“Public” Mutual Funds

The Big 3 mutual-fund managers (BlackRock, State Street, and Vanguard) have amassed incredibly large public-company holdings through the array of mutual funds they oversee.  As a result, they now play a pivotal role in corporate governance in many of the world’s largest and most important companies.

A key concern is whether the Big 3 use their powerful voice in corporate affairs to good effect.  Professors Lucien Bebchuk and Scott Hirst argue that they neglect their oversight obligations because of agency costs;[1] Professors Jill Fisch, Asaf Hammadi, and Steven Davidoff Solomon (“FHDS”) counter that the Big 3 have sufficient competitive … Read more

Cost-Benefit Analysis and the Conflict Minerals Rule

In § 1502 of Dodd-Frank, Congress instructed the SEC to draft rules requiring public companies to disclose their use of “conflict minerals” originating in and around the Democratic Republic of the Congo (DRC). Coined the Conflict Minerals Rule, the statute is based on the notion that investor accountability paves the way for socially conscious corporate behavior. The suspicion was that money from U.S. companies was flowing to warlord-controlled mines in the region and thereby fueling human rights abuses by such groups. The hope was that improved transparency ushered in by the Rule would cause companies to turn off the spigot.… Read more

The Case for a Junior Equity Market

The following post comes from Professor Jeff Schwartz of the University of Utah S.J. Quinney College of Law:

The influential SEC Advisory Committee on Small and Emerging Companies recently approved a new set of recommendations.  The boldest among them is the committee’s unanimously-endorsed proposal that the SEC encourage the creation of a junior equity market for small and emerging firms.

Here is why this makes sense.  Over the last fifteen years, the traditional public markets, like the NYSE and NASDAQ, have become increasingly inhospitable places for all but the largest public companies.  Unsurprisingly, this shift has been accompanied by a … Read more

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Editor's Tweet: Professor Jeff Schwartz of the University of Utah discusses the case for a junior equity market.