Securities Regulation

Activist Short Selling Today: The Two Sides of the Coin

By John C. Coffee, Jr. July 7, 2020 by renholding

Two extraordinary accounting scandals — one at Luckin Coffee Inc. in China and the other at Wirecard AG, the German digital payments firm — have revealed brazen and bankrupting frauds, directed by the most senior executives at each firm. Together, …

Did Congress Trade Ahead on News of Covid-19?

By John W. Goodell and Toan Luu Duc Huynh July 3, 2020 by renholding

In a new paper,[1] we study the impact on U.S. stock prices of news stories about accusations that several members of Congress traded ahead of private material information about COVID-19. The lawmakers traded stocks during the early stages of …

The Role of Investor Attention in Seasoned Equity Offerings

By Thomas Chemmanur, Karen Simonyan, Yu Wang and Xiang Zheng July 2, 2020 by renholding

Many studies of seasoned equity offerings (SEOs) have attempted to explain the decline of a company’s stock price after it announces an SEO (see, e.g., Asquith and Mullins (1986) or Masulis and Korwar (1986)). The literature has focused on the …

Davis Polk Discusses NYSE’s New Proposal on Direct Listings

By Marcel Fausten, Joseph Hall, Byron Rooney, Sarah Solum and Richard Truesdell, Jr. July 1, 2020 by renholding

On June 22, the New York Stock Exchange (NYSE) filed a proposed rule change with the Securities and Exchange Commission that would permit companies to raise capital in a direct listing. The NYSE had previously proposed a rule change, which …

SEC Update on Regulatory Relief During the Pandemic

By Jay Clayton, William Hinman, Dalia Blass and Brett Redfearn June 29, 2020 by renholding

The U.S. Securities and Exchange Commission’s efforts in response to the COVID-19 pandemic are centered, first and foremost, on the health and safety of our employees and all Americans.  The Commission’s recognition of the corresponding need of market participants to

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SEC Chief Accountant on Importance of High-Quality Financial Reporting in Light of Covid-19

By Sagar Teotia June 25, 2020 by renholding

On April 3, 2020, the Office of the Chief Accountant (OCA) issued a statement[1] regarding the importance of high-quality financial reporting in light of the significant impacts of COVID-19.[2]  At that time, in addition to facing a number

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Explaining Dirks

By Andrew Vollmer June 19, 2020 by renholding

Dirks v. SEC established the fraud claim for tipping as part of the insider trading prohibition in the federal securities laws.  An essential element of the claim was proof that the insider personally benefited from disclosing confidential information to the …

SEC Chair Speaks on Small Business Capital Formation

By Jay Clayton June 19, 2020 by renholding

Welcome to the 39^th Annual Small Business Forum. I want to thank Martha and the staff in the Office of the Advocate for Small Business Capital Formation – that includes Colin, Jenny, Jessica, Julie, Malika and Todd – for

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SEC Chair Clayton Speaks on Municipal Securities Disclosure

By Jay Clayton June 17, 2020 by renholding

Good afternoon everyone. Thank you to the Office of Municipal Securities for organizing this conference.  And thank you to all the panelists for taking time to join us today.[1]

State of the Municipal Securities Market

Since December 2018, when

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Shining a Light on Strategically Leaked Plans of Activist Investors

By Ryan Flugum and Matthew E. Souther June 15, 2020 by renholding

On October 12, 2015, an activist hedge fund we’ll call John Doe Management filed a Form 13D, disclosing 5.5 percent ownership and an intent to pursue an activist campaign in a target firm we’ll call Industrial Corp (IC). The next …

Does Reducing Disclosure Mean Fewer Pre-IPO Lawsuits?

By Burcu Esmer, N. Bugra Ozel and Suhas A. Sridharan June 12, 2020 by renholding

Can silence solve problems that words cannot?  The Securities and Exchange Commission (SEC) hopes so, because this premise underlies the confidential filing provision of the Jumpstart Our Businesses (JOBS) Act.  But how firms benefit from confidential filings remains unclear, complicating …

Davis Polk Discusses the SEC and Inadequate Perk Disclosure

By Robert Cohen, Ning Chiu, Joseph Hall, Betty Moy Huber and Kyoko Takahashi Lin June 10, 2020 by renholding

A $900,000 fine is a reminder for companies to use care in tracking and disclosing all elements of executive compensation.

Between 2015 and 2019, Argo Group International Holding, Ltd. reported some $1.2 million in perks and similar personal benefits paid …

Paul Weiss Discusses Increased Burden of Pleading Corporate Scienter

By Susanna M. Buergel, Andrew J. Ehrlich, Brad S. Karp, Daniel J. Kramer, Richard A. Rosen and Audra J. Soloway June 5, 2020 by renholding

On May 27, the Second Circuit issued a ruling that significantly heightens the already heavy burden plaintiffs face in pleading corporate scienter.  The Second Circuit affirmed dismissal of a putative securities class action against Kimberly-Clark Corporation and Avanos Medical, Inc. …

The SEC’s Covid-19 Disclosure Guidance Is a Litigation Trap

By Andrew Vollmer June 4, 2020 by renholding

The Securities and Exchange Commission (SEC) has been putting pressure on companies that regularly file public reports to make detailed statements about the effects of the coronavirus pandemic on their businesses. Given the many uncertainties about those effects, the disclosures …

The Vanishing IPO Puzzle

By Thomas J. Chemmanur, Jie (Jack) He, Xiao (Shaun) Ren and Tao Shu June 3, 2020 by renholding

The number of private firms going public in the U.S. has declined significantly since 2000. A related phenomenon is that most private firms that “exit” (change ownership structures to allow early equity investors such as entrepreneurs and venture capitalists to …

Why the U.S. Is Lagging on ESG Disclosure Reform

By Virginia Harper Ho June 2, 2020 by renholding

Over the past five years, international organizations ranging from the United Nations and the G20 to the World Economic Forum and the International Organization of Securities Commissioners (IOSCO) have advocated expanding environmental, social, and governance (“ESG”) or “non-financial” reporting by …

SEC Chairman Speaks to Fixed Income Market Structure Advisory Committee

By Jay Clayton June 2, 2020 by renholding

Thank you, Michael [Heaney]. Good morning everyone, and welcome to this year’s second meeting of the Fixed Income Market Structure Advisory Committee. Thank you for joining us. I am glad we are able to meet virtually today.

I would like …

Chairman Clayton Speaks to SEC’s Asset Management Advisory Committee

By Jay Clayton May 28, 2020 by renholding

I look forward to hearing the Committee’s insights into the effects of the pandemic on the asset management industry and, in particular, our long-term Main Street investors.[1]  An essential component of our national response to, and recovery from, COVID-19

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Commissioner Peirce Speaks to SEC Investor Advisory Committee

By Hester M. Peirce May 26, 2020 by renholding

Thank you Anne [Sheehan] and other members of the committee for arranging an impressive list of panelists to share their views and perspectives on the important topics on today’s agenda.  The committee has not let COVID-19 stop it from holding

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Making Sense of Out-of-Pocket Damages

By Richard A. Booth May 20, 2020 by renholding

Most securities fraud class actions under SEC Rule 10b-5 involve revelation of negative information about the defendant company that should have been disclosed earlier – bad news that (allegedly) has been covered up by company agents. The standard remedy in …