Financial Misconduct and Strategic Corporate Disclosures

By Rebecca Files, Alex Holcomb, Gerald S. Martin and Paul Mason October 9, 2018 by renholding

Financial misconduct can lead to significant financial and reputational penalties for a firm and its managers, including hefty fines from regulators and steep drops in stock price. In fact, recent research finds that firms accused of fraud lose an average …

Debevoise on Material Omissions in Private Equity Secondary Transactions

By Katherine Ashton, John W. Rife III, Andrew M. Ahern, Kenneth J. Berman and Robert B. Kaplan October 9, 2018 by pss2150

As private equity funds approach the end of their lives, a fund’s general partner is often encouraged by the fund’s limited partners and third-party buyers to consider secondary liquidity solutions. Liquidity solutions can involve fund extensions, asset sales to third-party …

SEC’s Co-Chief of Enforcement Talks Remedies and Relief

By Steven R. Peikin October 4, 2018 by renholding

My remarks today come a little over a year after Stephanie Avakian and I were appointed Co-Directors of the SEC’s Division of Enforcement and just a few days after the close of the first full fiscal year in which we

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Bonfire of the Vanities–2018 Style: The Case of Elon Musk

By John C. Coffee, Jr. October 2, 2018 by renholding

Elon Musk came close to doing something truly unique. No, not his electric car. Rather, he was about to roll the dice with his shareholders’ equity.

Securities analysts estimate that somewhere between 25 and 35 percent of the value of …

Resolving the Tension Between Efficiency and Inclusivity in Crowdfunding

By Andrew Abraham Schwartz September 27, 2018 by renholding

There’s a contradiction at the core of securities crowdfunding, a form of Internet-based public stock market modelled on Kickstarter and its ilk. On the one hand, crowdfunding seeks to create an inclusive system where entrepreneurs, regardless of where they are …

SEC’s Co-Director of Enforcement Talks About Her Division’s Impact

By Stephanie Avakian September 21, 2018 by renholding

My speech today [1] happens to fall a little less than two weeks before the close of Steve Peikin’s and my first full fiscal year as Co-Directors of the SEC’s Division of Enforcement. In many respects, a year is an

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Sullivan & Cromwell Discusses SEC’s Withdrawal of Proxy Advisory Guidance

By Marc Treviño, Misha Patel and Amanda Toy September 19, 2018 by renholding

On September 13, the SEC’s Division of Investment Management withdrew two interpretive letters issued in 2004 to Egan-Jones Proxy Services (“Egan-Jones”) and Institutional Shareholder Services, Inc. (“ISS”). The letters described some of the guidelines under which an investment adviser could …

Did Deregulation End the “Quiet Period” of Low-Risk Banking?

By Paul G. Mahoney September 18, 2018 by renholding

From the New Deal until the 1970s, banks were on a tight leash. Regulators controlled the rate of interest they could pay on deposits. Banks could not underwrite or deal in corporate securities. With some exceptions, they could not expand …

Was Glass-Steagall’s Demise Both Inevitable and Unimportant?

By Arthur E. Wilmarth, Jr. September 18, 2018 by renholding

The financial crisis of 2007-09 caused the Great Recession, the most severe global economic downturn since the Great Depression. The financial crisis began with the collapse of the subprime mortgage market in the U.S. and spread to financial markets around …

SEC Commissioner Jackson Issues Statement on Shareholder Voting

By Robert J. Jackson, Jr. September 14, 2018 by renholding

Today, the Office of the Chairman and the Division of Investment Management at the Securities and Exchange Commission suddenly raised questions about long-resolved issues regarding shareholder voting.[1] Because the Investor Advisory Committee’s critical work in this area is ongoing, …

How Private Equity Enhances the Market for Corporate Control and Capitalism

By Edward Peter Stringham and Jack Vogel September 13, 2018 by renholding

In this age of firebrand political rhetoric and sniping from the right and the left, Wall Street has taken more than its fair share of criticism. One of the most significantly misplaced criticisms, however, derives from a gross misunderstanding of …

Making Sustainability Disclosure Sustainable

By Jill E. Fisch September 10, 2018 by renholding

Issuers, investors, and regulators are paying increasing attention to corporate sustainability. Commentators have proffered a variety of explanations for this attention ranging from the argument that corporations are morally obligated to act in a socially responsible manner to the claim …

Insider Trading Ahead of Cyber Breach Announcements

By Zhaoxin Lin, Travis R.A. Sapp, Jackie Rees Ulmer and Rahul Parsa September 4, 2018 by renholding

On March 14, 2018, the Securities and Exchange Commission charged a former chief information officer of Equifax with insider trading. The complaint alleged that he profited from selling stock ahead of the September 2017 public announcement of a major cybersecurity …

SEC Chair Clayton Talks Capital Formation

By Jay Clayton August 30, 2018 by renholding

I am delighted to participate in the 36|86 Entrepreneurship Festival here in Nashville, Tennessee. I would like to speak for about 25 minutes about key capital formation initiatives at the SEC.[1] After my remarks, I will be joined by

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Thinking Holistically Before Dropping Quarterly Reporting

By James D. Cox August 27, 2018 by renholding

Robust capital markets are widely believed to signal economic vitality, and a reliable barometer of such vitality was historically a rising number of IPOs and listings. Yet, as we are experiencing record setting economic expansion, that barometer has failed us. …

Quarterly Reporting and Market Liquidity

By Joshua R. Mitts August 27, 2018 by renholding

Trading in U.S. equity markets is fast and cheap. While proponents of ending quarterly reporting point to the dangers of short-termism, less frequent disclosure is also likely to lead to a decline in liquidity and to greater trading costs. The …

Cutting Disclosure Frequency Is the Wrong Solution to the Wrong Problem

By Charles K. Whitehead August 27, 2018 by renholding

President Trump has directed the Securities and Exchange Commission to study whether a public company’s reporting requirements should shift from a quarterly to semi-annual schedule. Doing so, according to the president, “would make business (jobs) even better in the U.S.” …

SEC Chair Talks Investor Roundtables on Conduct Standards for Investment Professionals Rulemaking

By Jay Clayton August 23, 2018 by renholding

In April 2018, the Commission proposed for public comment a significant rulemaking package designed to serve our Main Street investors that would (1) require broker-dealers to act in the best interest of their retail customers, (2) reaffirm and in some

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What Happened to “Meaningfully Close Personal Relationship” in Insider Trading?

By Peter Henning August 22, 2018 by renholding

Did insider trading law almost devolve into an effort to define what kind of relationship a tipper and tippee must have for a defendant to be liable? And was any federal judge or jury qualified to say? Since the Second …

Revisiting the SEC Ruling on Whether Cryptocurrencies are Securities

By Usman W. Chohan August 17, 2018 by renholding

In June 2018, the cryptocurrency community waited with baited breath for the Securities and Exchange Commission (SEC) decision on whether cryptocurrencies were securities, commodities, or something else.

If the commission treated them as securities, they would be subject to …

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