pacces

Hedge Fund Activism as a Conflict of Entrepreneurship

Hedge funds have boosted shareholder activism worldwide. In my recent article, I discuss the policy response to hedge fund activism. I argue that the short-termism debate cannot shed light on the desirability of such activism. Rather, hedge fund activism should be regarded as a conflict of entrepreneurship, namely a conflict about the most efficient horizon to maximize profit. The choice of this horizon, which is uncertain, belongs to the entrepreneur. An engagement by hedge funds reveals that their views about this particular point differ from that of the incumbent management. Because the efficient horizon to maximize profit varies with the … Read more

Clifford Chance Discusses CFTC Guidance on Cooperation

On January 19, 2017, the U.S. Commodity Futures Trading Commission (“CFTC“) issued an Enforcement Advisory describing the factors that will be considered to evaluate the cooperation provided by companies that are the subject of CFTC investigations and / or enforcement actions (the “Cooperation Advisory”). The CFTC can, in its discretion, reduce penalties to be imposed for violations based upon its determination of a company’s level of cooperation. The Cooperation Advisory emphasizes a company’s proactive steps in response to an investigation, including encouraging personnel to cooperate with CFTC, identifying potential wrongdoers from within the company and from other organizations, … Read more

John Coffee Headshot

How Not to Write a Class Action “Reform” Bill

It was predictable. Given a solidly Republican Congress and a Republican president, sooner or later, an effort would be made in the Trump administration to curb class actions. Not surprisingly, it has come sooner, with the “Fairness in Class Action Litigation Act of 2017” (H.R. 985). A motley assortment of procedural “reforms”—some good, many bad, and most overbroad—H.R. 985 has been introduced by Representative Bob Goodlatte (R-Va.), chairman of the House Judiciary Committee. Much of this bill is a reincarnation of a similar class action “reform” bill that passed the House in 2015, but died in the Senate (possibly because … Read more

K&L Gates Discusses the Border Adjustment Tax

The House Republicans have proposed sweeping changes to the U.S. tax system, specifically that income from the export of goods, services and intangibles will not be subject to federal income tax, and that the cost of such imports into the U.S. will not be deductible. By incentivising exports and deterring imports, the proposed “Border Adjustment Tax” (BAT) is intended to increase domestic production, strengthen the U.S. economy and create new jobs, and deter corporate inversions and erosion of the U.S. tax base. It also is estimated to pay for approximately one-third of the cost of the Republicans’ comprehensive tax reform … Read more

Jones Day Explores Trump’s Plan for the Future of American Infrastructure

President Donald J. Trump’s “America’s Infrastructure First” plan is one of the Trump Administration’s priorities during his first 100 days in office. Throughout the campaign, President Trump heralded his plan to build and restore highways, tunnels, airports, bridges, and water systems across America and promised a $1 trillion investment in the infrastructure sector over a 10-year period. Leaders from both parties acknowledge the nation’s deteriorating infrastructure, and there have been expressions of support from both sides of the aisle for some sort of development and construction program. Aside from the overall proposed sticker price of $1 trillion, there are scant … Read more

Paul Weiss Offers M&A at a Glance for January

M&A activity in January 2017 showed mixed results, with the global M&A market generally down and the U.S. M&A market generally up.  Total deal volume as measured by dollar value decreased globally by 26.9% to $280.97 billion, but increased in the U.S. by 36.0% to $108.11 billion.  The number of deals followed similar trends, decreasing globally by 0.4% to 2,832 and increasing in the U.S. by 21.6% to 789.

Globally, both strategic and sponsor-related M&A activities were down, with deal volume, as measured by dollar value, decreasing by 22.4% to $235.77 billion and 43.9% to $45.20 billion, respectively.  The number … Read more

PwC Explores Whether Trump Will Stay the Course on Sanctions

President Trump made many statements during the campaign regarding actions he plans to take to reverse Obama administration sanctions policies.[1] These included revisiting the agreement to ease sanctions on Iran, rolling back the sanctions program against Russia, and reversing the Obama administration’s policy of easing sanctions on Cuba. However, we believe that reversing course on these policies is much easier said than done.

For example, several of the Obama administration’s sanctions policies – including those involving Iran and Russia – were part of multilateral actions rather than unilateral sanctions programs, so breaking from such agreements will be difficult. Iran … Read more

Skadden Discusses Swaps Regulations

Swaps transactions, virtually unregulated before the 2008 financial crisis, are regulated in the U.S. under Title VII of the Dodd-Frank Act. Title VII empowers the Commodity Futures Trading Commission (CFTC), for most swaps, and the Securities and Exchange Commission, for the balance of swaps (securities-based swaps), to adopt a comprehensive regulatory framework. Many other G-20 countries have added similar responsibilities for financial regulators given the role swaps played in the financial crisis.

The CFTC now is being run by Acting Chairman J. Christopher Giancarlo. He is the lone Republican CFTC commissioner and recently criticized many, but not all, of the … Read more

karolyi
sedunov

Operating Risk and the Rights of Lenders to Control It

Operating risk is a major concern for firm management and stakeholders. Stark examples of losses due to corporate operations include BP’s $17.2 billion loss in June 2010 following the Deepwater Horizon incident (Wong and Yousuf, 2010) and Freeport-McMoRan’s $13.9 billion loss in 2008 due to plunging metal prices and difficulty with the acquisition of a rival company (James, 2009). The consequences of these and other operating losses are significant, and spill over to connected firms (Wu, 2016). Managers may be willing to make risky operating decisions if they are unaware of the risk or measure it poorly, or if their … Read more

Arnold & Porter Kaye Scholer Discusses FTC Merger Remedy Study

On February 3, 2017, the U.S. Federal Trade Commission (FTC or Commission) released the findings of its “Merger Remedy Study” (the FTC Study) which examined the effectiveness of Commission-required remedies in transactions from 2006 to 2012.[1] The FTC Study—its first on merger remedies in over 16 years—provides an important window into the FTC’s current thinking about merger remedies that may help businesses plan and position transactions for FTC approval. Moreover, it also provides several key insights that potential divestiture buyers should consider during and after completion of the divestiture to ensure the remedy is successful.

The FTC Study concluded … Read more

campbell3

The Role of State Blue Sky Laws After the JOBS Act and the National Securities Markets Improvement Act

State securities laws—generally referred to as “blue sky laws”— contain both registration provisions and antifraud provisions.  Registration provisions require that a company offering its securities to investors in a particular state register its securities with the state or meet the requirements for an exemption from the state’s registration provisions.  State antifraud provisions prohibit fraud in connection with the offer and sale of securities.

Blue sky laws – in particular, state registration provisions—have been a significant, unfair and inefficient impediment to small business capital formation.  A small business offering its securities as a way to raise capital is required to meet … Read more

Gibson Dunn Discusses Antitrust in China

China’s antitrust regulators have continued to increase their enforcement of the Anti-Monopoly Law (“AML”) in 2016.  Given the high level of scrutiny in this area and the current legal environment in China, compliance with the AML should be a priority for businesses operating in China.

2016 saw the publication of a number of draft guidelines, outlining the regulators’ proposed approach to many important areas in antitrust enforcement, including leniency, the calculation of fines, and application of the AML to the automotive industry.  Currently, discussions are also under way for highly anticipated draft guidelines on the application of the AML to … Read more

cziraki
gider

Legal Insider Trading Profits Often Amount to Peanuts

How much do corporate insiders make on their trades? It has long been shown that insiders realize significant positive abnormal returns on their transactions, in percentage terms. Surprisingly, however, there has been little research examining insiders’ dollar profits, even though it is dollar profits, rather than percentage returns, that insiders themselves likely care about.

Why is it important to make this distinction? Even if insiders realize high percentage returns, they may trade small amounts or trade infrequently, so that overall profits are still small. Conversely, even small percentage returns may lead to high profits if an insider trades large … Read more

Sullivan & Cromwell Discusses Banking Organization Capital Plans and Stress Tests

On January 30, 2017, the Federal Reserve published a final rule,[1] initially proposed on September 26, 2016,[2] that will modify the CCAR capital plan and stress testing rules applicable to bank holding companies (“BHCs”) with $50 billion or more in total consolidated assets and U.S. intermediate holding companies (“IHCs”) of foreign banking organizations (collectively, “CCAR firms”).[3]  Most notably, beginning with the 2017 CCAR and DFAST cycle, the final rule will exclude the capital plans of “large and noncomplex” CCAR firms (those that are not global systemically important banks (“G-SIBs”), … Read more

duarte-silvat
morgan

Counterarguments to SEC Statistical Analysis in Enforcement Actions and Inquiries

In recent years, the Securities and Exchange Commission has focused on using quantitative analysis to identify statistical outliers and anomalies through programs like the Aberrational Performance Inquiry, which evaluates hedge fund returns,[1] and the Accounting Quality Model (informally known as “RoboCop”), which scours public company filings to estimate “peer-level risk metrics.”[2]  Using enforcement actions involving the allocation of securities as an example, we explore issues raised by the use of statistics in SEC enforcement actions and inquiries.

Recent trade allocation actions by the SEC

In the last few years, the SEC has announced multiple enforcement actions against investment … Read more

Skadden Discusses a House Bill that May Shake Up CFTC Rulemaking

Less than two weeks into the new congressional session, the U.S. House of Representatives passed by a vote of 239 to 182 the Commodity End-User Relief Act1 (the Bill or House Bill), marking the first step by the new post-election Congress to pare down elements of the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act (Dodd-Frank). The Bill would reauthorize the Commodity Futures Trading Commission (CFTC or Commission) for five years, at an annual budget level that would be unchanged from last year.2 Many key provisions in the House Bill, including some added on the House floor … Read more

Drinker Biddle Reports on Crowdfunding and FINRA’s First Enforcement Action

In the fall of 2016, UFP, LLC, d/b/a uFundingPortal (UFP), became the subject of FINRA’s first enforcement action against a registered funding portal. During the course of the investigation, UFP shut down its website and withdrew its registration as a funding portal with the Securities and Exchange Commission (SEC). Despite its withdrawal from registration, UFP remained subject to FINRA’s jurisdiction and submitted a Letter of Acceptance, Waiver and Consent (AWC) to settle the alleged rule violations without admitting or denying the findings. FINRA accepted the AWD, finding that UFP violated two Regulation Crowdfunding Rules and three FINRA Funding Portal Rules, … Read more

lanois-photo-2

The Legacy of the Sarbanes-Oxley Act, 15 Years On

What does Sarbanes-Oxley mean? That’s when two members of U.S. Congress fiddle and half a million accountants in Europe start dancing.”[1]

President Donald Trump pledged during his electoral campaign to repeal some of the reforms that came about after the 2008 financial crisis, including the Dodd-Frank Act of 2010[2], declaring that the coming administration would seek to remake the way the U.S. oversees the financial sector. This has led some commenters to go even further back in time and call for the repeal of the Sarbanes-Oxley Act of 2002 (‘Sarbanes-Oxley”).[3]

Sarbanes-Oxley[4] was enacted by … Read more

Cleary Gottlieb Reviews CFTC’s New Cooperation Guidelines for Enforcement Actions

On January 19, 2017, the U.S. Commodity Futures Trading Commission (the “CFTC”) Division of Enforcement (the “Division”) issued two Enforcement Advisories setting forth the factors that the Division may consider in assessing cooperation by companies and individuals in the context of CFTC enforcement proceedings.

The Enforcement Advisories provide greater guidance on the Division’s view as to what constitutes effective cooperation by a company and/or an individual in a CFTC investigation and enforcement action.  They also continue a broader trend of authorities, both in the U.S. and abroad, articulating demanding standards that a company must meet to … Read more

hoopes001
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wilson-ryan

Tax Gross-Ups May Gross Out Investors

Much of the public has long believed that executives are overcompensated, a sentiment that has occasionally crept into legislation.  In one case, Congress voted to impose punitive excise taxes on managers who received excessive golden parachute payments. Unlike most taxes meant to influence corporate behavior, these taxes aim directly at the corporate decisionmaker who receives the payment, potentially leaving him worse off economically. To avoid that result, some compensation committees have structured managers’ compensation to include tax gross-ups: a payment of some portion of the manager’s personal tax liability, plus any tax on the compensation triggered by paying the liability … Read more

Paul Weiss Discusses FCPA Enforcement and Anti-Corruption Developments

2016 was, by any measure, an extraordinary year for the enforcement of the Foreign Corrupt Practices Act.  The Department of Justice and the Securities and Exchange Commission assessed a record-shattering total of nearly $2.5 billion in penalties.  But despite those record numbers, open questions remain as to the impact of the Yates Memo, which instructs prosecutors to focus on prosecutions of individuals, and of the FCPA Pilot Program, which encourages corporate self-reporting of wrongdoing.  Looking at anti-corruption developments more broadly, we see notable increases in the extent and sophistication of international cooperation and coordination and in the activities of the … Read more

DFC Global Appraisal Battle Draws Opposing Briefs From Professors

An M&A appraisal case before the Delaware Supreme Court has drawn amicus briefs from two groups of esteemed professors — including three from Columbia Law School — with opposing views on how a company should be valued.

The case involves the sale in 2014 of payday lender DFC Global to private equity firm Lone Star Funds for $9.50 a share, or about $1.3 billion. Muirfield Value Partners and three other DFC investors argued that the price was too low and filed an appraisal action, which allows shareholders that did not vote for the buyout to ask a judge to determine … Read more

Sullivan & Cromwell Discusses Corporate Inversion Transactions

On January 13, 2017, the Internal Revenue Service (the “IRS”) and the Treasury Department (the “Treasury”) published new final and temporary regulations (the “New Regulations”) and issued a notice of proposed rulemaking by cross-reference to the temporary regulations that address inversion transactions.  The New Regulations generally finalize the previous temporary and proposed regulations while making a few technical changes.  Most notably, the New Regulations:

  • expand the application of the “associated obligations” rule and exclude intercompany obligations from “nonqualified property” that gives rise to disqualified stock,
  • retain the distinction between stock and asset reorganizations,
  • leave undisturbed pre-IPO buyout transactions and
  • modify

Read more

Claude Lopez
elham

Financial Deregulation: Repeal or Adjust?

While a major overhaul of U.S. financial regulation may be unlikely during the early months of the Trump administration, changes should be expected as his nominees to lead the Treasury Department and financial regulatory agencies are confirmed. This will be the biggest turnover in regulatory leadership since the passage in 2010 of the Dodd-Frank Act, and it may also prove to be a test for Basel III, the macro-prudential policy framework created by the G20 countries in response to the 2007-2008 financial crisis.

Dodd-Frank, which has not been fully implemented, is the legislative vehicle for U.S. integration of Basel III … Read more

Skadden Discusses Trump’s Potential Impact on Executive Compensation

President Donald Trump’s campaign proposals included changes to tax rates and a promise to repeal the Dodd-Frank Act. If enacted, these proposals could have a significant impact on the way businesses handle executive compensation, permitting companies greater flexibility in structuring compensation arrangements. His staff also hinted at a reversal of Department of Labor (DOL) conflict of interest regulations. However, even if these proposals are enacted, some aspects of compensation programs that companies implemented to comply with current or, in the case of the DOL rules, anticipated requirements are likely here to stay given their popularity with institutional shareholders or due … Read more

Gibson Dunn Reviews U.S. Cybersecurity and Data Privacy

In 2016, companies, governments, and consumers were again challenged to navigate an evolving landscape of cybersecurity and privacy issues.  This year saw flash points impacting the trajectory for data breach litigation, the future for privacy class actions, and the scope of government powers to both regulate data collection practices and gather data itself.  Cybersecurity also burst onto the international regulatory and political scene.

Among other developments, this year the Supreme Court issued its decision in Spokeo, Inc. v. Robins, a long-awaited development addressing (somewhat) plaintiffs’ burden to show concrete injury to satisfy Article III standing.  Plaintiffs and defendants had … Read more

Proskauer Discusses Due-Process Issues in Shareholder Derivative Actions

The Delaware Supreme Court requested further consideration of the federal due-process issues that might arise where a court is asked to hold that a shareholder derivative action is precluded because a prior derivative action was dismissed based on the first plaintiff’s failure to make a demand on the company’s board before filing suit.  The Court’s January 18, 2017 decision in California State Teachers’ Retirement System v. Alvarez squarely focuses on an issue that has been raised several times in the Delaware Court of Chancery:  whether federal due-process principles prevent the actions of a named plaintiff in a derivative action from … Read more

Debevoise Looks at UK’s Initial Move to Expand Corporate Criminal Liability

On January 13, the UK Government took a step towards significant reform of the business crime landscape by issuing a formal “call for evidence” in relation to corporate liability for economic crimes such as fraud, false accounting and money laundering. While only the initial step – the next stage will involve a full consultation on a detailed proposal and draft legislation – it potentially heralds a new era of increased corporate exposure to prosecution.

Any changes that are enacted are broadly likely to take the form of corporate offenses similar to section 7 of the Bribery Act 2010 (failure to … Read more

peregrine

Board Forecast: Continuing Gatekeeper Anxiety

Multiple recent developments suggest that governing boards will continue to be called upon to address the personal liability concerns of corporate gatekeepers and other executives. There may be no clear indication yet of whether the Trump administration will endorse government individual accountability initiatives, such as the Yates Memorandum. But these new developments indicate that the “pipeline effect” of investigations commenced after the Yates memo was issued in September 2015 will be felt for the foreseeable future.

Such an effect will undoubtedly fuel the self-interest tendencies of many key corporate leaders. That, in turn, could enhance the potential for conflict between … Read more

K&L Gates Discusses the Border Adjustment Tax

Thanks to the Republican sweep of the White House and the Congress, all the talk in recent years about tax reform is on the verge of turning into action.  What many dismissed as idle chatter before Election Day suddenly became very real as the prospect of passing tax reform by using the budget reconciliation mechanism requiring only 51 votes in the Senate turned from a pipedream into reality.  But, with so many tax reform options on the table, how do you know what to focus on?   What ideas are worth explaining to the C Suite, running diagnostics, and spending resources … Read more

Ashiq Ali, Charles & Nancy Davidson Chair in Accounting
ningzhong-li-utd1
hoyoun-kyung-utd

How Dodd-Frank’s Revision to Reg FD Affects the Timing of Credit Rating Issuance

Regulation Fair Disclosure (Regulation FD), implemented in 2000, prohibits U.S. public companies from disclosing non-public information selectively. Section 100(b)(2)(iii) of the regulation, however, allowed issuers to disclose non-public information to credit rating agencies (CRAs) for the purpose of determining or monitoring credit ratings, as long as the ratings were publicly disclosed. Section 939B of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act or the Act) removed this exemption from Regulation FD, as part of a major regulatory reform of the credit rating industry, following the financial crisis of 2008. This revision to Regulation FD seems … Read more

Arnold & Porter Discusses Restraining the Regulatory State Through the Congressional Review Act

With a Republican sweep of Congress and the executive branch, there will be a concerted effort this year to reform and restrain the current regulatory state. The incoming Trump Administration and Republican Congress have a number of options to repeal regulations issued by the Obama Administration, with the Congressional Review Act (CRA) being one vehicle for affirmatively undoing some of the regulatory actions of the last six months.[1]

The CRA is an oversight tool that Congress may use to repeal or prevent a regulation issued by a federal agency from taking effect. The 1996 law grants Congress: (1) proper … Read more

dammann

Business Courts May Improve Firm Performance

A central goal of corporate law is to prevent managers from putting their own interests ahead of those of shareholders.  Such self-serving behavior can take many forms, ranging from illegal self-dealing transactions to self-entrenchment in the face of hostile takeover attempts.  Moreover, while the law may prohibit such conduct, the relevant norms are often notoriously vague and fact-intensive, which makes them difficult for courts to apply.

Against this background, high-quality courts should improve firm performance in at least two ways.  First, such courts should make it easier to police transactions designed to transfer wealth from firms to managers.  Second, by … Read more

Paul Weiss Offers M&A 2016 Year-End Roundup

2016 was an active year for M&A, though year-end results did not surpass record-levels set in 2015.  Global deal volume for the year was $3.7l trillion and U.S. deal volume was $1.66 trillion (14.8% and 16.4% lower than their respective record levels in 2015).  Sponsor-related deal volume for the year was $776.52 billion globally and $396.69 billion in the U.S. (down 22.6% and 32.9%, respectively, from 2015 levels and 12.5% and 6.5%, respectively, from 2014 levels).  Strategic deal volume was $2.93 trillion globally and $1.26 trillion in the U.S., surpassing 2014 levels though falling short of 2015 record levels by … Read more

Wachtell Lipton Shines a Spotlight on Boards for 2017

This past year witnessed a number of new corporate governance initiatives. Among the most significant:

Read more

epstein
scheffel
vlietstra

Keeping Bank Examinations Confidential in Litigation

In a bank examination, regulators evaluate a financial institution’s compliance with applicable laws and regulations.  The process is generally non-public, and the bank examination privilege helps keep it confidential.  But questions have recently arisen about how the privilege is meant to work, and the answers to them may significantly affect financial institutions and their dealings with federal and state regulators.

In our new legal treatise, The Bank Examination Privilege, we offer a comprehensive overview of the bank examination privilege and its essential role in bank supervision.  As we point out, there are two key reasons why confidentiality is vital.  First, … Read more

ryznar
mike

A New Model for Bank Stress Tests

In recent years, policymakers have struggled with the question of how to prevent bank failures.  The Dodd-Frank Act offers one answer, calling for stress tests that examine through economic models how banks of a certain size would react to a bad turn of economic events, such as negative interest rates.  The 2016 stress tests, for example, required banks to consider their preparedness for negative U.S. short-term Treasury rates and major losses to their corporate and commercial real estate lending portfolios.[1]  A failed stress test raises red flags about whether a bank has enough capital to stay solvent in a … Read more

Jones Day Discusses the OCC’s Latest Fintech Developments

The Comptroller of the Currency (the “OCC”) has been working for over a year to develop a comprehensive framework to improve the OCC’s ability to identify and understand trends and innovations in the financial services industry, as well as evolving customer needs.[i]  The OCC is taking a comprehensive approach to financial innovation, including innovative products and services.  As part of this initiative, the OCC formed a team including policy experts, examiners, lawyers and other’s (the “Team”) to gain a better understanding of emerging technology and new approaches in financial services and to design the OCC’s … Read more

caskey
ozel

Earnings Expectations and Employee Safety May Not Mix

The pressure to meet earnings expectations has grown intense for U.S. companies, and may be damaging the health and safety of workers. Missing analyst estimates, even by a small amount, can lead to significant negative reactions from investors. For example, eBay’s share price plunged 22 percent when it missed its fourth-quarter 2004 consensus estimate by just one penny. Facing such market pressures, managers may look for ways to improve their firm’s bottom line. They can create incentives for employees to become more productive, reduce discretionary expenditures, or seek ways to boost profits in the short term. These actions often come … Read more

K&L Gates Discusses Trump’s Plan to Make Mexico Pay for the Wall

One of the most significant post-election questions for the financial-services industry—particularly global financial institutions that move money across borders—is, what is the status of President Trump’s proposal to tax electronic remittances to Mexico to pay for the wall between Mexico and the United States?

Mr. Trump’s Proposal

During the 2016 Republican presidential primaries, Mr. Trump laid out various ways to force Mexico to pay for a wall along the U.S.-Mexico border in a two-page memo[1] to The Washington Post,[2] which is now linked to the immigration section of Mr. Trump’s transition website.  The first proposal listed is … Read more

John P. Anderson

When Does Corporate Criminal Liability for Insider Trading Make Sense?

Corporations are subject to broad criminal liability for the insider trading of their employees.  Critics have noted that this results in a harsh irony.  “After all,” as Professor Jonathan Macey notes, “it is generally the employer who is harmed by the insider trading.”[1]

Of course, not all employers of insider traders are innocent.  But I am convinced that critics like Professor Macey are on to something.  Namely, the current enforcement regime is absurdly overbroad in that it affords no principled guarantee to corporate victims of insider trading that they will not be indicted or punished for the crimes perpetrated … Read more

Paul Weiss Offers M&A at a Glance for December

While 2016 was strong overall (see our annual review here), M&A activity in the last month was mixed.  Total deal volume in December 2016 rose globally by 31.2% to $376.14 billion but declined in the U.S. by 49.4% to $78.58 billion.  The number of deals reached 12-month lows both globally and in the U.S., with decreases of 24.2% to 2,505 and 28.8% to 591, respectively, with a more pronounced drop in the number of sponsor-related deals.  Global strategic deal volume increased by 38.8% to $296.59 billion, while deal volume in the U.S. decreased by 58.5% to $48.54 billion.  The … Read more

John Coffee Headshot

Trumping the Constitution

Buried deep in Article I of the U.S. Constitution is an obscure provision known as the “Emoluments Clause.”  In relevant part, it provides that:

“[N]o person holding any Office of Profit or Trust under them, shall, without the consent of the Congress, accept of any present, Emolument, Office or Title, of any kind whatever, from any King, Prince, or foreign State.”[1]

Arguably, it was the first conflicts of interest prohibition in U.S. history, and its origins lie in a gift of a snuff box by the King of France to Benjamin Franklin, then our Ambassador to France, which gift … Read more

Debevoise Explores Expanded Civil Liability for Terrorism

On September 28, 2016, the U.S. Congress expanded civil liability for foreign countries and international businesses by enacting the Justice Against Sponsors of Terrorism Act (“JASTA”), overriding President Obama’s veto for the first time in his Presidency. While Congress ostensibly directed JASTA at claims brought by victims of the September 11 attacks, the law’s effect could be far broader and reach a wide array of actors. As a result, companies may wish to consider adding anti-terrorism screening to their regular due diligence and compliance procedures.

JASTA makes two major changes to existing federal law. It withdraws the sovereign immunity protection … Read more

Wachtell Lipton Discusses Corporate Bankruptcy and Restructuring for 2016 and 2017

Last year was an active but uneven one in the world of corporate bankruptcy and restructuring. On the one hand, default rates in the U.S. remained at relatively muted levels, with the continuation of low interest rates and strong (if sometimes volatile) capital markets. At the same time, as we anticipated a year ago, 2016 was also marked by distress among oil-and-gas exploration companies, “brick and mortar” retailers and municipal issuers in Puerto Rico.

Although commodity prices have stabilized, we expect companies in the oil and gas sector to face continued pressure in 2017. The pressure on traditional retailers, including … Read more

Cleary Gottlieb Explores What’s Next in UK Corporate Governance Reform

On November 29, 2016, Prime Minister Theresa May’s government issued a green paper[1] (the “Green Paper”) to canvass opinion on proposed reforms to the UK’s corporate governance framework.

A green paper is a government consultation document that invites feedback from interested parties (both within Parliament and outside it) on legislative proposals. The document does not form part of the legislative process and is non-binding in nature, and the government has stressed that it is not currently advocating any one proposal. Therefore, while the content of the Paper provides some guidance as to the government’s current thinking on … Read more