Securities Regulation

How Credit Default Swaps Affect Managers’ Voluntary Disclosure

By Jae B. Kim, Pervin K. Shroff, Dushyantkumar Vyas and Regina Wittenberg Moerman September 17, 2018 by renholding

Credit Default Swaps (CDSs) enable lenders to distribute credit risk to parties more willing and able to bear it, thereby enhancing the liquidity and flexibility of individual lenders and the financial system (Greenspan 2004). However, empirical evidence suggests that CDSs …

SEC Commissioner Jackson Issues Statement on Shareholder Voting

By Robert J. Jackson, Jr. September 14, 2018 by renholding

Today, the Office of the Chairman and the Division of Investment Management at the Securities and Exchange Commission suddenly raised questions about long-resolved issues regarding shareholder voting.[1] Because the Investor Advisory Committee’s critical work in this area is ongoing, …

How Private Equity Enhances the Market for Corporate Control and Capitalism

By Edward Peter Stringham and Jack Vogel September 13, 2018 by renholding

In this age of firebrand political rhetoric and sniping from the right and the left, Wall Street has taken more than its fair share of criticism. One of the most significantly misplaced criticisms, however, derives from a gross misunderstanding of …

Disclosure Regulation in the Commercial Banking Industry: Lessons from the National Banking Era

By João Granja September 12, 2018 by renholding

In the aftermath of the 2007—2009 financial crisis, policymakers around the globe responded to calls for greater transparency in the financial system by adopting new rules and institutions that required more and better information disclosure by financial institutions. For example, …

Insider Trading Ahead of Cyber Breach Announcements

By Zhaoxin Lin, Travis R.A. Sapp, Jackie Rees Ulmer and Rahul Parsa September 4, 2018 by renholding

On March 14, 2018, the Securities and Exchange Commission charged a former chief information officer of Equifax with insider trading. The complaint alleged that he profited from selling stock ahead of the September 2017 public announcement of a major cybersecurity …

SEC Chair Clayton Talks Capital Formation

By Jay Clayton August 30, 2018 by renholding

I am delighted to participate in the 36|86 Entrepreneurship Festival here in Nashville, Tennessee. I would like to speak for about 25 minutes about key capital formation initiatives at the SEC.[1] After my remarks, I will be joined by

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What Really Drives “Short-Termism”?

By John C. Coffee, Jr. August 27, 2018 by renholding

Earlier this month, the CEO of Pepsi Co. suggested to President Trump that eliminating quarterly reporting (and shifting to biannual reporting) would reduce the pressure on managers to focus on the short-term. As impulsive as Elon Musk, the president bought …

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 …