How Comply-or-Explain Disclosure Regulation Can Improve Corporate Governance and Gender Equality

By Aaron A. Dhir, Sarah Kaplan and Maria Arabella Robles October 8, 2024 by renholding

In 2020, the Nasdaq stock market filed a proposal with the U.S. Securities and Exchange Commission seeking permission to adopt a board diversity-related disclosure requirement for its listed companies. In 2021, the SEC approved the proposal, making Nasdaq the most …

SEC Whistleblower Program Marred by Too Much Secrecy, Two Commissioners Say

By Hester M. Peirce and Mark T. Uyeda October 8, 2024 by renholding

The Commission recently issued two whistleblower award determinations awarding an aggregate $122,000,000 among four claimants.[1] We did not support these determinations, but we are unable to explain our reasons because the public final orders determining the awards redact certain …

Let the Light Shine on Bank Supervisors’ Examination Ratings

By Hamid Mehran and Chester Spatt September 12, 2024 by renholding

We have argued that bank regulators should disclose more bank information than is now required.[1] This is because supervisory practices generally do little to promote transparency, which leads to opacity that interferes with the pricing of risk and undermines …

Cohen Milstein Discusses Two U.S. Supreme Court Cases that May Increase Hurdles for Securities Fraud Plaintiffs

By Laura H. Posner and Alexandra Gray September 12, 2024 by renholding

In November, the U.S. Supreme Court will hear two cases from the Ninth Circuit Court of Appeals that will implicate the ability of investors to bring securities fraud claims. The most worrisome – NVIDIA Corp. v. E. Ohman J:or Fonder …

Materiality Under the SEC’s Climate Risk Rule

By Tom Riesenberg August 12, 2024 by renholding

The concept of materiality has been called the “bedrock” or the “cornerstone” of the corporate disclosure system established by Congress in the federal securities laws.[1] But, despite its importance, determining how to use or apply the concept can be …

Reg FD’s Dilemma: The Unseen Edge in Private Investor Meetings

By H. Scott Asay, Shana Clor-Proell and Michael T. Durney July 31, 2024 by renholding

Regulation Fair Disclosure (Reg FD) attempts to level the playing field for investors, stating that any “informational edge” should be due to investors’ “skill, acumen, or diligence” rather than “from their superior access to corporate insiders.”[1]However, Reg FD …

How Audit Committee Chairs’ Service on Other Boards Enhances Non-GAAP Disclosure Quality

By Cheng-Hsun Lee July 30, 2024 by renholding

In today’s rapidly evolving corporate governance landscape, the role of audit committees in overseeing financial reporting has never been more important. Recent regulations, such as the updated Compliance & Disclosure Interpretations (“C&DIs”), have emphasized the need for audit committees to …

Fraud-on-the-Market Liability in the ESG Era

By Kevin S. Haeberle July 29, 2024 by renholding

Fraud-on-the-market (“FOTM”) suits are thought to generate considerable benefits for society – namely, those associated with increased stock-market price accuracy and liquidity. But these suits are also said to impose exceptionally large social costs relative to even those associated with …

How Shifting to Semi-Annual Financial Reporting Affects Market Dynamics and Governance

By Keren Bar-Hava July 18, 2024 by renholding

In recent years, regulatory shifts in financial reporting have garnered significant attention, especially concerning their implications for corporate governance and market dynamics. One notable change was the 2017 regulatory adjustment on the Tel-Aviv Stock Exchange (TASE), where small-cap firms were …

Skadden Discusses Delaware Decisions on Controller Transactions, Standards of Review, and Disclosure Obligations

By Edward B. Micheletti, Peyton V. Carper and Emily A. Nowlan July 10, 2024 by renholding

The first half of 2024 has been a watershed moment for the development of controller law in the Delaware courts. Among the highlights, the Delaware Supreme Court reexamined and confirmed that transactions involving a conflicted controller will invoke entire fairness …

SEC Corporation Finance Director Speaks on the State of Disclosure Review

By Erik Gerding June 25, 2024 by renholding

Good afternoon.[1] I appreciate the opportunity to speak with you again today as part of the Corp Fin Workshop. I wanted to make a few remarks about the important work being done in the Division’s Disclosure Review Program and

…

Leveraging Information Forcing in Good Faith

By Hillary Sale May 29, 2024 by renholding

The duty of good faith and oversight, which is a branch of the duty of loyalty, has been the subject of considerable litigation in recent years, with cases revealing significant information asymmetries between directors and management. These cases are subject …

How Bank Regulation and Supervision Can Weaken Financial Stability

By Hamid Mehran and Chester Spatt May 14, 2024 by renholding

We argue that bank regulation and supervision interfere with pricing risk by creating opacity. Given that market disclosures enhance the efforts of supervisors, and vice versa, more disclosure could enhance financial stability (see Spatt, 2010)[1]. In addition, we …

Should Companies Announce Reviews of Strategic Alternatives?

By Jenny Zha Giedt May 13, 2024 by renholding

A company’s announcement that it is undertaking a “review of strategic alternatives” is Wall Street code for exploring a potential sale or merger. Though no transaction may occur, the announcement signals that the company is due for a shake up, …

Why Do Companies Keep Their Loan-Covenant Details Secret?

By Edward Xuejun Li, Monica Neamtiu and Zhiyuan Tu May 8, 2024 by renholding

It’s surprisingly tough to find detailed information about the loan agreements of many public companies. In fact, nearly 20 percent of those agreements are not publicly available, despite disclosure mandates. In a recent study, we shed light on this phenomenon, …

The EU Listing Act Shows How EU and U.S. Law Are Converging on the Duty to Disclose Inside Information

By Arnoud Pijls May 2, 2024 by renholding

Last February, the European Council and the European Parliament reached a final compromise on an EU Listing Act.[1] The act aims to make listings in the EU – and raising capital through the stock market – more attractive by …

Silent Greenwashing: The Economic Case for Moving from Voluntary to Mandatory Environmental Disclosure

By Julien Manili April 25, 2024 by renholding

As consumers demand protections for the environment, corporations increasingly tout their sustainability efforts. Yet, economic indicators demonstrate that those efforts are mostly talk. Research and development on greener products and processes remains remarkably low, at about 4 percent of global …

Do Investors Care Who Led the Audit?

By Daniel Aobdia, Vincent Castellani and Paul Richardson April 23, 2024 by renholding

Following a lengthy and contentious standard setting process, the Public Company Accounting Oversight Board (PCAOB), the U.S. regulator overseeing the auditors of publicly traded companies, implemented Rule 3211 in 2017. This rule requires audit firms to disclose the name of …

SEC Chair Speaks on Mandatory Disclosure at Conference Honoring John C. Coffee, Jr.

By Gary Gensler March 25, 2024 by renholding

Today, Columbia is honoring Jack Coffee, a leader of securities law scholarship and policy. I hope Columbia one day might invite me back to celebrate your career, Professor Fox. Caveat inviter, though, at the SEC, we are Merritt neutral. As …

Arnold & Porter Discusses Delaware Chancery Ruling in Microsoft-Activision Blizzard Deal

By Andrew Varner, Joel I. Greenberg, Steven Kaplan and Alice Lin March 19, 2024 by renholding

On February 29, the Delaware Chancery Court declined to dismiss claims that the process followed in obtaining board and stockholder approval of the merger of Activision Blizzard, Inc. with a subsidiary of Microsoft failed to comply with the requirements of …

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