Securities Regulation

How Startup Attorneys Create Value and Engineer Exits

By Rachel Landy April 25, 2023 by renholding

For nearly 40 years, scholars have debated whether business lawyers add value to transactions. The debate essentially started with an influential article by Professor Ronald Gilson, who characterized business lawyers as “transaction cost engineers.” These engineers optimize the costs of …

SEC Chair Testifies Before U.S. House Committee on Financial Services

By Gary Gensler April 24, 2023 by renholding

Good morning, Chairman McHenry, Ranking Member Waters, and members of the Committee. Thank you for inviting me to testify today. As is customary, I will note that my views are my own, and I am not speaking on behalf of …

How Regulation of Share Buybacks and Insider Trading Compare in the U.S. and Europe

By Lance Ang April 21, 2023 by renholding

Share buybacks have returned with a vengeance following the COVID-19 pandemic.[1] The average proportion of buybacks out of aggregate shareholder payouts in 2019-2021 was higher than the historical average during 2005-2019 in the U.S. and Europe.[2] These developments …

Davis Polk Discusses SEC’s Proposed Safeguarding Rule for Registered Advisers

By Gregory S. Rowland, Leor Landa, Michael S. Hong, Zachary J. Zweihorn and Sarah E. Kim April 20, 2023 by renholding

On February 15, 2023, the SEC proposed a sweeping new rule (Proposed Rule) which would replace current Rule 206(4)-2 (Custody Rule) under the Investment Advisers Act of 1940 (Advisers Act or Act). The Custody Rule was originally adopted in 1962 …

Do Managers Factor Litigation Risk into Their Environmental Disclosure Decisions?

By Scott Robinson, Nikki Skinner and Jasmine Wang April 19, 2023 by renholding

The SEC has proposed mandating climate disclosure to meet investor demand for information about the environmental risks firms face and managers’ plans to mitigate their firms’ environmental impacts.  Yet critics worry that the proposed mandate would increase risks of litigation …

Wachtell Lipton Discusses Constitutional Challenges to Ongoing SEC and FTC Administrative Proceedings

By John F. Savarese, Kevin S. Schwartz, Noah B. Yavitz, Adam L. Goodman and Jacob Miller April 19, 2023 by renholding

We previously reported on the Supreme Court’s grants of certiorari in SEC v. Cochran and Axon Enterprise, Inc. v. FTC, in which the Court agreed to consider whether federal district courts have jurisdiction to hear constitutional challenges to the …

SEC Chair Gensler Speaks on Alternative Trading Systems and the Definition of an Exchange

By Gary Gensler April 17, 2023 by renholding

Today [April 14], the Commission is considering whether to issue a supplemental release to our January 2022 proposal requiring significant trading platforms—including in the Treasury markets—to come under important rules for the markets. I believe this supplemental release would help

…

Cooley Discusses the Risk of Liability from Sustainability Reports

By Cydney Posner April 14, 2023 by renholding

In April of last year, as described in this press release, the SEC filed a complaint against Vale S.A., a publicly traded (NYSE) Brazilian mining company and one of the world’s largest iron ore producers, charging that it made “false …

SEC Chair Testifies on FY 2024 Budget Request Before House Subcommittee

By Gary Gensler April 6, 2023 by renholding

Good afternoon, Chair Womack, Ranking Member Hoyer, and members of the Subcommittee. Thank you for inviting me to testify today on the Securities and Exchange Commission’s Fiscal Year (FY) 2024 budget request. As is customary, I’d like to note that

…

Skadden Discusses Proposed SEC Expansion of Custody Rule Safeguards for Investment Advisers

By Anna Rips, Anastasia T. Rockas, TJ Wells and Marc Sana April 4, 2023 by renholding

On February 15, 2023, the Securities and Exchange Commission (SEC) proposed new rules and amendments (Proposal) to Rule 206(4)-2 (Custody Rule) under the Investment Advisers Act of 1940 (Advisers Act). The Proposal would, if adopted as written:

• Redesignate the current

…

Davis Polk Discusses New SEC Cybersecurity Requirements for Regulated Market Participants

By Robert A. Cohen, Greg D. Andres, James W. Haldin, Gabriel D. Rosenberg and Zachary J. Zweihorn March 29, 2023 by renholding

The SEC proposed an array of new cybersecurity-related requirements in the form of: (1) an expansive new Rule 10, (2) extending the reach of Regulation SCI, and (3) expanding Regulation S-P, including to require incident response programs. The SEC also …

Gibson Dunn Offers 2022 Year-End Securities Litigation Update

By Craig Varnen, Brian M. Lutz, Monica K. Loseman, Jefferson E. Bell, and Mark H. Mixon, Jr. March 28, 2023 by renholding

Although the number of securities lawsuits filed this year remained steady compared to 2021, we have seen many notable developments in securities law. This year-end update provides an overview of the major developments in federal and state securities litigation since …

Climate Disclosure Line-Drawing and Securities Regulation

By Virginia Harper Ho March 27, 2023 by renholding

In 2022, the Securities and Exchange Commission (SEC) proposed climate disclosure rules requiring each public company to tell investors specifically about the financial effects of climate risk on the company and how the company assesses those risks. The rules will …

Covington Discusses SEC’s Focus on Cybersecurity Incident Disclosure

By David Engvall, Ashden Fein, Gerald Hodgkins, Ian Macdonald and Micaela McMurrough March 27, 2023 by renholding

On March 9, 2023, the Securities and Exchange Commission (the “SEC”) Enforcement Division’s Crypto Assets and Cyber Unit announced a settlement with Blackbaud, Inc. involving allegations of inadequate disclosure controls and procedures and material misstatements and omissions concerning a 2020 …

SEC Chair Gensler Speaks on Requirement to File Electronically

By Gary Gensler March 23, 2023 by renholding

Today [March 22], the Commission is considering a proposal under the Exchange Act to require broker-dealers and other registrants to submit forms electronically. I am pleased to support this proposal because, if adopted, it would advance the Commission’s efforts to

…

Shadow Trading, Corporate Investments, and Macroeconomic Risk

By Yoon-Ho Alex Lee, Lawrence Liu and Alessandro Romano March 22, 2023 by renholding

Corporate insiders engage in “shadow trading” when they use private information about their own firm to trade in the shares of economically connected companies such as suppliers, customers, or competitors. While legal scholars have long recognized that shadow trading can …

SEC Chair Gensler on Recent Bank Failures, Enhanced Cybersecurity for Market Entities

By Gary Gensler March 16, 2023 by renholding

Good morning. This is an open meeting of the U.S. Securities and Exchange Commission on March 15th, 2023. I want to welcome members of the public who are listening in.

Before we get to today’s agenda, I want to address

…

How Changes to Form 8-K Disclosure Rules Affect Corporate Innovation

By Yangyang Chen, Yue Luo, Jeffrey Pittman and Qin Tan March 15, 2023 by renholding

Studies have shown that the disclosure of information can affect a company’s technological innovation in different ways, depending on how complete or timely it is. The complete disclosure can promote innovation by making capital providers more receptive to providing financing, …

How Litigation Risk Affects Companies’ Liquidity

By Tommaso Oliviero, Min Park and Hong Zou March 7, 2023 by renholding

Securities litigation has become a major source of risk to businesses. From 2007 to 2016 the number of securities class actions (SCAs) filed each year increased by roughly 70 percent in the U.S. and by 115 percent worldwide (PricewaterhouseCoopers, 2017).…

SEC Commissioner Speaks at Columbia’s Going Public in the 2020s Conference

By Mark T. Uyeda March 7, 2023 by renholding

Good morning and thank you, [Columbia Law School] Dean [Gillian] Lester, for the introduction. I am honored to speak to this distinguished group of academics, practitioners, and regulators at today’s “Going Public in the 2020s” conference. My remarks reflect solely

…