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Judge Bars Severance Payment to Messier

The SEC invokes the Sarbanes-Oxley law to temporarily block the $22.9 million.

September 25, 2003|From Times Staff and Wire Reports

The Securities and Exchange Commission won a court order Wednesday blocking a $22.9-million severance payment to former Vivendi Universal Chief Executive Jean-Marie Messier while the agency probes the media conglomerate.

U.S. District Judge Kevin Duffy in New York barred Vivendi from transferring funds to Messier. The SEC had asked Duffy to order the company to put the payment in an escrow account. Earlier this month, a New York state judge told Paris-based Vivendi that it must comply with an arbitration panel's ruling and pay Messier the severance.

"Basically what we're trying to do is prevent this extraordinary payment from moving forward while we're in the midst of our investigation of Vivendi for the benefit of Vivendi shareholders," SEC lawyer Gary Klein said.

The SEC's victory is a significant setback for Messier, who is fighting to salvage not only his severance and bonus pay but also his reputation. Messier has denied any wrongdoing.

The action marks only the second time the SEC has invoked the Sarbanes-Oxley law to block severance pay. The law gives the agency the authority to seek court orders temporarily freezing for as long as 90 days any "extraordinary payments" a company makes to one of its executives during the course of an SEC investigation.

Authorities in the U.S. and France have been scrutinizing whether Messier and others attempted to hide Vivendi's financial crisis from shareholders and violated insider trading rules by unloading Vivendi stock shortly before the company conducted a large sale of shares.

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