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Corporate Governance
Are Hedge Funds Good for Firms they Target? Look at the Effects on Their Industry Competitors!
Since the late 1990s, activist hedge funds have become the dominant face of shareholder activism, essentially taking over an arena that was once dominated by pension funds and mutual funds. Hedge fund activism (HFA) has attracted substantial public attention because …
PwC discusses Bank Culture: It’s About More Than Bad Apples
The US Federal Reserve (Fed) again expressed concerns about the culture at financial institutions this month.[1] This has been a recurring theme since the financial crisis, as regulators in the US and abroad have hit industry players with steep …
In Defense of Corporate Persons
Corporate personhood is getting a bad name.
After Citizens United v Federal Election Decision in 2010, protecting the First Amendment rights of corporations to spend money in elections, the nation has seen the development of a broad-gauged movement to overturn …
Davis Polk explains DOJ Incorporation of Yates Memo’s Focus on Individual Prosecutions into U.S. Attorneys’ Manual
On November 16, 2015, Deputy Attorney General Sally Quillian Yates gave a speech[1] regarding the implementation of the Department of Justice’s recent policy initiatives to facilitate the prosecution of individuals in corporate cases outlined in the “Yates Memo,” issued …
Tax-Free Perks Abound (At Least for Some)
Skadden discusses Glass Lewis Issuing 2016 US Proxy Policy Guidelines
Proxy advisory firm Glass Lewis recently issued its U.S. voting policy guidelines for the 2016 proxy season. The guidelines include a few key changes, a summary of which is outlined below.
Conflicting Shareholder Proposals. Conflicting shareholder proposals relating to …
Macroprudential Policy: What Does It Really Mean
The global financial crisis forced regulators to realize that traditional monetary measures cannot adequately ensure financial stability. As an alternative, macroprudential policy can complement and supplement monetary policy in dealing with macroeconomic as well as stability issues. Yet the debate …
Wachtell Lipton discusses Staggered Boards, Long-Term Investments and Long-Term Firm Value
Recent econometric studies (“empirical evidence”) definitively rebut the position taken by the Harvard Law School Shareholder Rights Project (SRP) that classified boards are associated with lower firm value and inferior outcomes for shareholders. After correcting serious statistical and econometrical flaws…
The Nonprime Mortgage Crisis: Willful Blindness and Positive Feedback Lending
The Wall Street Journal recently reported that federal prosecutors are pursuing criminal cases against bank executives for allegedly selling flawed mortgage securities. The crux of the cases? That the bankers ignored warnings they were packaging too many shaky mortgages into …
Gibson Dunn explains Resolution Triumphs: Proposed U.S. TLAC and Long-Term Debt Requirements for G-SIBs
At an October 30th open meeting, the Board of Governors of the Federal Reserve System (Federal Reserve) approved a proposed rule (Proposed Rule) that would impose Total Loss Absorbing Capacity (TLAC) and long-term debt (LTD) requirements for globally significant …
Corporate Social Responsibility and Environmental Sustainability
In a recently published book chapter,[1] I explore the prospects for corporate social responsibility (CSR) as a partial solution to the environmental sustainability challenge. Many large corporations affect the environment through their operational activities and their choices about product …
Millstein Governance Forum on December 10, 2015 at CLS
On December 10th, Columbia Law School’s Millstein Center on Global Markets and Corporate Ownership will be hosting its 10th annual Millstein Governance Forum.
For the past decade, the Forum has served as one of the premiere …
Who Should Pick Board Members?
There is a frenzied rush for shareholders to get a new ‘right”, the right to put up their own nominees for board membership. Boards of directors, so goes a dominant opinion, are not to be fully trusted to pick the …
Fried Frank explains BMC Software and the Court’s Ongoing Incremental Path to Increased Reliance on the Merger Price in Appraisal Cases
The Delaware Court of Chancery has been on a slow but clear path toward increased reliance on the merger price in determining fair value in appraisal cases. While the court’s reliance on the merger price as the best indicator of …
Too Big to Tax? Vanguard and the Arm’s Length Standard
Vanguard is the world’s largest complex of mutual funds, with over $3 trillion in assets under management, including $215 billion added in 2014. Vanguard’s main attraction to investors is its low costs. Profs. Freeman and Brown (2000) report that the …
The Influence of Political Bias in State Pension Funds
The propensity to favor local investments is not restricted to individual investors alone but is also common among institutional investors. It also exists in common equity and private equity portfolios of state public pension funds. This phenomenon, known as local …
On Thin Ice: Climate Change, Exxon, the NYAG and the Martin Act
The New York Attorney General, Eric T. Schneiderman, created a stir this month by opening an investigation of Exxon Mobil Corp. pursuant to the Martin Act (New York’s “Blue Sky” Statute).[1] Various Congressmen, Senators and environmental groups also asked …
Gibson Dunn discusses Depomed Decision Highlighting Importance of Careful Monitoring of M&A Non-Disclosure & Use Obligations
On November 19, 2015, in Depomed, Inc. v. Horizon Pharma plc, the Superior Court of California, County of Santa Clara granted Depomed’s request for a preliminary injunction to enjoin Horizon’s hostile exchange offer to acquire Depomed. The injunction was …
Unions and Shareholder Proposals
Invigorating the shareholder proposal process is a top priority for corporate governance reformers. But the possibility that self-interested shareholders could use proposals to harass or pressure managers to accommodate their interests is a cause for concern. Union shareholders attract more …