Securities Regulation

Admissions in SEC Enforcement Cases: The Revolution that Wasn’t

By David Rosenfeld October 26, 2017 by renholding

In 2013, the Securities and Exchange Commission announced a new policy of sometimes requiring admissions when settling enforcement actions.  The policy was a radical departure from the agency’s more than four decades-old practice of allowing companies and individuals to settle …

Are Investors Influenced by the Order of Information in Earnings Press Releases?

By Lin Cheng, Darren Roulstone and Andrew Van Buskirk October 24, 2017 by renholding

Research has begun to analyze the tone and narrative structure of earnings announcements after decades of focusing on market reactions to the earnings news itself. One conclusion from this literature is that language matters – the tone (i.e., the excess …

Cleary Gottlieb Discusses SEC’s Proposed Changes to Public Company Disclosure

By Nicolas Grabar, Jeffrey D. Karpf, Sandra L. Flow, Andrea M. Basham and Gaia Goffe October 24, 2017 by renholding

On October 11, 2017, the SEC proposed a collection of amendments to its rules and forms intended to modernize and simplify some of the disclosure requirements applicable to U.S. public companies.[1]  The proposals would implement a statutory directive under …

Is It Time to Retire Securities Act Form S-8?

By Keith F. Higgins October 13, 2017 by renholding

Every securities lawyer knows that offers and sales of securities must either be registered under the Securities Act of 1933 (Securities Act) or made pursuant to an applicable exemption.  This rule is so fundamental that we often neglect to think …

SEC Chair Clayton Speaks at Open Meeting on Reg S-K Reform

By Jay Clayton October 12, 2017 by renholding

Good morning.  This is an open meeting of the United States Securities and Exchange Commission on October 11, 2017 under the Government in the Sunshine Act.

This also marks my first open meeting as Chairman.  I am delighted that today

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Davis Polk Explains How New Revenue Recognition Rules May Slow 2018 Offerings

By Alan F. Denenberg, Joseph A. Hall, Michael Kaplan, Sarah K. Solum and Richard D. Truesdell, Jr. October 9, 2017 by renholding

New revenue recognition rules (ASC 606 and IFRS 15) are required to be adopted by most public companies starting January 1, 2018 and most private companies starting January 1, 2019. These changes are widely regarded as some of the most …

Insider Tainting: Strategic Tipping of Material Non-Public Information

By Andrew Verstein September 27, 2017 by renholding

In an article forthcoming in the Northwestern University Law Review, I analyze the strategic use of insider trading law to disable the trading activity of an information recipient. I call this phenomenon “insider tainting.” While most tips of information open …

CamberView Partners Discusses SEC Guidance on New Pay Ratio Rule

By Abe M. Friedman, Sharo M. Atmeh, Lauren D. Gojkovich and Troy A. Paredes September 27, 2017 by renholding

On September 21, the U.S. Securities and Exchange Commission (SEC) issued guidance on the implementation of the Pay Ratio disclosure requirement as well as separate guidance from SEC staff concerning the use of sampling and other methodologies. Concurrently, the staff …

Confidential Distortion: Dealing with Confidential Witnesses in Securities Litigation

By John C. Coffee, Jr. September 25, 2017 by renholding

In a recent article prepared for the ABA’s National Institute on Class Actions, which is now posted on SSRN (available here), I and Professor Alexandra Lahav survey recent class action developments, and I focus particularly on the special …

How Investor Attention Affects Fraud Discovery and Value Loss in Securities Class Actions

By Anna Abdulmanova, Stephen Ferris, Narayanan Jayaraman and Pratik Kothari September 19, 2017 by renholding

A securities class action is a complex event characterized by scarce information, high uncertainty, and increased information asymmetry between stakeholders and firms.  In our paper “The Effect of Investor Attention on Fraud Discovery and Value Loss in Securities Class Action …

Paul Weiss Discusses the Extension of the M&F Worldwide Doctrine

By Scott Barshay, Ross Fieldston, Justin Hamill, Stephen Lamb and Jeffrey Marell September 19, 2017 by renholding

Recently, in In re Martha Stewart Living Omnimedia, Inc. Stockholder Litigation, in an opinion by Vice Chancellor Slights, the Delaware Court of Chancery extended the Kahn v. M&F Worldwide roadmap for invoking business judgment review in controller buyouts to …

Latham Discusses How Second Circuit Broadened Personal Benefit Test for Insider Trading

By William R. Baker III, Joshua G. Hamilton, Douglas K. Yatter, Nicholas L. McQuaid and Kaitlin A. Wallace September 13, 2017 by renholding

On August 23, 2017, the Second Circuit issued its second significant decision on insider trading liability in the past three years, United States v. Martoma. In its 2014 decision in United States v. Newman, the Second Circuit limited …

The Rise of Financial Regulation by Settlement

By Matthew C. Turk September 12, 2017 by renholding

The dramatic escalation in enforcement activity by federal agencies against large financial institutions since the financial crisis is well known. These days the latest multi-billion dollar deal between regulators and Wall Street banks has lost blockbuster status and hardly even …

Fried Frank Discusses Coin Offerings

By Stuart H. Gelfond, Lee T. Barnum and Craig R. Bergmann September 5, 2017 by renholding

Recently, the Securities and Exchange Commission (the “SEC”) issued two publications relating to initial coin offerings, or “ICOs”: The SEC’s Office of Investor Education and Advocacy published an investor bulletin¹ (the “Investor Bulletin”) highlighting the risks of ICO investing …

Skadden Discusses LIBOR Replacement Plans

By Mark D. Young, Maureen A. Donley, Daniel B. O'Connell and Shekida A. Smith September 4, 2017 by renholding

Plans to end the long reign of the London Interbank Offered Rate (LIBOR) as one of the world’s most often-used interest rate benchmarks have recently been confirmed by several top financial regulators. On July 27, 2017, Andrew Bailey, chief executive …

King & Spalding Discusses Stock Indices’ Exclusion of Multi-Class Share Structures

By Keith M. Townsend, Carrie A. Ratliff, Zachary L. Cochran, and Zack Davis August 29, 2017 by renholding

The S&P Dow Jones and FTSE Russell indices recently took actions designed to exclude companies with multi-class share structures from several of the most prominent market indices.

On July 31, S&P Dow Jones announced that companies with multi-class share structures …

Mandatory Arbitration Does Not Give Stockholders a Choice

By Samuel M. Ward and Michael A. Toomey August 28, 2017 by renholding

An August 21 blog post, “Shareholders Deserve Right to Choose Mandatory Arbitration,” by Professor Hal S. Scott, argues that the introduction of mandatory arbitration clauses into corporate charters would be good for stockholders. Nothing could be further from the truth.…

How the SEC Neglects to Enforce Control Person Liability

By Marc I. Steinberg and Forrest Colby Roberts August 24, 2017 by renholding

Scholars and politicians alike have spoken and written at great length about the importance of gatekeepers in our current corporate governance system. However, relatively little has been done to discipline  gatekeepers who seem to have lost the keys to the …

Gibson Dunn Offers Second-Quarter Update on Class Actions

By Christopher Chorba, Theane Evangelis, Kahn A. Scolnick, and Bradley J. Hamburger August 22, 2017 by renholding

This update provides an overview of key class action developments during the second quarter of 2017 (April through June):

• Part I explores a significant decision from the Supreme Court concerning defeating novel attempts by plaintiffs to obtain appellate review of

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Shareholders Deserve Right to Choose Mandatory Arbitration

By Hal S. Scott August 21, 2017 by renholding

On July 17, SEC Commissioner Michael Piwowar extended an important invitation to U.S. public companies. “For shareholder lawsuits,” Piwowar offered, “companies can come to [the SEC] to ask for relief to put… mandatory arbitration into their charters.” To some, this …