Sky Blog
Each month, we publish a roundup of the most important SEC enforcement developments. This month included the SEC’s fiscal year end and a large number of enforcement actions of note, and we examine:
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 …
Financial markets and securities regulation in the European Union and the United States are converging in an increasing number of areas, from the repression of market manipulation to the provision of stricter requirements for market gatekeepers, such as auditing firms …
Firm managers spend substantial time meeting privately with analysts and investors (e.g., Thomson Reuters 2009; Soltes 2014; Brown, Call, Clement, and Sharp 2015; Bushee, Gerakos, and Lee 2018). As evidenced by a wealth of anecdotes and surveys, such private communications …
On March 5, the SEC brought an enforcement action charging a public company and three of its investor relations personnel with violations of Regulation FD, alleging that the company’s IR personnel had fed non-public information to sell-side research analysts in …
In a new article, I examine the regulatory goals of creating “fair, orderly, and efficient” securities markets in light of the recent issues involving trading in the shares of GameStop Corp. (GME) through the broker-dealer firm Robinhood Financial LLC. The …
Regulation Fair Disclosure (“Reg FD”) is commonly believed to prohibit managers from disclosing information about their firm to select shareholders. But managers are in fact allowed to do so in several circumstances. Specifically, Reg FD exempts communications to shareholders who …
Private meetings between management and investors occur worldwide and are generally held at corporate headquarters with invited investors and sell-side analysts (a.k.a., site visits). Ng and Troianovski (WSJ, 2015) report that U.S. investors pay $1.4 billion a year to securities …
In 2012, Mary L. Schapiro, the chairwoman of the Securities and Exchange Commission, argued that market participants had “short memories” and that the SEC as a result had to take regular enforcement actions “so that people don’t forget that they …
Among the many issues facing public companies as a result of the COVID-19 pandemic is how to handle disclosure. The pandemic is having a material impact on most companies. While in a few cases the crisis may actually be increasing …
We show that positive daily stock returns contain more information on the long-term change in stock value than do negative daily stock returns that are noisier on average and more prone to subsequent reversals. This difference in the informativeness of …
The number of U.S. listed companies declined by almost half between 1996 and 2012, from 8,090 to 4,102, and had risen only slightly, to 4,336, by year-end 2017. However, the real market valuation of these listed companies tripled over the …
With so much boardroom attention on cybersecurity, directors continue to focus on the Securities and Exchange Commission (SEC) guidance issued earlier this year and its implications. The guidance adds specific expectations for disclosure controls and incident response procedures, and reiterates …
On February 21, 2018, the SEC issued new Guidance regarding cybersecurity disclosure and governance requirements applicable to SEC reporting companies. In our earlier Client Update on this topic, we discussed the disclosure considerations addressed in the Guidance. In this Client …
Prior research finds that individual (retail) investors often fail to use accounting information when making stock trading decisions. Instead, many individuals underperform by trading on attention-grabbing technical trends such as high past stock returns.
A number of Securities and Exchange …
With institutional shareholders playing a growing role in corporate governance, dialogue between boards and shareholders is increasingly common in the U.S. and Europe. Talking with boards is essential to institutional investors’ stewardship functions, and engaging with institutional investors has become …
Mandatory disclosure sits at the foundation of modern securities regulation. Public companies must produce and share a wide variety of information about their condition and prospects, and they must do so on their own dime.
There can be little doubt …
Over the last 30 years, institutional investors have dramatically increased their stakes in U.S. companies. In the 1980s, they held approximately 20 percent to 30 percent of the average firm in the U.S. By 2010, they held over 65 percent. …
The dominant narrative about Salman v. United States, the first insider trading case decided by the U.S. Supreme Court in almost 20 years, is that it was a big win for federal prosecutors. That is only part of the story.…