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Cleary Gottlieb Discusses First DOJ Declination Under Merger-Related Safe Harbor Provisions

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On June 16, 2025, the Department of Justice’s National Security Division (“NSD”) and the U.S. Attorney’s Office for the Southern District of Texas announced a landmark declination to prosecute private equity firm White Deer Management LLC following its voluntary self-disclosure …

Paul Weiss Discusses New DOJ Guidance on Crediting Penalties in Coordinated Resolutions

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On June 5, 2025, the Head of the Criminal Division of the Department of Justice (“DOJ”), Matthew R. Galeotti, issued a memorandum providing guidance to Criminal Division prosecutors on corporate resolutions involving parallel criminal, civil, regulatory, and administrative proceedings by …

How Non-GAAP Revenue Guidance Is Shaping Analysts’ and Investors’ Perceptions

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In recent years, public firms in the U.S. have increasingly issued revenue guidance that is not based on Generally Accepted Accounting Principles (GAAP). Instead, they have focused on customized, non-GAAP metrics such as “organic revenue” or “constant-currency revenue.” Non-GAAP revenue …

Davis Polk Discusses the Return of Antitrust Remedies in Merger Settlements

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The FTC and DOJ recently announced the first settlements of merger enforcement actions reached under the second Trump administration. These actions follow comments from leadership at the antitrust agencies expressing an openness to structural merger remedies, an important contrast to …

Morrison & Foerster Discusses DOJ Initiative to Pursue False Claims Enforcement Against DEI

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On May 19, 2025, the U.S. Deputy Attorney General issued a memorandum (the “Memo”) announcing a Civil Rights Fraud Initiative (the “Initiative”) and instructing the U.S. Department of Justice (“DOJ”) to pursue False Claims Act (“FCA”) enforcement against “any recipient …

Sullivan & Cromwell Discusses N.Y. Court’s Rejection of Efforts to Make State Hub for Non-U.S. Derivative Litigation

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On May 20, 2025, the New York Court of Appeals affirmed the dismissal of two shareholder derivative actions brought against directors and officers of large European companies in decisions with critical implications for non-U.S. companies’ exposure to fiduciary litigation in …

Paul Weiss Discusses New DOJ Corporate and White-Collar Enforcement Policies and Priorities

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On May 12, 2025, the Head of the Department of Justice’s (“DOJ”) Criminal Division, Matthew R. Galeotti, announced significant changes to the Criminal Division’s corporate and white-collar enforcement policies and priorities.[1] Speaking at the Securities Industry and Financial Markets …

Cleary Gottlieb Discusses DOJ National-Security Case Declinations Under Corporate Enforcement Policy

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On April 30, 2025, the Department of Justice’s (“DOJ”) National Security Division (“NSD”), alongside the U.S. Attorney’s Office for the Northern District of California, announced a declination to prosecute Universities Space Research Association (“USRA”) for criminal export control violations committed …

Morrison & Foerster Discusses DOJ’s New Digital Asset Enforcement Policy

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On April 7, 2025, Deputy Attorney General Todd Blanche issued a memo (the “Blanche Memo”) announcing the Trump administration’s Department of Justice (“DOJ”) refocus of enforcement policies related to investigations and prosecutions of individuals and entities involved with digital assets. …

How Not to De‑Classify a Board

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Activist investors often think that the classification of boards abets sloth, protecting directors from shareholder input. Yet boards understandably value the durability and continuity of multi-year terms, which give them the bargaining power to pursue long-term plans. Companies often try …

How to Reinvigorate the FDIC

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The Federal Deposit Insurance Corporation (FDIC) is the U.S. agency responsible for insuring all bank deposits and facilitating all bank resolutions. Yet, as only one of three bank regulators, the agency relies on the Federal Reserve (Fed) and Office of …

Sidley Austin Discusses CFTC Advisory on Self-Reporting, Cooperation, and Remediation

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On February 25, 2025, the Division of Enforcement (Enforcement Division) of the U.S. Commodity Futures Trading Commission (CFTC) released an Enforcement Advisory on Self-Reporting, Cooperation, and Remediation (Advisory). The Advisory is the Enforcement Division’s “sole policy on self-reporting, cooperation, and …

The Limits of Shareholder Ratification

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In a recent article, I analyze the function of shareholder ratification in corporate governance and argue that understanding this function is critical to both refining shareholder-based cleansing mechanisms and appreciating their inherent limitations. Although I focus on Corwin cleansing in …

Paul Weiss Discusses Delaware Decision Applying Business Judgment Rule to “Clear Day” Approval of Reincorporation

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In Maffei v. Palkon, the Delaware Supreme Court unanimously held that the business judgment rule applies to a corporation’s decision to change its state of incorporation, even if the move arguably favors a controlling stockholder by reducing future liability …

Wachtell Lipton Discusses Trump Administration’s New White-Collar Enforcement Priorities

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In our most recent memorandum, we predicted that President Trump’s second administration would likely entail a significant overhaul of DOJ’s agenda and enforcement priorities.  Although we are less than a month into the new Trump Administration, we have already seen …

Fixing MFW

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Delaware’s regime governing controlling shareholders relies on the courts’ ability to police conflicted transactions under the stringent “entire fairness” standard of review. In theory, judicial review under this standard allows judges to distinguish between fair transactions and those that are …

How to Improve the Bank Charter Application Process

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New bank formation in the United States is at an all-time low, and Americans increasingly rely on non-bank financial technology companies (fintechs) to satisfy their financial services needs. Fintechs that do not operate through banks mostly operate outside the direct …

ESG Dealmaking

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Environmental, social and governance (“ESG”) concerns are driving businesses globally to re‐calibrate their mergers and acquisitions (M&A). In a new article, I contend that, despite a growing ESG backlash in the United States, ESG issues will continue to be …

Wachtell Lipton Discusses Important Appellate Court Decisions for Syndicated Loan Market

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On December 31, 2024, two separate appellate courts issued notable decisions addressing so-called “uptier” transactions.  In a typical uptier transaction, a majority of lenders under a credit agreement, in connection with amending the credit agreement and providing additional financing, are …

Everything Is Rational Apathy

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Rational apathy stands at the center of current and long-time developments and debates in corporate governance and activism. Dominance of index funds in share ownership, prevalence of proxy advisers, pass-through voting programs, trading proxy votes on an exchange, and the …

Arnold & Porter Discusses CFPB Report on Privacy-Protection Gaps for Financial Service Customers

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The Consumer Financial Protection Bureau (the CFPB) recently released a report identifying limits in federal privacy protections afforded by the Fair Credit Reporting Act (FCRA) and Gramm-Leach-Bliley Act (the GLBA). The report strongly encourages state policymakers to consider how consumers …

Sullivan & Cromwell Discusses Director and Creditor Liability in Distressed Companies Under Delaware Law

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On November 15, 2024, the Delaware Court of Chancery found that certain of the directors of Bridge Street Worldwide, Inc. (“BSW”), a Delaware corporation, were liable for breaching their fiduciary duty of loyalty by entering into a forbearance agreement with …

Gibson Dunn Discusses New U.S. Outbound Investment Regulations

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On October 28, 2024, the U.S. Department of the Treasury issued final regulations implementing an outbound investment control regime targeting AI, semiconductors, and quantum computing investments involving China that raise national security concerns. The regulations’ prohibitions and reporting requirements go …

Ropes & Gray Discusses SEC Settlements With Four Issuers in Cybersecurity-Disclosure Cases

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On October 22, 2024, the Securities and Exchange Commission (“SEC”) filed settled enforcement orders involving four current and former public companies – Unisys Corp., Avaya Holdings Corp., Check Point Software Ltd, and Mimecast Limited. The settlements concern the issuers’ disclosures …

Moving from Agency Costs and Private Benefits of Control to Principal Costs and Private Benefits of Influence ­

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Corporate governance research has historically focused on agency costs (imposed by professional managers) or principal-principal expropriation (imposed by dominant shareholders). We seek to reverse this theoretical focus on private benefits of control, and its preoccupation with the principal/shareholder and agent/manager …

Davis Polk Discusses Commerce Department Guidance Expanding Export-Control Requirements for Financial Institutions

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On October 9, 2024, the Commerce Department’s Bureau of Industry and Security (BIS) issued new guidance for financial institutions on best practices for compliance with export control laws and regulations (the Guidance).[1] The Guidance caps a series of notes …

Arnold & Porter Discusses Final FinCEN Rules for Investment Advisers Under Bank Secrecy Act

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On August 28, 2024, the Financial Crimes Enforcement Network (FinCEN) issued a final rule to add “investment adviser” to the definition of “financial institution” under the regulations implementing the Bank Secrecy Act (BSA). The final rule defines the term “investment …

Business Judgment and ESG

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New research provides evidence that legally nonbinding commitments from corporate managers to Environmental, Social, and Governance (ESG) principles may help predict subsequent corporate behavior. [1]  This study provides cautiously optimistic evidence that CEOs who claim to consider the ethical implications …

Sullivan & Cromwell Discusses Banking Agencies’ Request for Information About Bank Relationships with Fintechs

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On July 25, 2024, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency (together, the “Agencies”) issued a request for information (the “RFI”)[1] regarding arrangements …

Paul Weiss Discusses Delaware Supreme Court Clarification of Tests for Advance Notice Bylaw Challenges

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Recently in Kellner v. AIM ImmunoTech, Inc., the Delaware Supreme Court clarified the legal tests applicable when stockholders challenge advance notice bylaws. A key aspect of the Supreme Court’s ruling is the importance of distinguishing between a facial and …

Corporate Sustainable Finance

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Sustainable debt financing—bonds issued to support projects that benefit the environment or social welfare—has skyrocketed over the past decade, rising from a niche market to a trillion-dollar business. Public finance has been an essential catalyst for the market for sustainable …

Elon Musk’s Threat

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In the wake of a judicial decision invalidating Tesla CEO Elon Musk’s stock-option package, Tesla’s shareholders have voted overwhelmingly to ratify Musk’s pay. Rather than respect investors’ judgment, however, the lawyers who brought the case claimed that the shareholder vote …

Sullivan & Cromwell Discusses SEC Charge of Internal Accounting Controls Failure Based on Cybersecurity Breach

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On June 18, 2024, the Securities and Exchange Commission (“SEC”) announced charges against R.R. Donnelley & Sons Company (“RRD”) for failure to maintain adequate internal accounting controls in violation of Section 13(b)(2)(B) of the Securities Exchange Act of 1934 (“Exchange …

Dissent Is a Fiduciary Duty

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Many leading companies encourage their employees to dissent, believing that it can enhance organizational learning. When employees disagree with management, they can identify blind spots, counteract groupthink, and generally overcome gaps in understanding. These qualities help spur the innovation and …

Director Independence Reconceived

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Independent directors were originally conceived as guardians of shareholder interests who could safeguard a corporate board’s ability to check management’s power. They have since become a marquee feature of modern corporate governance. What, though, makes a director independent? Scholars, regulators, …

Sullivan & Cromwell Discusses SEC Rule Amendments to Regulation S-P

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On May 16, 2024, the Securities and Exchange Commission (“SEC”) significantly expanded its consumer information protection framework by adopting rule amendments (the “Final Amendments”) to Regulation S-P, which governs the protection of consumer financial information held by broker-dealers, investment companies, …

Sullivan & Cromwell Discusses State Requirements of “Fair Access” to Financial Services

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An increasing number of states have enacted or are considering enacting legislation requiring financial institutions to provide customers “fair access” to financial services. These fair access requirements, first appearing in Florida’s House Bill 3 (2023) (“FL HB 3”), generally prohibit …

Cleary Gottlieb Discusses New York Sovereign-Debt Restructuring Legislation

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The New York State Legislature is again considering a proposed law with potential implications for sovereign debt.  Entitled the “Sovereign Debt Stability Act,” it combines two previous legislative proposals from the 2023 legislative session.[1]  Those proposals sought to: (i) …

Kirkland Discusses Proposed Regulations for Excise Tax on Share Repurchases

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On April 12, 2024, the U.S. Department of Treasury and the Internal Revenue Service published proposed regulations regarding the 1% excise tax on certain stock redemptions and economically similar transactions (corporate “repurchases”) by publicly traded U.S. corporations (“Covered Corporations”) on …

Private Equity Negotiations

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For most of its history, the private equity industry was largely left alone by securities regulators. A basic assumption underlying this approach was that private equity fund investors are sophisticated and should therefore be able to engage in effective private …

Ropes & Gray Discusses Executive Order Limiting Data Transfers to China and Other Nations

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On February 28, 2024, President Biden announced an Executive Order (“EO”) directing the Department of Justice (“DOJ”) to promulgate regulations that restrict or prohibit transactions involving certain bulk sensitive personal data or United States Government-related data and countries of concern …

Arnold & Porter Discusses OCC, FDIC Policy Statements on Bank Merger Scrutiny

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In recent months, the U.S. banking regulators have proposed policy statements focused on providing greater insight on the agencies’ review of bank mergers and acquisitions under the Bank Merger Act (BMA).[1] On January 29, 2024, the Office of the …

Morrison & Foerster Discusses California Plan to Criminally Prosecute Antitrust Violations

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In the latest development signaling California’s increasing efforts to police antitrust violations, on March 6, 2024, Senior Assistant Attorney General Paula Blizzard announced that the California Office of the Attorney General (“California AG”) Antitrust Section is reviving its criminal antitrust …

Wachtell Lipton Discusses AI in the 2024 Proxy Season: Managing Investor and Regulatory Scrutiny

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Corporate disclosures concerning artificial intelligence have increased dramatically in the past year, with Bloomberg reporting that nearly half of S&P 500 companies referenced AI in their most recent annual reports.  And some investors are clamoring for even more, using shareholder …

Kirkland & Ellis Discusses FinCEN Proposal to Increase Anti-Money Laundering Requirements for Investment Advisers

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On February 13, the U.S. Treasury, Financial Crimes Enforcement Network (“FinCEN”) proposed1 (the “Proposed Rule”) to apply affirmative anti-money laundering and countering-the-financing-of-terrorism (“AML/CFT”) program obligations as prescribed by the Bank Secrecy Act (the “BSA…

Paul Weiss Discusses Delaware Chancery Ruling on Controllers’ Fiduciary Duties When Exercising Stockholder Rights

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In In re Sears Hometown and Outlet Stores, Inc. Stockholder Litigation, the Delaware Court of Chancery (in an opinion by Vice Chancellor J. Travis Laster) clarified that, when exercising stockholder rights to alter a corporation’s status quo, controllers owe …

Skadden Discusses Final SEC Rules on SPACs and De-SPACs

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On January 24, 2024, the Securities and Exchange Commission (SEC) adopted final rules that impose significant additional procedural and disclosure requirements on initial public offerings (IPOs) by special purpose acquisition companies (SPACs) and in business combination transactions involving SPACs (de-SPACs). …

Skadden Discusses Manhattan U.S. Attorney’s Office Whistleblower Program for Individuals’ Self-Disclosure

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On January 10, 2024, Damian Williams, U.S. Attorney for the Southern District of New York (SDNY), announced the creation of that office’s Whistleblower Pilot Program (Program). This initiative provides notice of the requirements for individuals who wish to self-disclose criminal …

SEC Commissioner Dissents on Final SPAC Rules

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Today [January 24], the Commission considers a lengthy adopting release of nearly 600 pages that extensively describes numerous disclosure, dissemination, forward looking statement, liability, and accounting provisions purportedly designed to advance investor protection and facilitate capital formation for special purpose …

Cleary Gottlieb Discusses Proposed CFTC Guidance on Voluntary Carbon Credit Derivatives

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On December 4, the Commodity Futures Trading Commission (the “CFTC”) proposed guidance for designated contract markets (“DCMs”) listing voluntary carbon credit (“VCC”) derivative contracts.  The proposed guidance, published to coincide with COP 28, and the opportunity to provide comment will …

Davis Polk Discusses FSOC Revision to Nonbank SIFI Designation Framework

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The Financial Stability Oversight Council revised its interpretive guidance and analytic framework for FSOC’s authority to designate nonbank financial companies for Federal Reserve supervision and regulation and to otherwise monitor and respond to financial stability risks. These changes reverse key …

Morrison & Foerster Discusses Federal Banking Agencies’ Adoption of Climate-Related Financial Risks Guidance

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On October 24, 2023, the Federal Reserve Board (FRB), the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency (together, the “Agencies”) released their final Principles for Climate-Related Financial Risk Management for Large Financial Institutions (the …

Debevoise Discusses Proposed FDIC Guidelines for Corporate Governance and Risk Management

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On October 11, 2023, the Federal Deposit Insurance Corporation (the “FDIC”) published in the Federal Register for comment a notice of proposed rulemaking to establish new guidelines (the “Proposed Guidelines”) for governance and risk management at FDIC-supervised insured depository institutions …

Cleary Gottlieb Discusses How U.S. Securities Laws Apply to a Bail-In of UK or European Bank

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On October 10, 2023, the Financial Stability Board (the “FSB”) published a report (the “FSB Report”)[1] that examined the international resolution framework as applicable to global systemically important banks (“G-SIBs”). In its examination, the FSB Report stated that the …

Taxing the Metaverse

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The metaverse has gained popularity following Facebook (Meta)’s announcement that it would bring the “Metaverse” to life and the excitement around cryptocurrency and NFTs. The metaverse acts as a social network where people participate in virtual activities, like purchasing digital …

Skadden Discusses CFTC Charges That DeFi Developers Facilitated Off-Exchange Trading

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On September 7, 2023, the Commodity Futures Trading Commission (CFTC) issued three enforcement settlement orders against developers of decentralized finance (DeFi) protocols.1 The orders charge Opyn, Inc., Deridex, Inc., and ZeroEx, Inc. (0x) with illegally offering leveraged and margined …

Gibson Dunn Discusses Rise of State Laws Restricting Foreign Entities’ Property Acquisitions

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Geopolitical tensions and strategic competition between the United States and China have increasingly influenced the investment landscape in recent years, implicating established regulatory frameworks such as that of the Committee on Foreign Investment in the United States (“CFIUS”), as well …

Debevoise Discusses How EU’s Sustainability Reporting Directive Affects Private Equity

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The EU’s Corporate Sustainability Reporting Directive (“CSRD”) is a new framework that requires companies to include a large body of sustainability information in their annual reporting, in accordance with the detailed European Sustainability Reporting Standards (“ESRS”), combined with external “assurance” …

Wachtell Lipton Discusses Corporate DEI Initiatives After Harvard Affirmative Action Case

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It is no secret that American corporations face vigorous — and often conflicting — demands concerning diversity, equity and inclusion (DEI) initiatives.  Over the past year, DEI initiatives and commitments have come under pressure in the face of macroeconomic headwinds, …

Wachtell Lipton Discusses PCAOB Proposal to Expand Auditors’ Oversight Role

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The Public Company Accounting Oversight Board (PCAOB) has proposed changes to its auditing standards that would significantly expand auditors’ responsibilities and oversight of a company’s noncompliance with laws and regulations.  If adopted as proposed, the rules would require auditors to …

On Corporate Social Issues, U.S. Consumers Do Not Put Their Money Where Their Mouths Are

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Despite an increasing focus on corporations that profit from social injustices and misconduct, governments and international agencies have had limited success in addressing these issues. Advocates for change suggest that stakeholders, particularly retail consumers, could help, given that their purchasing …

Davis Polk Discusses Unsung Provisions of Bill to Hold Bank Executives Accountable

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The Recovering Executive Compensation Obtained from Unaccountable Practices (RECOUP) Act, designed to hold senior executives at banking organizations accountable, has broad and unusual bipartisan support, passing out of the Senate Banking Committee by a 21-2 bipartisan vote. As the bill …

What’s in Your Climate Score?

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An increasing number of consultancies, financial technology firms, data providers, and investment advisory groups offer information about localized physical climate risks like floods, hurricanes, and wildfires. In recent years, mainstream financial services companies have acquired many of the early climate-analytics …

Davis Polk Discusses Delaware Chancery Decision Denying Corwin Cleansing for Defensive Measure

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The recent In re Edgio, Inc. Stockholders Litigation decision highlighted concerns when a public company involved in a business combination adopts defensive measures that would continue for a significant period of time post-closing. The court declined to apply Corwin cleansing …

Mythical Adverse Effect

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The material adverse effect (“MAE”) definition in mergers and acquisitions agreements is one of the most intensely negotiated, litigated, and studied contract provisions ever. It has nearly tripled in average length over the past two decades, as lawyers haggle over …

Sullivan & Cromwell Discusses CFPB Policy Statement on Abusive Conduct

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On April 3, 2023, the Consumer Financial Protection Bureau (“CFPB”) issued a policy statement regarding what constitutes an “abusive” act or practice (the “Policy Statement”).[1] The Policy Statement outlines the CFPB’s approach to analyzing whether an act or practice …

The Corporate Governance Cartel

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In recent years, major institutional investors in the U.S. have combined their efforts on environmental, social, and governance (“ESG”) matters. Large institutional investors now vote in lockstep on a variety of corporate issues, jointly lead governance initiatives, and often adopt …

Sullivan & Cromwell Discusses ESG Considerations for Financial Institutions in 2023

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As U.S. financial institutions assess their ESG risks, opportunities, policies and procedures for 2023, key considerations include the numerous significant ESG developments in 2022—in particular, recent proposals and initiatives announced by financial regulators with respect to climate-related risk management and …

When Will Investors Vote for Socially Beneficial but Costly ESG Policies?  

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Investors are increasingly interested in whether firms implement environmental, social, and governance (ESG) policies that, for example, reduce the firms’ carbon footprints, diversify their workplaces, or better protect customers’ private information. Some socially beneficial policies (e.g., improving energy-efficiency) may also …

Kirkland & Ellis Discusses Final Labor Department Regulations on ERISA Fiduciaries and ESG

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In recent years, few topics within the U.S. Department of Labor’s (the “DOL”) purview have garnered as much interest as the potential consideration of environmental, social and governance (“ESG”) factors by fiduciaries of plans subject to the U.S. Employee Retirement …

Wachtell Lipton Discusses ESG and Stakeholder Governance Within the Framework of Fiduciary Duties

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Over the past decade, investors, companies, and commentators have increasingly accepted and adopted stakeholder governance as the way to pursue the proper purpose of the corporation and have embraced consideration of environmental, social and governance (ESG) issues in corporate decision-making …

Fraud on the Crypto Market

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Investors now routinely turn to crypto asset trading for portfolio appreciation and diversification, but significant investor protection concerns loom. Between 2017 and 2019, thousands of crypto assets were offered to the public and others through initial coin offerings. Many of …

Skadden Discusses First OFAC and FinCEN Parallel Enforcement Actions on Virtual Currency

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On October 11, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN) announced settlements for approximately $24 million and $29 million, respectively, with virtual currency exchange Bittrex, Inc. (Bittrex). …

Debevoise & Plimpton Discusses the EU AI Liability Directive’s Impact on Artificial Intelligence Legal Risks

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On September 28, 2022, the European Commission released a proposal to change the legal landscape for companies developing and implementing artificial intelligence in EU Member States. This AI Liability Directive would require Member States to implement rules that would significantly …

Skadden Discusses Final FinCEN Rule on Beneficial Ownership Reporting

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On September 29, 2022, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a long-awaited final rule implementing the beneficial ownership information (BOI) reporting requirements of the Corporate Transparency Act (CTA). The final rule adopted much of FinCEN’s December …

Debevoise & Plimpton Discusses Executive Order Paving Way for New EU-U.S. Data Transfer Framework

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On October 7, 2022, U.S. President Biden signed Executive Order 14086 on Enhancing Safeguards for United States Signals Intelligence Activities (the “Order”). The administrative Order creates new protections applicable to cross-border data sharing through a phased implementation process and is …

Davis Polk Discusses Three Recent Court Losses Signaling Challenges for Antitrust Enforcement

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Under the Biden administration, the U.S. antitrust agencies are taking an aggressive approach to merger enforcement, and have outlined strategies that move away from historical merger review tools in favor of more enforcement-friendly standards. But recent court decisions have tested …

What Is Stock Market Short-Termism?

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What is stock market short-termism? It’s important to know the boundaries between stock market short-termism and other economic ills, because in public discourse many social and economic woes are mistakenly attributed to stock market myopia. But when we mistakenly categorize …

The War on Business

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Nations and businesses often compete and clash. But the war on business has escalated in  recent years as nation-states and non-state actors target specific businesses with sanctions and recriminations and new intensity and methods. The many legal, economic, and social …

Davis Polk Discusses Biden’s Executive Order on Competition, One Year Later

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Since President Biden issued his July 2021 Executive Order on Competition, the antitrust agencies have made broad policy statements promising more aggressive enforcement and have initiated a number of high-profile enforcement actions.  Rather than establishing a record of success, the …

Corporate Governance and International Law

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Why should corporate managers comply with international law?  International agreements, customary international law, and non-binding recommendations are sources of norms that, if adopted, could address many of the harms that corporations create for society and the planet.

Corporations are increasingly …

The Interplay Between Private Meetings with Investors and Subsequent Earnings Announcements

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Since the passage of Regulation Fair Disclosure, managers have increasingly met privately with investors. During these meetings, investors gather useful information by seeking managers’ feedback, pursuing a deeper understanding of publicly available information, and inquiring about company strategy. That information …

Sullivan & Cromwell Discusses EU’s Corporate Sustainability Reporting Requirements

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European Union leaders have reached a provisional political agreement on a revised Corporate Sustainability Reporting Directive (“CSRD”) that would introduce more detailed sustainability reporting requirements for all “large” EU companies and companies with securities (including low denomination debt …

The Corporation as Trinity

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In Adolf Berle’s famous 1954 essay, “Corporate Capitalism and The City of God,” certain passages that once seemed musty and redolent of a bygone era are now eerily timely. Like current critics, Berle chides corporate leaders who think they …

Skadden Discusses Senate Bill to Create Regulatory Structure for Crypto and Other Digital Assets

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In recent years, innovation in the blockchain or “Web3” space has been impacted by uncertainty on the regulatory front. Undoubtedly, the greatest area of uncertainty has involved the Securities Exchange Commission (SEC) and its application of the so-called Howey test …

How Accounting Employees’ Incentives Affect Financial Reporting Quality

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An extensive body of literature that spans accounting, corporate finance, management, and other adjacent disciplines examines the relationship between senior executives’ contractual incentives (e.g., bonus plans, stock and option holdings) and various properties of their firms’ financial reporting and disclosures. …

Wachtell Lipton Discusses Emerging Issues in Decentralized Governance and the Lessons of Corporate Governance

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While recent gyrations in cryptoasset markets have focused attention on the future contours of stablecoins, market-making, and impending regulation, another feature of the blockchain landscape is also confronting noteworthy challenges.  Specifically, a new breed of business organization has emerged …

Decentralized Finance, Crypto Funds, and Value Creation in Tokenized Firms

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Decentralized Finance (DeFi) employs blockchain technology and smart contracts with the goal of enabling perfectly disintermediated financial markets. Despite the far-reaching ambition, DeFi markets are experiencing increasing intermediation recently, as a new type of intermediary, so-called Crypto Funds (henceforth, CFs), …

Meme Investors and Retail Risk

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Dramatic trading in GameStop, AMC, and other “meme stocks” has reignited debates about the efficiency of the stock market, its purposes, and whose interests it should serve. The changing role of retail investors and meme investors, a subset of retail …

Purpose Proposals 

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The shareholder proposal has long been an effective tool for shareholders to bring emerging corporate governance issues to the attention of a company’s board of directors, its managers, and their fellow shareholders. Over time, shareholder proposals have driven a variety …

How Disclosure and Information Intermediaries Strengthen the Credibility of Initial Coin Offerings

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The crypto-tokens market has recently emerged as an alternative source of financing for entrepreneurial ventures, with approximately $27 billion raised globally through March 2022.[1] These ventures issue blockchain-based digital “crypto-tokens” to raise external capital through an initial coin offering …

Sullivan & Cromwell Discusses the Implications for Financial Institutions of Proposed SEC Climate Disclosure Rules

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On March 21, 2022, the Securities and Exchange Commission proposed, in a 510-page release, climate-related disclosure rules for public companies. Although the proposed rules do not impose industry-specific requirements, in certain areas they would have a particularly significantly impact …

Moonshots

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In the last half-century, technological progress has stagnated. The century from 1870 to 1970 brought electricity, running water, telephones, television, automobiles, and airplanes. Life expectancy at birth rose from 45 to 72. But since the early 1970s, progress has been …

Arnold & Porter Discusses Today’s SEC Examination Priorities, Tomorrow’s SEC Enforcement Actions

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Rounding out a series of quarter-end announcements from the US Securities and Exchange Commission (SEC), the Division of Examinations (Exams) announced its 2022 examination priorities on March 30, 2022. These priorities reflect SEC Chair Gary Gensler’s stated view that the …

Sullivan & Cromwell Discusses SEC’s Proposed New Cybersecurity Risk-Management Rules for Investment Advisers and Firms

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On February 9, 2022, the Securities and Exchange Commission (the “SEC”) voted 3 to 1 (Commissioner Peirce dissenting[1]) to propose cybersecurity risk management rules and amendments for registered investment advisers, registered investment companies and business development companies (the …

Reviving Bank Antitrust

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Antitrust is back. The Chicago School relegated antitrust policy to obscurity during the latter half of the 20th century, but a new cohort of antimonopoly scholars has recently rekindled concerns about industrial consolidation and corporate “bigness.” This antitrust revival …

Sullivan & Cromwell Discusses Reopened Comment Period for SEC’s Pay-Versus-Performance Disclosure Rule

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On January 27, 2022, the U.S. Securities and Exchange Commission (the “SEC”) reopened a 30-day comment period (beginning today) on proposed rules requiring registrants to disclose how executive compensation actually paid by a registrant relates to the financial performance of …

Sullivan & Cromwell Discusses Dashed Efforts to Make New York a Hub for Non-U.S. Derivative Litigation

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In the last week of December, the Commercial Division of the New York Supreme Court dismissed two shareholder derivative actions brought against directors and officers of large European companies in decisions with critical implications for non-U.S. companies’ exposure to fiduciary …

Skadden Discusses SEC’s Final Amendments Under Holding Foreign Companies Accountable Act

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On December 2, 2021, the U.S. Securities and Exchange Commission (SEC) adopted final amendments implementing the disclosure and submission requirements of the Holding Foreign Companies Accountable Act (HFCA Act). In addition, the adopting release establishes the SEC’s procedures for (i) …

Plus Factors in Price-Fixing Litigation

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Antitrust plaintiffs typically rely on circumstantial evidence when pursuing price-fixing claims, because price-fixing conspirators usually conceal their collusion through code names, secret meetings, cover stories, and falsified documents. Antitrust law uses a two-step process for proving price-fixing agreements through circumstantial …

Debevoise & Plimpton Discusses Federal Regulators’ Focus on AI and Consumer Protection in Finance

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As financial institutions increasingly deploy artificial intelligence (“AI”), including machine learning and automated decision-making technologies, across their business lines, U.S. federal regulators have started to scrutinize the consumer protection implications of these technologies. Most recently, the Department of Justice (“DOJ”), …

Wachtell Lipton Discusses SEC Staff’s Move to Limit Exclusion of “Social Policy” Shareholder Proposals

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The SEC Staff has issued revised guidance rescinding prior Staff Legal Bulletins addressing the exclusion of Rule 14a-8 shareholder proposals based on the social significance to a company, “micromanagement” or  “economic relevance.”  The changes will likely facilitate a larger number …

Davis Polk Discusses Financial Action Task Force’s New Guidance for Virtual Assets

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The Financial Action Task Force (FATF), the inter-governmental body that recommends international standards for anti-money laundering (AML) and countering the financing of terrorism (CFT), released an updated version of its guidance on the application of FATF’s recommendations to virtual assets …

Sullivan & Cromwell Discusses White House Roadmap to Address Climate-Related Financial Risk

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On October 14, 2021, the White House issued a report entitled “A Roadmap to Build a Climate-resilient Economy.”[1]  The 40-page report was mandated by President Biden’s May 2021 executive order on “Climate-Related Financial Risk” (the “EO”)[2] and presents …

Capitalism, Heal Thyself

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A paradigm shift is underway: The corporation – much reviled as a cost-externalizing, short-termist, inward-focused, politically manipulative machine – is undergoing a fundamental change. This is good news. Corporations are beginning to confront the harm they created, allowing capitalism to …

Sullivan & Cromwell Discusses SEC Proposal to Enhance Proxy Voting Disclosure by Investment Funds

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On September 29, 2021, the SEC issued a proposed rulemaking to enhance the information mutual funds, exchange-traded funds and other registered management investment companies (“funds”) report annually about their proxy votes.  The proposal also would require so-called “institutional investment managers” …

Unicorniphobia

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Once upon a time, a successful startup that reached a certain maturity would “go public” – selling securities to ordinary investors, perhaps listing on a national stock exchange, and taking on the privileges and obligations of a public company under …

Disclosure Procedure

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Each year, U.S. public companies spend millions of people-hours producing the securities disclosures that undergird public capital markets. But relatively little is known about how firms produce such consequential information, including whether they are spending too much, too little, or …

Who’s Looking Out for the Banks?

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Two decades ago, Congress repealed the Glass-Steagall Act’s Depression-era separation between commercial banking and other financial activities, paving the way for bank holding companies (BHCs) to expand into investment banking and insurance.  At the time, some critics – most notably, …

Comparative Corporate Governance

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With the increasing internationalization of law and legal scholarship, comparative corporate governance has seen a burgeoning volume of research from a practical, theoretical, and empirical perspective. Practically speaking, both internationally and within individual countries, most corporate governance research deals with …

Debevoise & Plimpton Discusses European Commission’s Views on Sustainable Finance Disclosures Regulation

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The European Commission (the “Commission”) recently issued long-awaited answers to questions raised by the European Supervisory Authorities earlier this year on the Regulation on Sustainability-related Disclosures in the Financial Sector (“SFDR”). This Update covers answers to questions that relate to …

Capital Discrimination

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In 2014, Diane Straka, along with three male associates, formed a corporation for the purpose of providing accounting services.  Each of the founders was an officer, director, and 25 percent shareholder of the new entity.  A problem soon emerged: One …

Do Lawyers Make Good Gatekeepers?

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Do lawyers report evidence of material violations up-the-ladder at the companies they represent, as the Sarbanes-Oxley Act and related regulations require? Have general counsel properly  investigated those reports? Can we trust lawyers to be effective gatekeepers and stop corporate misconduct? …

Law Enforcement’s Lochner

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When we contemplate the numerous challenges regulators and prosecutors face in identifying and redressing corporate and white-collar crime, constitutional criminal procedure is not usually high on the list. If anything, the constitutional doctrines that apply to the government’s interactions with …

Is Everything Securities Fraud?

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Securities litigation is almost inevitable for any public company.  Often, investors sue because the firm’s managers engaged in fraud that directly harmed the shareholders – say, by doctoring the firm’s financials or lying about known business prospects.  However, shareholders also …

Debt, Control, and Collusion

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The new wave of financial economics empirical scholarship has revitalized what had been theoretical discussions about the effects of common ownership in both economics and law.  Common ownership within the same industry by mutual funds may create incentives for those …

Contractual Stakeholderism

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Individually or collectively, corporate leaders are promising stakeholders to improve corporate practices on a range of issues. In a new article, I argue that they can demonstrate their commitment to stakeholders by designing contracts differently.

We are already attentive to …

Taming Unicorns

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Until the last decade, most startups that grew to become valuable businesses chose to go public. Late-stage startups with reported valuations over $1 billion used to be so rare that venture capitalist Aileen Lee called them “unicorns.” When she coined …

Ownership Piercing

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In a new article, I build upon the paradox of ownership. My central thesis is that those who own are not always in control; therefore, those who control should be held accountable like the owners would if they were …

Shearman & Sterling Discusses Financial Regulators’ Request on How Firms Use AI

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On March 29, the Federal Reserve Board, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the National Credit Union Administration (the “Federal Agencies”) issued a request for information (“RFI”) …

The Shareholder in France and the U.S.: Comparing Corporate Legal Priorities

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The fundamental question in the law of business organizations – what is the purpose of the corporation? – contains a related question of constituencies and, therefore, priorities among them: Whom does the corporation serve?  If, for example, the purpose that …

Prosocial Antitrust

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Recent developments have placed antitrust law on a collision course with corporate purpose. In a new paper, I reveal the unforeseen negative impacts of this conflict and provide a roadmap for avoiding them.

Businesses and investors are increasingly embracing …

ESG Incidents and Shareholder Value

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Corporations increasingly integrate environmental, social, and governance (ESG) issues into their business practices and signal this by committing to sustainability initiatives, such as the UN Global Compact or the 2019 Business Roundtable Statement on the Purpose of a Corporation. This …

Market Myopia’s Climate Bubble

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A growing number of financial institutions, from BlackRock to the Bank of England, have reached the conclusion that markets are not accurately assessing climate change-related risks. European Central Bank President Christine Lagarde recently warned that central bankers “will have to …

Corporate Venture Capital

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Why are venture capitalists the winners in the startup funding game?  VCs have funded most of the big-name startups that now dominate the NASDAQ and, in a sense, have been the only game in town for high-growth startups needing millions …

Sullivan & Cromwell Discusses Bill to Strengthen Regulators’ Power to Block Mergers

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On February 4, 2021, Senator Amy Klobuchar, chair of the Antitrust Subcommittee of the Senate Judiciary Committee, introduced a bill entitled “The Competition and Antitrust Law Enforcement Reform Act” (the “Bill”).  If enacted, the Bill would fundamentally revise longstanding U.S. …

Cleary Gottlieb Discusses New EU ESG Disclosure Obligations for Financial Services Firms

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Over a year ago, on December 29, 2019, Regulation (EU) 2019/2088 on sustainability-related disclosures for the financial services sector (the “Sustainable Finance Disclosure Regulation”, or “SFDR”) entered into force. Just a few months remain before key …

Domesticating Foreign Finance

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Barclays, Credit Suisse, Deutsche Bank, UBS, and other foreign banks played an outsized role in the 2008 financial crisis that cost U.S. households trillions of dollars of wealth. As credit markets froze, foreign banks’ U.S. offices experienced extreme stress and …

Passive Exit

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Economist Albert O. Hirschman (1970) classically set out the two alternatives facing dissatisfied members of an organization: They can voice displeasure or exit for greener pastures. Hirschman’s model has long explained the tradeoff facing shareholders of a poorly governed firm: …

Paul Weiss Discusses SEC Proposal to Permit Offering Gig Workers Equity Compensation

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The SEC has proposed amendments that would permit, for a temporary five-year trial period, companies to offer equity compensation to “platform workers” (gig economy workers who provide services by means of an internet or other technology based marketplace platform) under …

Skadden Discusses the Intersection of Sustainability Agreements and Antitrust Laws in the EU

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Sustainability issues are increasingly high on the list of competition policy priorities both at the European Union and member state levels. The European Commission (EC) and national competition authorities are actively rethinking how competition policy can better support the transition …

Wachtell Lipton Discusses Workplace Wellness and Employee Mental Health As Investor Engagement Priorities

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With the prospect of global vaccines on the horizon, companies worldwide continue to address the challenges of pandemic management and recovery on their businesses, the communities and constituencies they serve and especially on their employees.  As companies seek to prioritize …

Latham & Watkins Discusses IBOR Fallbacks Protocol and Supplement from ISDA

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On October 23, 2020, the International Swaps and Derivatives Association, Inc. (ISDA) published its IBOR Fallbacks Protocol (Protocol) and Supplement to the 2006 ISDA Definitions (Supplement) in anticipation of the expected discontinuation of the London Interbank Offered Rate (LIBOR) at …

Banking Bailout Law

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Bank bailouts during periodic financial crises aim to stop financial panic and restore the stability of the financial system. Even if they are undesirable, future bank bailouts are unavoidable due to political and political economy reasons, whether or not they …