December 2018

Toward More Efficient Corporate Knowledge

By Mihailis E. Diamantis December 27, 2018 by renholding

In a recent paper,[1] I argue that the criminal law needs what I call a functional approach to corporate knowledge.  When the law treats corporations as though they know things, it affects how they manage information.  Knowledge, in one …

How Does Private Firm Innovation Affect Anti-Takeover Provisions in Corporate Charters?

By Thomas J. Chemmanur, Manish Gupta and Karen Simonyan December 24, 2018 by renholding

The role of anti-takeover provisions (ATPs) in the corporate charters of firms has recently become a matter of considerable debate in the academic literature. On the one hand, earlier studies have argued that ATPs entrench firm management and therefore depress …

Debevoise & Plimpton Discusses SEC Enforcement Against Private Equity Advisers

By Jonathan Adler, Kenneth J. Berman, Robert B. Kaplan, Julie M. Riewe and Rebecca F. Silberstein December 24, 2018 by pss2150

On December 13, 2018, the U.S. Securities and Exchange Commission (“SEC”) announced a settled enforcement action against private equity adviser Yucaipa Master Manager, LLC (“Yucaipa”) for alleged negligent failure to disclose conflicts of interest and misallocation of fees and expenses …

The Effect of Common Ownership on Profits: Evidence from the U.S. Banking Industry

By Serafin Grundl and Jacob Gramlich December 21, 2018 by renholding

In recent years, large asset managers and other institutional investors have come to own increasingly large shares of firms that are competitors. For instance, BlackRock owns shares of both Bank of America and JPMorgan Chase. Such common ownership is prevalent …

Why Do Bankrupt Firms Have Such Complex Capital Structures?

By Kenneth Ayotte December 20, 2018 by renholding

Complex capital structures are prevalent in many recent high-profile Chapter 11 bankruptcy cases.  One recent example is Toys ‘R’ Us, whose debt structure was, as characterized by Bloomberg Businessweek, “as complex and precarious as a Jenga tower. [1]” It …

Wachtell Lipton Offers Thoughts for Boards of Directors in 2019

By Martin Lipton, Steven A. Rosenblum, Karessa L. Cain, Amanda S. Blackett and Kathleen C. Iannone December 20, 2018 by renholding

In recent years, it has become increasingly evident that the activism-driven corporate world is relatively fragile and is proving to be unsustainable, particularly when viewed in the broader context of rapidly changing political and social norms and increasing divisiveness across …

Why Dismantling Nonbank SIFI Regulation Is a Serious Mistake

By Jeremy C. Kress, Patricia A. McCoy and Daniel Schwarcz December 19, 2018 by renholding

The unnerving events of fall 2008 removed all doubt that investment banks and other nonbank financial firms can propagate systemic risk and endanger the world’s financial system.  In response, Congress instituted a robust system for regulating systemic risk posed by …

Paul Weiss Offers M&A at a Glance for November 2018

By Matthew W. Abbott, Scott A. Barshay, Angelo Bonvino, Ariel J. Deckelbaum, Jeffrey D. Marell and Taurie M. Zeitzer December 19, 2018 by renholding

With the exception of sponsor-related transactions, M&A activity in November 2018 generally declined. Deal volume by dollar value[1] decreased, by 9.1% to $141.10 billion in the U.S., and by 21.4% to $254.76 billion globally. The number of deals also …

What Can We Learn from Stock Prices?

By Joshua Mitts December 18, 2018 by renholding

Prices convey information.  Hayek (1945) put it this way: Prices “coordinate the separate actions of different people in the same way as subjective values help the individual to coordinate the parts of his plan.”  Stock prices, in particular, matter a …

Bitcoin Futures: From Self-Certification to Systemic Risk

By Lee Reiners December 18, 2018 by renholding

December 2017 marked a milestone in the short history of virtual currency. On Friday, December 1, 2017, the Chicago Mercantile Exchange Inc. (CME) and the CBOE Futures Exchange (CFE) self-certified new contracts for cash-settled bitcoin futures products. The self-certification process …

Dual Class Stock: What Is a Fair Compromise?

By John C. Coffee, Jr. December 17, 2018 by renholding

In my last post[1], I focused on the Council of Institutional Investors’ (“CII”) recent proposal to the New York Stock Exchange and Nasdaq to impose a listing condition that any super-voting rights on dual class stock must expire …

Kirkland & Ellis Discusses the FTC’s Approach to Private-Equity Strategic Deals

By Peter McCormack and Katie Drummonds December 17, 2018 by renholding

In the last decade, private equity sponsors increasingly have pursued “strategic” deals — transactions combining two or more competitors. The U.S. Department of Justice Antitrust Division (DOJ) and the Federal Trade Commission (FTC) have actively enforced the antitrust merger laws …

The Protection of Investors and the Compensation for their Losses: Australia

By Olivia Dixon and Jennifer G. Hill December 14, 2018 by renholding

Investor protection has been an ideal in corporate and securities law ever since the early 20^th century, when Berle and Means famously highlighted shareholder vulnerability in modern public corporations. In more recent times, investor protection has been treated as …

Transparency and the (E)valuation of Asset-Backed Securities

By Jed J. Neilson, Stephen G. Ryan, K. Philip Wang and Biqin Xie December 13, 2018 by renholding

In 2011, the commission appointed by Congress to investigate the causes of the financial crisis concluded that “a combination of excessive borrowing, risky investments, and lack of transparency put the financial system on a collision course with crisis” (The …

SEC Chair Clayton Talks Small Business Capital Formation

By Jay Clayton December 13, 2018 by renholding

Every year the SEC staff does a tremendous job identifying topics, selecting speakers and coordinating the behind the scenes work necessary to organize this all-day event focused on small business capital formation.[1]  Thank you Bill, Jennifer [Zepralka] and the

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Common Ownership: The Investor Protection Challenge of the 21st Century

By Robert J. Jackson, Jr. December 12, 2018 by renholding

Thank you so much, Scott [Hemphill], for that incredibly kind introduction.* It’s a real honor to be here with you—and to be invited to testify before the Federal Trade Commission (FTC). I share your commitment to making sure …

The Rise of Asian Equity Markets and the International Corporate Governance Dialogue

By Mats Isaksson December 11, 2018 by renholding

While there is a growing debate in the United States about a shift from public equity markets to private ownership models, Asian stock exchanges are steaming ahead. Last year a record 1,074 companies got listed in the region, and 43 …

Skadden Discusses Proposed Updates to Banking Rules for Derivative-Contract Exposure

By William J. Sweet, Jr., Mark D. Young, James A. Frazer, Collin P. Janus and Rachel Kaplan Reicher December 11, 2018 by renholding

On October 30, 2018, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency (collectively, the agencies) jointly invited comment on a proposed regulation that, if adopted, …

New York Attorney General Overreaches in Climate-Change Complaint Against Exxon

By Merritt B. Fox December 10, 2018 by renholding

The New York Attorney General (“NYAG”) recently filed a complaint against ExxonMobil alleging that the company violated the Martin Act, New York State’s securities law, by making material misstatements concerning how it was accounting for the possibility of increasingly stringent …

Sullivan & Cromwell Discusses Antitrust Developments at Justice Department

By Sullivan & Cromwell December 10, 2018 by renholding

On November 15, 2018, Assistant Attorney General Makan Delrahim delivered remarks at the American Bar Association Antitrust Section Fall Forum in which he discussed three recent settlements of ongoing civil and criminal investigations and highlighted efforts by the Antitrust Division …