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

Brownson evidence based public health - Which metal reacts with naoh to produce hydrogen gas - Chemistry - Russia's toughest prisons watch online - High lpc leaders perform best when the situational favorability is - Critical Summary of Finding Dawn – Due on September 18th – 15% - Amenable research topic - Dali concept 1 center - Why is it necessary to plan - Potentiometer measurement of resistance experiment - 2010 ipt hsc answers - The transactional model of communication supports - Backtrack 5 tutorial for beginners - Claude monet painting in his studio - Thomas and chess 9 dimensions of temperament - Dulce et decorum est meaning - Types of organizational buyers - Fin 100 week 8 homework - Picot question for short staffing - Journal Article - Inflectional morphemes in english - Cmit 321 penetration test proposal - Grocery store - 50-w8 - 2 pages - Information technology for managers reynolds - How to calibrate a centrifuge - Zopa com case study - Sales pitch training course - Three students have each saved $1000 - Week 8 - Timberly construction negotiates a lump sum purchase of several assets - Katherine c intervention follow up - Aristotle book 1 chapter 7 - Schoolwear association research reveals uniforms can be a powerful tool - Design goals in building an operating system - Mondale winery depreciates its equipment using the group method - Whittemore hall virginia tech - Ocr physics equation sheet - Advanced pathophysiology - Ten commandments coptic orthodox - Milton keynes bus timetable 24 25 - 39 colin st west perth - Unit VIII Journal - Linux - Branching tree diagram activity - Pr 6 2a lifo perpetual inventory - Nurs 6512 head to toe assessment - Community and family studies resources - Postmodern frame in art - 1a henstock road arcadia - Icem cfd geometry tutorial - NEED IN 18 HOURS or LESS - Ammonia leak emergency procedures - Coca cola labor issues - Interpersonal communication in organisations - Cybertext building blocks of accounting a financial perspective - Mres developmental neuroscience and psychopathology - A toccata of galuppi's - Enid hayden montana 1948 - Operation Security - Series parallel circuit lab - Accidentally disliked a song on spotify daily mix - Focused cough assessment shadow health - Order 2432569: Curriculum Action Plan - Game theory behavioral economics - Hydrolysis of phenyl benzoate - Energy skate park answer key - Assignment - Brockton carpet cleaning prepares a bank reconciliation - Got lactase the co evolution of genes and culture answers - Specific purpose statement persuasive speech examples - 18594 la 3235 galliano la 70354 - Http www creativebloq com infographic tools 2131971 - Broad antlered deer crossword - Hybrid idps systems event correlation - How did bohr improve rutherford's model - Experiment 1 observation of mitosis in a plant cell - Cumulative relative frequency ogive - Lifestyle and health practices profile - Business studies hsc summary notes - Mtv indies that's how we roll songs list - Seasons come to pass page 232 - What were the destination ip addresses discovered by the netwitness investigator analysis? - Ritz carlton gold standards pdf - Human development class Discussion - Checkpoint gaia cli commands - Alpha chi omega founders day - General mills organizational culture - Tiffany and co business model - Generational Change in Political Socialization and Participation POL101-2 - Strategies for closing gap 3 in service marketing - Indian writing in english history - Eassy writing - Titanic ethics - Health policy and law Final Project Milestone Three: Analysis Outline - Locate the centroid y of the area - One event not depicted in the catacombs was: - Baddeley and hitch working memory model - Old english hsc syllabus