From Texas Gulf Sulphur to Chiarella: A Tale of Two Duties

By Donald C. Langevoort January 8, 2018 by renholding

The Second Circuit’s en banc decision in SEC v. Texas Gulf Sulphur Corp.[1] (“TGS”) is approaching its 50th anniversary, and it’s still well-known for several important holdings. Perhaps the most celebrated (or condemned) accepted the SEC’s argument …

Gibson Dunn Discusses SEC Guidance on How the New Tax Law Affects Disclosure and Accounting

By Ronald O. Mueller, Elizabeth Ising, Michael Scanlon, Brian Lane and Andrew Fabens January 8, 2018 by renholding

On December 22, 2017, the Securities and Exchange Commission’s Office of the Chief Accountant and Division of Corporation Finance (“Staff”) issued important guidance that provides significant relief and helpful answers on some of the accounting and disclosure issues raised by …

How Effective Is the SEC in Identifying Financial Reporting Errors?

By Matthew Kubic December 22, 2017 by renholding

The Securities and Exchange Commission (SEC) Division of Corporate Finance (DCF) reviews and regulates information in public filings to “deter fraud and facilitate investor access to information necessary to make informed investment decisions.”

Commentators criticize the SEC for …

Skadden Discusses Trends in M&A Disclosure Litigation

By Edward B. Micheletti, Jenness E. Parker and Bonnie W. David December 18, 2017 by charlesbluesky

Over the past two years, the deal litigation landscape has changed dramatically. In early 2016, the Delaware Court of Chancery announced a new rule for evaluating disclosure-based settlements in deal litigation — the “plainly material” standard — and expressed a …

Sheppard Mullin Discusses SEC’s Streamlined Enforcement Agenda

By Jeff Kern and Kate Ross December 14, 2017 by charlesbluesky

One of the most eye-catching items in the recently released 2017 Annual Report of the Enforcement Division of the Securities and Exchange Commission (SEC or the Commission) is the significant decline in enforcement activity from 2017. The report, issued on …

SEC Chair Talks Cryptocurrencies and Initial Coin Offerings

By Jay Clayton December 12, 2017 by renholding

The world’s social media platforms and financial markets are abuzz about cryptocurrencies and “initial coin offerings” (ICOs). There are tales of fortunes made and dreamed to be made. We are hearing the familiar refrain, “this time is different.”…

Davis Polk Discusses Solicitor General’s Change of Heart on SEC Judges

By Michael Flynn, Amelia Starr, Linda Chatman Thomsen and Paul Nathanson December 11, 2017 by renholding

On November 29, 2017, the Solicitor General filed a brief in the Supreme Court on behalf of the Securities and Exchange Commission (“SEC”) reversing the agency’s position and arguing that SEC administrative law judges (“ALJs”) have been unconstitutionally appointed to …

Debevoise & Plimpton Discusses Developments in the Enforcement of Token Sales

By Morgan J. Hayes, Steven J. Slutzky, Kevin R. Grondahl, Taylor Lindman and Naeha Prakash November 30, 2017 by Carly Goeman

Securities and Exchange Commission (“SEC”) Chairman Jay Clayton recently discussed the uncertainties surrounding token offerings and other forms of distributed ledger-based financing.^[1] Mr. Clayton cautioned that the lack of information regarding online platforms that list and trade virtual coins …

How Missing SEC Filing Deadlines Affects a Company’s Stock Value

By Eli Bartov and Yaniv Konchitchki November 27, 2017 by renholding

Investors, hedge funds, regulators, banks, and attorneys want to know: What really happens when a company misses a regulatory deadline? In a new paper, we offer theory and quantitative analysis of the consequences of missing U.S. Securities and Exchange Commission …

King & Spalding Discusses the Fading of Home Field Advantage for SEC Litigators

By William F. Johnson and Katie Barry November 16, 2017 by charlesbluesky

As the season changes to fall, and baseball playoffs and football dominate sports headlines, the home field advantage has proven important once again. But in the regulatory litigation game, it appears that even a home field advantage cannot help the …

SEC Chair Clayton Talks SEC and Market Transparency

By Jay Clayton November 9, 2017 by renholding

Thank you, Keith [Higgins], for that gracious introduction.[1] Let me return the sentiment. Keith – you are a member of an esteemed group of Division Directors, some of whom are here today, who have served the Commission and, most …

What Do Corporate Insiders Do with Newly Vested Equity?

By Erik Johannesson and Seil Kim November 8, 2017 by renholding

In a new study, we examine restricted-stock vesting events, through which directors and high-level executives (“insiders”) receive stock but face fewer reporting requirements and selling restrictions than if the stock had been purchased on the open market. Using a detailed …

PwC Discusses SEC’s Increased Scrutiny of Robo-Advisers

By Dan Ryan, Julien Courbe, Adam Gilbert, Mike Alix and Roberto Rodriguez November 8, 2017 by renholding

Earlier this year, the Securities and Exchange Commission (SEC) issued guidance regarding “robo-advisers,” automated investment advice tools accessed via web-based or mobile platforms with minimal human interaction.¹ The guidance is an important reminder to the industry that robo-advisers are …

Admissions and Accountability in Civil Enforcement

By Verity Winship and Jennifer K. Robbennolt November 7, 2017 by renholding

Whether and when targets of civil enforcement admit wrongdoing has been in and out of the public spotlight since the 2007-2008 financial crisis, when the issue seemed tied up in frustrations that suspected wrongdoers—especially banks and corporations—were getting off too …

Wachtell Lipton Discusses SEC’s Guidance on Shareholder Proposals

By David A. Katz, Trevor S. Norwitz, Sabastian V. Niles and S. Iliana Ongun November 6, 2017 by renholding

The SEC Division of Corporate Finance recently provided useful guidance on excluding certain Rule 14a-8 shareholder proposals (Staff Legal Bulletin No. 14I). While helpful, we hope the SEC will undertake a much-needed comprehensive review of Rule 14a-8, including …

SEC Enforcement Co-Chief Talks Cybersecurity and Retail Investor Protection

By Stephanie Avakian November 1, 2017 by renholding

Good afternoon and thank you for inviting me to speak today. Before I begin, let me give the required disclaimer that the views I express here today are my own and do not necessarily represent the views of the Commission

…

Arnold & Porter Discusses SEC’s Pay Ratio Guidance

By Joel I. Greenberg and Sara Adler October 31, 2017 by charlesbluesky

Item 402(u) of Regulation S-K was adopted in 2015 to implement the pay ratio disclosure provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and will require pay ratio disclosure with respect to the first fiscal year beginning …

SEC Commissioner Piwowar Speaks on Market Structure

By Michael S. Piwowar October 30, 2017 by renholding

These days you rarely hear the name Financial Industry Regulatory Authority (“FINRA”) in this town [Washington, D.C.] [1] without some mention of “FINRA 360,” the comprehensive self-evaluation initiated by FINRA President and CEO Robert Cook. From what I have seen …

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 …

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