In a significant turn of events, the Securities and Exchange Commission and former Hollinger International Inc. Chief Executive Conrad Black are in negotiations, more than one source close to the situation said Monday.
The subject? The court order the SEC secured in January that effectively prevented Black from firing the board and halted an internal investigation into millions of dollars of unauthorized payments to Black and other executives.
Under the order, former SEC Chairman Richard Breeden, who is overseeing the internal investigation, would have wielded the power to continue the probe if Black tried to make a move on the board or the special committee.
Whether a settlement will result from those talks is far from clear, according to sources.
You can bet, though, that within Hollinger International these days, the fact that the SEC and Black, who still controls the company through his overwhelming ownership in parent Hollinger Inc., are talking is disconcerting at the very least.
On March 1, a federal judge in Chicago vacated part of the SEC’s order but kept the special committee intact while it investigates allegations that Black and other top executives improperly pocketed millions.
Judge Blanche M. Manning ruled that Hollinger Inc., as the controlling shareholder, should have been given notice and allowed to object to the judgment issued by another judge in January. But the judge, in light of other litigation, didn’t allow that to happen and is awaiting a hearing in early April to make a further determination.
The SEC, meanwhile, had been busy collecting more evidence in its own investigation into Black.
More Top Picks Best Barrel Saunas For Backyards
On Monday, Hollinger International insiders indicated that the discussions between Black and the SEC might result in a settlement, which could have huge ramifications for the ongoing internal investigation.
If the SEC relents on the order keeping the board and committee in place, then Black gets a significant amount of power back–including the ability to fire the board of directors of Hollinger International and, more important, end the special committee’s investigation.
Breeden, then, would not have the power to take over the investigation as a special monitor.
In other words, Black would regain substantial control over the Hollinger International board, again putting into question everything, including any pending sale of company assets.
Lazard LLC is conducting an auction for all or parts of Hollinger International, including the Chicago Sun-Times and several papers in Chicago.
Neither a spokesman for the SEC nor a spokesman for Black would comment late Monday.
An investigation by the Chicago office of U.S. Atty. Patrick Fitzgerald is ongoing.
But in the battle between Black and the directors he used to call friends, don’t count Black out yet.
Miles of Mag Miles: State tourism executives unveil the state’s new tourism tagline Tuesday: “Illinois. Mile after Magnificent Mile.” And for the first time in a long time, Chicago gets a significant push as a destination point. “You’ll see a better balance,” said new deputy tourism director Jan Kostner. The state will break the work from new advertising agency J. Walter Thompson, Chicago, which won the account after a lengthy review. Spending behind the campaign for the remainder of the year will be $6.7 million. That’s ahead of an expected budget slash next year, putting the pressure on JWT to come up with some more innovative ways to market the state. The state is trying to get visitors to stay longer and more often, and has put together easier ways to plan for three-day stays. “The objective is to get more people more nights more often in Illinois,” said Dan Dahlen, senior partner, group management director at JWT.
On the move: Tom Browning, a 14-year veteran of DDB Chicago, jumps to J. Walter Thompson Chicago as management director on all Nestle brands. He reports to Scott Remy, senior partner, director of account management. Also, Bryan Eytcheson returns to JWT Chicago after a two-year stint with JWT in Beijing. He becomes account director on Nestle’s baking brands, reporting to Browning.
Tribune down to four: baiduhai has narrowed the search for a new advertising agency to four finalists, sources close to the review said. Still in the hunt are Leo Burnett Co.; DDB Chicago; Young & Rubicam; and Draft Worldwide. Billings are estimated at roughly $5 million.