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Thinking Holistically Before Dropping Quarterly Reporting

By James D. Cox August 27, 2018 by renholding

Robust capital markets are widely believed to signal economic vitality, and a reliable barometer of such vitality was historically a rising number of IPOs and listings. Yet, as we are experiencing record setting economic expansion, that barometer has failed us. …

Financial Reporting Frequency

By Donald C. Langevoort August 27, 2018 by renholding

I should be a prime candidate to support the lengthening of the financial reporting cycle from three to six months, as the White House—and many others—now say they want the SEC to do. I want public corporations to be more …

Quarterly Reporting and Market Liquidity

By Joshua R. Mitts August 27, 2018 by renholding

Trading in U.S. equity markets is fast and cheap. While proponents of ending quarterly reporting point to the dangers of short-termism, less frequent disclosure is also likely to lead to a decline in liquidity and to greater trading costs. The …

Cutting Disclosure Frequency Is the Wrong Solution to the Wrong Problem

By Charles K. Whitehead August 27, 2018 by renholding

President Trump has directed the Securities and Exchange Commission to study whether a public company’s reporting requirements should shift from a quarterly to semi-annual schedule. Doing so, according to the president, “would make business (jobs) even better in the U.S.” …

Voluntary Disclosure and Firm Visibility: Evidence from Initial Public Offerings

By Michael Dambra, Bryce Schonberger and Charles Wasley August 23, 2018 by renholding

Legal academics and practitioners have long emphasized the important role that disclosure plays in the initial public offering (IPO) process. Issuers and their underwriters provide information via a prospectus and corresponding IPO roadshow to mitigate the information gap between the …

SEC Chair Talks Investor Roundtables on Conduct Standards for Investment Professionals Rulemaking

By Jay Clayton August 23, 2018 by renholding

In April 2018, the Commission proposed for public comment a significant rulemaking package designed to serve our Main Street investors that would (1) require broker-dealers to act in the best interest of their retail customers, (2) reaffirm and in some

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What Happened to “Meaningfully Close Personal Relationship” in Insider Trading?

By Peter Henning August 22, 2018 by renholding

Did insider trading law almost devolve into an effort to define what kind of relationship a tipper and tippee must have for a defendant to be liable? And was any federal judge or jury qualified to say? Since the Second …

How the Level of Blame Affects Companies’ Willingness to Disclose

By Jason D. Schloetzer, AyungTseng, Teri Lombardi Yohn and Yeo Sang Yoon August 21, 2018 by renholding

What motivates a firm to disclose information rather than remain silent following a material, negative economic event? For example, why did oil companies issue multiple, detailed disclosures about oil spills caused by Hurricane Katrina and Hurricane Rita but not disclose …

Revisiting the SEC Ruling on Whether Cryptocurrencies are Securities

By Usman W. Chohan August 17, 2018 by renholding

In June 2018, the cryptocurrency community waited with baited breath for the Securities and Exchange Commission (SEC) decision on whether cryptocurrencies were securities, commodities, or something else.

If the commission treated them as securities, they would be subject to …

The Problematic Role of Computer Code in Initial Coin Offerings

By Shaanan Cohney, David A. Hoffman, Jeremy Sklaroff and David A. Wishnick August 16, 2018 by renholding

The Initial Coin Offering (ICO) is one of the stranger financial innovations in recent memory. Imagine if Coca-Cola had funded its initial deployment of vending machines through the sale of tokens its machines might one day require. Now replace soda …

Gibson Dunn Offers 2018 Mid-Year Update on Securities Litigation

By Monica Loseman, Matt Kahn, Brian Lutz and Laura O’Boyle August 15, 2018 by renholding

The continued explosion in the number of securities class action filings is once again the big headline in our half yearly update. The now-sustained increase in both the number of filings and average and median settlement amounts—including a five-fold increase …

The Power of Words: How SEC Comment Letters to Foreign Issuers Affect the Capital Markets

By Daniel Giamouridis, Kleopatra Koulikidou and Stergios Leventis August 6, 2018 by renholding

In our recent paper, we find that the tone of language in Securities and Exchange Commission (SEC) comment letters after enforcement reviews has capital market implications, which are amplified or abbreviated based on the strength of a given country’s enforcement.…

SEC Chair Issues Statement on Proxy Process Roundtable

By Jay Clayton August 1, 2018 by renholding

Shareholder engagement is a hallmark of our public capital markets, and the proxy process is a fundamental component of that engagement. In 2010, the Commission issued a concept release seeking public comment on whether the U.S. proxy system as a …

Is Silence Golden? Negative Effects of Mandatory Disclosure

By Sudarshan Jayaraman and Joanna S. Wu July 30, 2018 by renholding

“When you talk, you are only repeating what you already know. But if you listen, you may learn something new.” – Dalai Lama XIV

Disclosure regulation is a cornerstone of modern securities markets. Its economic consequences have been extensively studied …

Davis Polk Discusses Ninth Circuit Approval of Securities Suit Over Unsponsored ADRs

By Michael S. Flynn, Michael Kaplan, Neil A. Potischman, Sarah K. Solum and Richard D. Truesdell, Jr. July 25, 2018 by renholding

On July 17, 2018, the Ninth Circuit issued an opinion in Automotive Industries Pension Trust Fund v. Toshiba Corp., No. 16-56058 (9th Cir. July 17, 2018), holding that the Supreme Court’s Morrison decision does not preclude purchasers of …

Tippees and Tippers: The Impact of Martoma II

By John C. Coffee, Jr. July 23, 2018 by renholding

This is a column for insider trading junkies—a special breed who love all the nuances in this very nuanced subject. Late last month, a Second Circuit panel did something fairly unusual: It withdrew a 2017 decision and substituted a new …

Taking Investor Preferences Seriously

By Kathryn Judge July 11, 2018 by renholding

Over the last half century, finance has made remarkable progress explaining the pricing of financial assets. In relying on portfolio theory, however, mainstream pricing models tend to ignore investor preferences for certain asset types. This is a mistake. In a …

The Role of Disclosure in the Unregulated Crypto Market

By Thomas Bourveau, Atif Ellahie, Emmanuel T. De George and Daniele Macciocchi July 10, 2018 by renholding

Our new research paper studies the issuers of unregulated crypto-tokens such as EOS and Tether. We examine two dimensions: the success of the Initial Coin Offering (ICO) process, and the capital market patterns following the listing of the tokens on …

How External Whistleblower Rewards Affect Internal Reporting

By Masaki Iwasaki July 6, 2018 by renholding

Does paying employees for blowing the whistle on corporate crime to regulators discourage internal reporting and undermine corporate governance? The answer is not as simple as it might seem. My research shows that, as the amount of reward increases, the …

Latham & Watkins Discusses SEC Official’s Analysis of Digital Assets as Securities

By Stephen P. Wink, David L. Concannon, Miles P. Jennings, Cameron R. Kates and Thomas H. Gabay July 2, 2018 by renholding

William Hinman, Director of the US Securities and Exchange Commission (SEC) Division of Corporation Finance, provided substantial color on the SEC’s evolving view of digital asset classification recently when he shared his thoughts on how to characterize purchases and sales …

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