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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 …