One of the more interesting articles stories in today’s NY Sunday Times is this one regarding the travails of Ricardo B. Salinas Pliego, the chairman of TV Azteca, in trying to find an American law firm that would support his position that there is no duty to disclose to the market that he and a partner had turned a $218 million profit from discounting TV Azteca debt that they purchased from third parties and then selling it to the company at the full amount of the indebtedness:

The Securities and Exchange Commission is investigating whether Mr. Salinas Pliego or TV Azteca properly disclosed his personal financial interest in a deal involving the company, where he serves as chairman. . .
The investigation stemmed from reports about a dispute over the need to disclose that Mr. Salinas Pliego and a partner had turned a $218 million profit from buying company debt at a deep discount and reselling it to the company for full price. [A] lawyer from a prominent firm, Akin, Gump, Strauss, Hauer & Feld, took the unusual step of quitting as counsel to TV Azteca and reporting his dispute with management to the board of directors.

However, if one firm doesn’t agree with you, Mr. Salinas Pliego’s approach is “to try, try again”:

As it turns out, Mr. Salinas Pliego and his management team rejected the advice of two other American law firms on the same matter, according to a nearly final draft report of an internal investigation. The draft, which was provided to The Times, was compiled by Munger, Tolles & Olson, a law firm in Los Angeles that was hired early this year by a committee of independent directors of TV Azteca . . . Munger Tolles’s investigation found that the company’s managers withheld important information from their board, failed to correct a false public statement by Mr. Salinas Pliego and gave explanations for their actions that the law firm concluded were not credible.

Apparently, the Munger Tolles reports provides an entertaining account of how Mr. Salinas Pliego traversed from law firm to law firm in trying to find someone who agreed with his position that his profit on the company’s debt need not be disclosed:

[The report] traces TV Azteca’s journey from corporate law firm to corporate law firm in a search for lawyers sympathetic to its position. After Akin Gump backed away, it says, TV Azteca sought a second opinion from lawyers at Cleary, Gottlieb, Steen & Hamilton, a big New York firm. When Cleary Gottlieb also recommended disclosing Mr. Salinas Pliego’s financial interest in the transaction, the company turned to another firm, Hogan & Hartson. That firm advised disclosure, too.
But when lawyers from Munger Tolles, as part of their investigation, sought to speak to the lawyers from the three firms whose advice had been rejected, they were rebuffed.
(In a particularly absurd twist, the report said Akin Gump declined to make its lawyers available in part because TV Azteca had not yet paid its bills, but lawyers representing Akin Gump did tell the Munger Tolles investigators what the Akin Gump lawyers would have said if they had consented to interviews.)

And in a delicious twist, the Munger Tolles report has now required the company to hire yet another law firm to help it respond to the report:

After splitting with Akin Gump, TV Azteca hired yet another American law firm, Mayer, Brown, Rowe & Maw, to recommend responses to the Munger Tolles report. A recent company filing said the recommendations included the creation of nominating and audit committees and the adoption of a rigorous code of ethics. But it was left to the regulators to decide whether to punish Mr. Salinas Pliego and his team.

My sense is that TV Azteca’s legal fees will continue to be a rather large budget item for the near future.