Marshalling Reputation to Minimize Problematic Business Conduct

By Claire A. Hill June 28, 2019 by renholding

Notwithstanding the attention corporate reputation gets as a concept, why it is valued, what it requires, and what is incompatible with a good reputation are given surprisingly short shrift. Institutional investors are increasingly pressuring companies to care about more than …

The Effect of Corporate Visibility on Social Responsibility

By Zhichuan Frank Li, Taylor Morris and Brian Young June 27, 2019 by renholding

The general public can be a stakeholder in a firm, even when it does not have direct ownership. And as the public becomes more vested in a firm’s actions, the firm may be more likely to engage in corporate social …

Arnold & Porter Discusses Federal Reserve Developments on Confidential Supervisory Information

By Richard Alexander, Michael Mancusi, Brian McCormally, Charles Yi and Kevin Toomey June 27, 2019 by renholding

The Board of Governors of the Federal Reserve System (FRB) issued two notable documents over the past two weeks involving confidential supervisory information (CSI): a cease and desist order against a former bank employee for improper handling of CSI and …

The Long-Term Effects of Shareholder Activism

By Emmanuel Pezier June 26, 2019 by renholding

Shareholder activism is growing in popularity across the world and appears to deliver mostly benign results for firms and stockholders. However, testing the effects of activism is problematic. For at least 30 years, researchers have recognized the difficulty of causal …

Addendum

By Reynolds Holding June 26, 2019 by renholding

Subsequent to the publication of yesterday’s Statement of Concerned Securities Law Professors, Professor Roberta Karmel, Centennial Professor of Law at Brooklyn Law School and a former Commissioner of the Securities and Exchange Commission, advised us that she also wanted to …

Paul Weiss Offers M&A at a Glance for May 2019

By Matthew W. Abbott, Scott A. Barshay, Angelo Bonvino, Ariel J. Deckelbaum, Jeffrey D. Marell and Robert B. Schumer June 26, 2019 by renholding

M&A activity in the U.S. and globally for the month of May was generally consistent with April levels. The most notable changes in May were an increase in the number of sponsor-related deals by almost 75% to 187 in the …

Statement of Concerned Securities Law Professors Regarding Investment Advisers and Fiduciary Obligations

By Drafting Committee June 25, 2019 by renholding

We circulate this statement as law professors specializing in the field of securities regulation who are concerned that the Securities and Exchange Commission (the “Commission”) has moved in a new direction that is both contrary to its past practice and …

Gibson Dunn Discusses New EU Sanctions Framework Aimed at Cyber-Attack Threats

By Judith Alison Lee, Adam M. Smith and Richard W. Roeder June 25, 2019 by renholding

In a previous client alert, we highlighted a recent U.S. sanctions regime aimed at deterring threats of election interference [1], which further expanded the U.S. menu of cyber-related sanctions.[2] Across the Atlantic, as a step forward that demonstrates …

Assessing Corporate Character as a Basis for Criminal Sentencing

By Matthew Caulfield and William S. Laufer June 24, 2019 by renholding

What is the purpose or motivation of corporate criminal punishment? What kinds of punishments ought we impose? While such questions may seem lofty, they are important nonetheless. Strict pragmatists who reject the goal of developing penal theory and focus only …

SEC Commissioner Peirce Talks Flaws in Scoring Companies on Environmental, Social, and Governance Factors

By Hester M. Peirce June 24, 2019 by renholding

Thank you, Ben [Zycher]. I will begin with the standard disclaimer. My remarks represent my views and not necessarily those of the Commission or my fellow Commissioners.

I will next address a question that is undoubtedly in the mind of

…

Blockchain Developers and Fiduciary Duty: An Ill-Fitting Framework

By Raina S. Haque, Rodrigo Seira Silva-Herzog, Brent A. Plummer and Nelson M. Rosario June 21, 2019 by renholding

By enabling new modes of human interaction, technological advancements catalyze the evolution of regulatory frameworks, tools, and approaches. The rate at which computer technology evolves outpaces that of legislation and rule-making. Our economy is increasingly structured not only by traditional …

Why the New Tax Law Offers a Questionable Incentive to Incorporate

By Michael Knoll June 20, 2019 by renholding

This spring, both Apollo and Blackstone announced that they would be converting from publicly traded partnerships to subchapter C corporations. In changing their legal forms of organization, they will join two other prominent private equity firms, Ares and KKR, which …

ISS Discusses U.S. Board Diversity Trends in 2019

By Kosmas Papadopoulos June 20, 2019 by renholding

As the U.S. annual shareholder meeting season is coming to an end, we review the characteristics of newly appointed directors to reveal trends director in nominations. As of May 30, 2019, ISS has profiled the boards of 2,175 Russell 3000 …

How Taxing Short-Term Share Profits Can Foster Innovation

By Eric He, Martin Jacob, Rahul Vashishtha and Mohan Venkatachalam June 19, 2019 by renholding

If short-termism shackles innovation, how do we break the chains? Our evidence suggests that increasing capital gains taxes for investors on short-term share appreciation is one possible solution.

Research shows that myopic focus on short-term earnings hurts investments in research …

Inside the Black Box of Private Merger Negotiations

By Tingting Liu and Micah S. Officer June 18, 2019 by renholding

Several authors (Boone and Mulherin, 2007[1]; Aktas, de Bodt, and Roll, 2010[2]) have noted a paradox in the mergers and acquisition (M&A) market since 1990. While there have been few competing public bidders, hostile offers, or …

ISS Discusses Why EVA Is a Better Measure of Investment Value Than EBITDA

By Bennett Stewart June 18, 2019 by renholding

There’s no doubting the popularity of EBITDA—earnings before interest taxes depreciation and amortization—as a measure of investment value. Analysts like EBITDA because it removes the vagaries of depreciation and taxes and is unaffected by company leverage ratios. EBITDA is certainly …

Index Funds and the Cost of Engagement

By Patrick Jahnke June 17, 2019 by renholding

Institutional ownership of companies has grown to the point that institutions today own approximately 80 percent of the market value of U.S. stocks.[1] Recent academic research explores this rising ownership concentration and debates the growing importance of “passive” or “index” …

Arnold & Porter Discusses the End of LIBOR

By Gregory Harrington and Arturo Caraballo June 17, 2019 by renholding

As alerted in our previous Advisories, LIBOR, the “world’s most important number,” is being phased out. Created almost 50 years ago on August 15, 1969—opening day of the Woodstock music festival—LIBOR began as a floating, market-determined interest rate for syndicated …

“Cyan,” Reverse-“Erie,” and the PSLRA Discovery Stay in State Court

By Wendy Gerwick Couture June 14, 2019 by renholding

In the wake of the Supreme Court’s holding in Cyan, Inc. v. Beaver County Employees Retirement Fund[1] that state courts have concurrent jurisdiction over Securities Act claims, even if asserted as class actions, there has been an influx of …

SEC Commissioner Peirce Talks Exchange-Traded Funds

By Hester M. Peirce June 14, 2019 by renholding

Welcome to all of you. We are so delighted to be able to host you at the Securities and Exchange Commission for today’s workshop on exchange-traded funds (ETFs). The discussion today is sure to be fascinating. Aside from my greeting,

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The CLS Blue Sky Blog

Columbia Law School's Blog on Corporations and the Capital Markets

June 2019