Last month, we released a new study, How the SEC Helps Speedy Traders, covered here by the Wall Street Journal, revealing that the Securities and Exchange Commission’s systems have been giving certain investors market-moving corporate filings before those same filings are made available to the investing public. In the days after the Journal published its article, the Senate Banking Committee issued a bipartisan letter to the SEC, “urg[ing] the SEC to quickly investigate this timing disparity for company filings and take the necessary steps to eliminate it.” Based on our subsequent research, the Journal later reported that the … Read more
Our Blog’s most recent Marketplace for Ideas series has considered whether the SEC should tighten its rules under the Williams Act, which now require that investors must disclose purchases of a 5% or greater stake in public companies within ten days of crossing the 5% level. This debate began in March 2011, when Wachtell, Lipton, Rosen and Katz first petitioned the SEC to reduce the disclosure window from ten days to one, and SEC Staff immediately signaled that they were indeed inclined to tighten the disclosure period. In response, Lucian Bebchuk and I filed a comment letter urging the SEC … Read more
Since the financial crisis, federal regulators have been searching for ways to rein in excessive risktaking in the financial sector. Many scholars and regulators have argued that executive retirement benefits can serve this risk-curbing function. Because top managers might not receive their promised retirement payouts if their firm goes bankrupt, the theory goes, generous retirement benefits encourage them to manage their firms more carefully. This view—sometimes called the “inside debt” hypothesis—assumes that, through retirement benefits, managers continue to be exposed to the firm’s credit risk after they retire. But no previous work has tested that assumption empirically. In our new … Read more
A committee of law professors that I co-chair with Lucian Bebchuk has petitioned the Securities and Exchange Commission to develop rules requiring public companies to disclose the use of shareholder money on politics. The petition has drawn over 500,000 supportive comments, more than any rulemaking proposal in the SEC’s history, including support from institutional investors and Members of Congress along with a sitting Commissioner. Although the SEC confirmed last year that it was considering the proposal and added disclosure of political spending to its regulatory agenda, the Commission has not yet announced whether it will require public companies to tell investors whether and how their money is being spent on politics.
This afternoon, I will join U.S. Senators Bob Menendez and Elizabeth Warren, along with John Coates of Harvard Law School, for a briefing on why the SEC should act immediately to develop rules requiring disclosure of corporate spending on politics. Today I will explain why the case for such rules is strong—and why the arguments that have apparently led the SEC to hesitate about making rules in this area provide no basis for continuing to allow public companies to spend shareholder money on politics in the dark. Read more
I am happy to announce that the Millstein Center for Global Markets and Corporate Ownership (“Millstein Center”) and the Investor Responsibility Research Center Institute (“IRRCI”) have initiated a joint effort to better understand the purpose, use and potential misuse of stock prices in public equity markets. We are therefore now requesting proposals for extensive new research projects on the role of stock prices as a corporate governance mechanism—and their effects on the decision making of corporate managements, boards of directors, and investors.
The daily price movement of a company’s public equity is often viewed as an indicator of market … Read more
This week, New York State Comptroller Thomas P. DiNapoli and New York City Public Advocate Bill de Blasio urged the Securities and Exchange Commission to respond to a petition I co-authored with my colleagues John Coffee, Ronald Gilson and Jeffrey Gordon asking the Commission to develop rules requiring public companies to disclose whether and how they spend shareholders’ money on politics. The New York officials argue that, upon her confirmation as the new Chairman of the Commission, Mary Jo White should make our petition, and the need for transparency in political spending at public companies, a top priority.
In … Read more
A committee of law professors that I co-chair with Lucian Bebchuk has petitioned the SEC to develop rules requiring public companies to disclose the use of shareholder money on politics. The petition has received unprecedented support, including comments from more than 300,000 individuals, institutional investors, and members of the U.S. Senate and House of Representatives. The SEC’s Division of Corporation Finance recently confirmed that the SEC is actively considering the petition, and the SEC’s entry in the Administration’s Unified Regulatory Agenda indicates that the SEC plans to propose rules by April.
In response, opponents of such rules are … Read more