hours in $20/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 6 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 12 Hours in $15/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 12 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

6 writers have sent their proposals to do this homework:

Quick Mentor
WRITING LAND
Financial Assignments
High Quality Assignments
Essay & Assignment Help
Pro Writer
Writer Writer Name Offer Chat
Quick Mentor

ONLINE

Quick Mentor

I have read your project description carefully and you will get plagiarism free writing according to your requirements. Thank You

$37 Chat With Writer
WRITING LAND

ONLINE

WRITING LAND

I have done dissertations, thesis, reports related to these topics, and I cover all the CHAPTERS accordingly and provide proper updates on the project.

$36 Chat With Writer
Financial Assignments

ONLINE

Financial Assignments

I am an elite class writer with more than 6 years of experience as an academic writer. I will provide you the 100 percent original and plagiarism-free content.

$17 Chat With Writer
High Quality Assignments

ONLINE

High Quality Assignments

Being a Ph.D. in the Business field, I have been doing academic writing for the past 7 years and have a good command over writing research papers, essay, dissertations and all kinds of academic writing and proofreading.

$20 Chat With Writer
Essay & Assignment Help

ONLINE

Essay & Assignment Help

I will provide you with the well organized and well research papers from different primary and secondary sources will write the content that will support your points.

$37 Chat With Writer
Pro Writer

ONLINE

Pro Writer

I have done dissertations, thesis, reports related to these topics, and I cover all the CHAPTERS accordingly and provide proper updates on the project.

$27 Chat With Writer

Let our expert academic writers to help you in achieving a+ grades in your homework, assignment, quiz or exam.

Similar Homework Questions

Murther hath broke ope - Write 83 1 3 as a fraction - Trinity esol entry 3 - PICOT Question--Appraising the Literature - Rest industry super fund - During early childhood, gender-stereotyped beliefs - Sunless sea casket of sapphires - Facebook bought instagram in 2012 for an estimated - Why did the zoot suit riots happen - CFP - A bicycle is a compound machine - Year 11 biozone answers - Physics Assignment - Population distribution pogil answers extension questions - Klip lok 406 roof sheeting - Lms curtin edu au blackboard - The things they carried setting importance - Golden chain tree problems - Difference between shang and zhou dynasty - I wandered lonely as a cloud literary analysis - Chemistry - Progressive era powerpoint presentation - Molar mass and evaporation rate - Differentiate between fraud and abuse - The sears tower in chicago is feet tall - Dark romance writing prompts - List of statutory liabilities - Why is metal a good conductor - Eleanor rigby analysis - Festival and special event management 5th edition pdf - Capstone Research Companion - Am gm hm inequality problems - Scaldbeck cottage camping norfolk - Saddle stitcher sd 511 - The house with a clo - Submit your topic and references - Term Paper and Presentation Part 2 - Patrick the human resources manager at acme company - The haber process pressure - 1045 steel hardness rockwell c - Progress notes in aged care examples - Level 14 501 swanston street - Discussion - Penn foster biology research paper example - Work breakdown structure for training program - Lms motorsports grants pass oregon - Kpi planning template - The following events occurred for johnson company - Disadvantages of composite materials - Smf eligible rollover fund - 855-280-0278 - Emulsion layer of x ray film - Calculating the cost of credit card purchases worksheet answers - SOCY 300 - Medical terminology f health w mymed - Sql for dummies 8th edition pdf - Foster care - Hcf swimming lessons rebate - Christine tanner model of clinical judgement - Stakeholder management - 1014(1) - I need 700 words report in company Analog Device to manufacturing power electronics - Trend adjusted exponential smoothing formula - What is the specific purpose of a speech - Transition communication plan template - Week 5 - Strum insurance lunenburg ns - Philosophy of tech and society - Hoxton park community health centre - Lewis v heartland inns of america - A cylindrical specimen of stainless steel having a diameter - 7 pool table room size - Exam timed - Module 08 Discussion - The Physiology of the Autonomic Nervous System - Supply Chain Management - 3/66 jenner street nundah - Word module 2 sam exam answers - Discussion - The new christian counselor summary - How to hire the best accounting tutor - Activity four advertisements - Closure in lesson plan - 10 pi over 3 in degrees - Class One: Part One - Surge function in modelling medicinal doses - Molly daisy and gracie rabbit proof fence - 24 hour fitness corporate discount - LifeLong Leadership - Softbank vision fund presentation pdf - EP-3 Draft for Peer Review - Hozier tickets bethlehem wind creek event center november 16 - Kenwood ts 850 hidden menu - Structure of a leaf and its functions - 137 palmateer drive bickley - Discussion week 10 - The sum of five consecutive integers - Aps talent management guide - How many pebbles per square metre - Mod 3 PATASU - Corporate finance case studies and solutions