Columbia Law School
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Finance & Economics
Benefit Corporations: Do the Benefits Exceed the Costs?
Benefit corporations are a hot new innovation in corporate law. In just a few years over half of the states have adopted benefit corporation statutes, aiming to provide a form of business association adapted to social enterprises which blend profit-making …
Morrison & Foerster reports SEC Settles Charges that Investment Adviser Failed to Adequately Disclose Changes in Investment Strategy
The SEC settled charges with two investment advisers to a closed-end fund based on allegations that the advisers failed to adequately disclose a change in investment strategy to the fund’s board and its investors. The SEC also found that shareholder …
Proxy Access Revisited: Regulatory Function of the Rule 14a-11 Formula
Proxy access grants shareholders the right to place their director nominees on corporate proxy materials. The Securities and Exchange Commission (the “SEC”) has been trying to regulate proxy access for almost 70 years since 1942. The most recent SEC regulations …
On the Role of Companies’ External Securities Law Advisors – Facilitators or Gatekeepers?
In order to retain their access to large scale capital at low cost, there is no question that companies need to actively manage their compliance with the ever-increasing regulatory requirements in the United States pertaining to corporate disclosure. Managing this …
PwC explains why Broker-Dealers Should Lock in Liquidity
The credit crisis of 2008 highlighted the criticality of effective liquidity management and demonstrated the difficulties broker-dealers face without adequate funding sources. In response, the Financial Industry Regulatory Authority (“FINRA”) has been taking steps to impose new requirements that will …
False Statements of Belief as Securities Fraud
Is a CEO’s statement that “I believe the TVs we manufacture have the highest resolution on the market” potentially actionable as an “untrue statement of material fact” under § 10(b) of the Securities Exchange Act and Rule 10b-5 promulgated thereunder? …
Cahill Gordon discusses FASB’s Recent Exposure Drafts on Determinations of Materiality
The Financial Accounting Standards Board (the “Board”) recently issued two exposure drafts that recommend a series of amendments related to determinations of materiality.1 These efforts form part of the Board’s ongoing disclosure framework project, an initiative dedicated to improving …
The Mechanisms of Derivatives Market Efficiency
In their influential 1984 article The Mechanisms of Market Efficiency[1], Ron Gilson and Reinier Kraakman put forward a causal framework for understanding how new information becomes incorporated into the price of publicly-traded equity securities. This framework was grounded …
Wachtell Lipton discusses SEC Narrowing Shareholder Proposal Exclusion for Rule 14a-8 Proposals that “Directly Conflict” with Company Proposals
Yesterday [October 22, 2015], the Staff of the Securities and Exchange Commission’s Division of Corporation Finance issued Staff Legal Bulletin No. 14H. SLB14H formally narrows the long-standing approach to interpreting Rule 14a-8(i)(9), which permits a company to exclude a …
A Debate on the Morality of Insider Trading
Today, we host two pieces debating the potential for firm disclosed insider trading to occur without harm to the company, its investors and other market participants. John P. Anderson, Associate Professor, Mississippi College School of Law, proposes that under some …
The Importance of “The Law of Conservation of Securities”: A Reply to John P. Anderson’s “What’s the Harm in Issuer-Licensed Insider Trading?”
Professor John P. Anderson’s article, What’s the Harm in Issuer-Licensed Insider Trading [1] argues that my “Law of Conservation of Securities” has no moral relevance to the question whether to allow such trading.
A stock market insider trade has two …
What’s the Harm in Issuer-Licensed Insider Trading?
I have argued that insider trading is morally harmless where the issuer approves the trade in advance and makes certain ex ante and ex post public disclosures.[1] I have also suggested that reforming the law to permit such issuer-licensed …
Weil discusses Navigating Proxy Access: A Roadmap for the Board of Directors
The subject of “proxy access” represents another turning point in the corporate governance of public companies that many boards of directors will need to face, and for some, much sooner than later. Proxy access, which has come to the forefront …
Deterring Repeated Fraud
Any successful fraudster can tell you the golden rule of his trade: if no one notices your fraud, keep doing it. The possibility to repeat past success makes fraud very costly: for example, health care fraud accounts for one to …
What Kept Pre-Modern Credit Networks Afloat?
Despite having become a cliché, the past is not always a foreign country. When Craig Muldrew wrote in his book, Economy of Obligation, “Increasing consumption and investment in the expansion of production meant that household debt loads grew to …
Kirkland & Ellis discusses NOL Poison Pill – A Timely Prescription
With recent stock market volatility and sharp drops in stock market prices coupled with the continuing low interest rate environment, management and boards of directors of companies with significant net operating loss carryforwards (NOLs) may want to consider taking steps …
The Role of Creditor Protection and Judicial Enforcement on Credit Access
The quality of the legal system matters for firms’ access to bank loans: Strong creditor and property rights and a rigorous judicial enforcement system with short, cheap and simple proceedings create favourable conditions for bank lending.
Bank loans are a …
Gibson Dunn analyzes the CFPB’s Rulemaking to Curtail Arbitration Agreements Barring Class Actions in Consumer Financial Contracts
On October 7, 2015, the United States Consumer Financial Protection Bureau announced that it is “launch[ing] a rulemaking process” that is intended to impede the use of “pre-dispute arbitration agreements for consumer financial products and services.”[1] The proposal currently …
Was Bernanke Courageous?
As reflected in the title of the new memoir by Former Federal Reserve Chairman Ben Bernanke, The Courage to Act: A Memoir of a Crisis and Its Aftermath, Bernanke clearly believes that he and other Fed policymakers demonstrated exceptional …