Debevoise Discusses SEC Whistleblower Action Over Retail Client Agreements

By Kara Brockmeyer, Andrew Ceresney, Charu Chandrasekhar, Arian June and Jonathan Tuttle February 6, 2024 by renholding

On January 16, 2024, the Securities and Exchange Commission announced a settled enforcement action against JP Morgan Securities, LLC (“JPMS”) for violating Rule 21F-17(a) of the Securities Exchange Act of 1934.[1] Like other recent 21F-17(a) cases brought by the …

Shareholder Engagement Inside and Outside the Shareholder Meeting

By Tim Bowley, Jennifer G. Hill and Steve Kourabas June 7, 2023 by renholding

In a recent paper, we explore the engagement practices of public company shareholders and offer several important insights.

First, contemporary shareholder-company engagement is a multi-dimensional and evolving phenomenon with shareholders using, to varying degrees, a wide range of engagement techniques. …

Retail Investors and ESG News

By Qianqian Li, Edward Watts and Christina Zhu April 6, 2023 by renholding

How much – and why – do individual investors value ESG-related activities of firms? In a new working paper, we shed light on these questions by studying how retail investors transact in their personal portfolios around a primary source …

Does ESG Information Affect Individual Investors’ Portfolio Choices?

By Catharina Janz, Rainer Michael Rilke and B. Burcin Yurtoglu February 7, 2023 by renholding

Socially responsible investing (SRI) involves considering environmental, social, and governance (ESG) issues when picking stocks. Once a niche area of fund management, the volume of global sustainable investment in five major markets reached $35.3 trillion at the start of 2020, …

Olshan Discusses FINRA, Stock Exchange Crack Down on Small-Cap IPO “Ramp and Dump” Schemes

By Spencer G. Feldman November 29, 2022 by renholding

On November 17, 2022, the Financial Industry Regulatory Authority (“FINRA”) issued a special alert to FINRA members concerning the heightened threat of fraud in small capitalization initial public offerings (“IPOs”). At the same time, both the New York Stock Exchange …

How Retail Investing Improves Corporate Governance and Benefits Society

By Sergio Alberto Gramitto Ricci and Christina M. Sautter August 31, 2022 by renholding

Since 2020, new retail investors have flooded the securities markets, opening a record number of new brokerage accounts. Due to the ease of investing through commission-free trading apps and the ability to purchase fractional shares, a broader segment of the …

SEC Director of Investment Management Speaks at PLI

By William A. Birdthistle July 27, 2022 by renholding

Good afternoon. Thank you, Paulita and Rajib, for your gracious invitation and kind welcome to this year’s program on current issues and trends in Investment Management.[1] As I suspect many of you know – and as the spring regulatory …

Meme Investors and Retail Risk

By Sue S. Guan May 26, 2022 by renholding

Dramatic trading in GameStop, AMC, and other “meme stocks” has reignited debates about the efficiency of the stock market, its purposes, and whose interests it should serve. The changing role of retail investors and meme investors, a subset of retail …

SPACtivism

By Sharon Hannes, Adi Libson and Gideon Parchomovsky January 12, 2022 by renholding

SPACs are on fire. Scholars and commentators have pointed out the flaws of SPACs, including the various agency problems they generate (Klausner 2021), and their utilization by sophisticated investors to take advantage of unsophisticated investors (Spamann, …

Heightened Eligibility Thresholds for Shareholder Proposals: Modernization or Voter Suppression?

By Xinyi Mao December 17, 2021 by renholding

In September 2020, the Securities and Exchange Commission amended Rule 14a-8 of the Securities Exchange Act to increase the eligibility requirements for a shareholder to submit proposals.[1] Rule 14a-8, also called the shareholder proposal rule, governs when a company …

The SPACtacular Rise of the Special Purpose Acquisition Company: A Retail Investor’s Worst Nightmare

By Bobby V. Reddy December 13, 2021 by renholding

The special purpose acquisition company, or SPAC, is a company with no commercial or operating history that has listed on a stock exchange with the sole objective of raising financing to identify and acquire another company. SPACs developed after the …

The Impact of Retail Investors on Stock Liquidity and Crash Risk

By Felix Hüfner and Jan-Oliver Strych December 10, 2021 by renholding

The influence of retail investors on the stock market is controversial among experts. Some studies conclude that retail investors are uninformed, overconfident investors who assess risk poorly and thus destabilize the financial markets (e.g., Grinblatt and Keloharju, 2009; Barber and …

Regulating via Social Media: Deterrence Eﬀects of the SEC’s Use of Twitter

By Jinjie Lin November 17, 2021 by renholding

Social media is widely used to create, disseminate, and consume information. Today, around seven in 10 U.S. adults use social media.[1] Additionally, more than half of Americans at least occasionally obtain news through social media.[2] In financial markets, …

The Fiduciary Principle and the Best Interests of Average Retail Investors

By Joseph A. Franco June 25, 2021 by renholding

The Securities and Exchange Commission recently offered a full-throated explication of its premise that investment advisers are subject to a federally imposed fiduciary standard under the Investment Advisers Act (IAA).[1] The premise, grounded in cryptic Supreme Court dicta, served …

A Reddit Rebellion in the Robinhood Era

By Joshua Mitts February 1, 2021 by renholding

For over a decade, hedge funds and other sophisticated traders have taken advantage of ordinary Americans who sought to share in the rewards of entrepreneurship and economic growth by investing in public companies. My research has identified tens of billions …

SEC Officials Issue Joint Statement on Complex Financial Products and Retail Investors

By Jay Clayton, Dalia Blass, William Hinman and Brett Redfearn October 29, 2020 by renholding

Retail investors have a wide array of investment options available to them, including an increasing number and type of investment products that are more complex than conventional stock and bond investments.[1] These complex products may be exchange-traded or sold

…

SEC Chair Clayton Speaks at Inaugural Meeting of Asset Management Advisory Committee

By Jay Clayton January 16, 2020 by renholding

I am delighted to welcome you in this new year to the inaugural meeting of the Commission’s newest advisory committee—the Asset Management Advisory Committee, or the “AMAC.”[1] I apologize that I am not there to speak to you in

…

The Cost to Retail Investors and Public Markets of “Harmonizing” Securities Offering Exemptions

By Erik F. Gerding October 1, 2019 by renholding

In June 2019, the U.S. Securities and Exchange Commission (“SEC” or the “Commission”) issued a Concept Release on the Harmonization of Securities Offering Exemptions (the “Concept Release”), which set forth proposals to expand the …

Investor Choice in Global Markets for Securities

By John Armour, Luca Enriques and Martin Bengtzen November 30, 2017 by renholding

In a recent paper, we explore how globalization has affected the operation of securities markets and the challenges this poses for their regulation. The paper is part of the first phase of the New Special Study of the Securities …

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