Talk about an unexpected change in the compensation structure that is buried in the Financial Stability Act.
The Financial Stability Act submitted by Senator Dodd also contains provisions that would reform the compensation process at the board level. The provision does so, reminiscent of SOX, through the use of listing standards. [...]
The Financial Stability Act contains a number of provisions designed to address the problem of excessive compensation. Most are procedural. A huge exception is the prohibition on "excessive" compensation by financial institutions subject to FDIC insurance. We will discuss some of these requirements over the next several posts.
Subtitle E includes [...]
On October 28, 2009, Mark Cuban filed a Reply Brief in Support of Motion for Attorneys’ Fees and Expenses (“The Reply”) in the Northern District of Texas – Dallas Division. The Reply contends Cuban is entitled to Attorneys’ fees and expenses from the SEC for three reasons: (1) Cuban’s alleged [...]
The Private Securities Litigation Reform Act was a severe response to congressional dislike for securities class action fraud suits. Congress sought to restrict the suits in part by imposing exceedingly tough pleading standards. Thus, a complaint would be dismissed unless plaintiffs alleged a "strong inference" of scienter. See 15 USC [...]
We have noted that in the wake of the Madoff scandal, internal reform of the Commission was necessary. Reforms have begun with particular vigor within the Division of Enforcement. Reforms are also necessary within the Office of Compliance Inspections and Examinations. One of the open questions was whether the office [...]
In the hodge podge of regulation that is the American Financial Stability Act, the draft legislation contains a provision that would require the SEC to adopt rules limiting or eliminating mandatory arbitration. The provision would apply not only to accounts opened with brokers but also investment advisors.
One of the other buried provisions in the Financial Stability Act is a requirement that the SEC adjust the definition of accredited investor for inflation. Specifically, Section 412 provides that the annual income and total net worth numbers contained in Rule 501 of Regulation D (17 CFR 230.501) must be [...]
The Financial Stability Act of 2009 calls for self funding of the Securities and Exchange Commission. This would allow the agency to pay its expenses out of earnings generated rather than tax revenues and to determine its own budget. Self funding has long been sought by the SEC, with Mary [...]
Senator Dodd has dropped a behemoth bill that seeks to systematically reform the financial system. The legislation would create a Consumer Financial Protection Agency that would handle financial matters with a retail flavor and a Financial Institutions Regulatory Administration that would largely combine the bank regulators into a single administrative [...]
The efforts to exempt public companies with a market cap of less than $75 million brought a quick reaction from Commissioner Aguilar:
The Investor Protection Act of 2009 in its current form would repeal this important requirement of an independent audit for public companies with a market cap under [...]The efforts to exempt public companies with a market cap of less than $75 million brought a quick reaction from Commissioner Aguilar:
The Investor Protection Act of 2009 in its current form would repeal this important requirement of an independent audit for public companies with a market cap under [...]What is clear by now is that if there was a problem with SOX, it was that the legislation did not go far enough. The law only addressed one compensation issue, loans to executive officers. SOX dealt with the concern by prohibiting them, leaving the matter otherwise untouched. Likewise, SOX [...]
In the securities fraud class action In re MIVA, Inc. Securities Litigation, No. 2:05-cv-00201-JES-DNF (M.D. Fla. Aug. 25, 2009), Magistrate Judge Douglas N. Frazier recommended the United States District Court of the Middle District of Florida grant the defendants’ motion for summary judgment. The Magistrate Judge held that the plaintiffs [...]
In Martinez v. Regions Financial Corporation, No. 4128-VCP, 2009 WL 2413858, *1 (Del. Ch. Aug. 6, 2009), an executive was discharged without cause after refusing to enter into a new employment agreement. The Delaware Court of Chancery determined the former executive was entitled to her “golden parachute” severance package, but [...]
Congressman Conyers has announced that he will introduce legislation to provide for a "modernized and updated version of the Glass-Steagall Act." It is part of the growing recognition that complete repeal was a mistake, something pointed out in The "Great Fall": The Consequences of Repealing the Glass-Steagall Act, [...]
In City of Westland Police & Fire Retirement System v. Axcelis Technologies, Inc., No. 4473-VCN, 2009 Del. Ch. LEXIS 173, at *1 (Del. Ch. Ct. September 28, 2009), the Court of Chancery of Delaware dismissed a books and records action brought by a shareholder against Axcelis Technologies, Inc. (“Axcelis”). Plaintiffs [...]
This Blog has engaged in a variety of innovative practices, including the reliance on both faculty and students to write posts. This week and last, for example, have been mostly devoted to student posts. One of the other innovative steps has been trial coverage. This Blog has used faculty and [...]
In Dreiling v. America Online Inc., 578 F.3d 995 (9th Cir. 2009), the Ninth Circuit Court of Appeals rejected an attempt to expand the scope of liability under §16(b) of the Securities Exchange Act of 1934. The court held that strict liability under § 16(b) required plaintiffs to clearly prove [...]
In Dreiling v. America Online Inc., 578 F.3d 995 (9th Cir. 2009), the Ninth Circuit Court of Appeals rejected an attempt to expand the scope of liability under §16(b) of the Securities Exchange Act of 1934. The court held that strict liability under § 16(b) required plaintiffs to clearly prove [...]
Activist shareholders sometimes seek board positions. Statistics show that the presence of a non-management director on the board can be beneficial to shareholders. At the same time, however, the dissident directors may not need indefinite tenure. This can be seen in connection with the behavior of Carl Icahn [...]
The employees of the SEC are often in the news when it comes to the regulation of the securities markets. Less often do they get there because of civic involvement unrelated to these markets. An exception is the recent nomination of Brenda Murray, the Chief ALJ at the Commission, for [...]
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In SEC v. Pirate Investor, LLC, 580 F.3d 233 (4th Cir. 2009), the SEC filed suit against Pirate Investor, LLC (“Pirate”), alleging the publisher made fraudulent misrepresentations violating §10(b) of the 1934 Securities Exchange Act. The Fourth Circuit upheld the trial court's' [...]
In the midst of this financial crisis, many seem to be reconsidering the wisdom of completely repealing Glass Steagall (in this 10th year anniversary). Apparently those are the views of two former Chairmen of Citigroup and Paul Volcker.
While these are certainly important figures, they are arriving late to the view. At [...]
In SEC v. Nature's Sunshine Products, Inc. (“NSP”), and SEC v. Douglas Faggioli and Craig Huff (collectively “Nature’s Sunshine”), the SEC brought a suit in the Federal District Court of Utah under control person liability based on an unprecedented extension of the Federal Corrupt Practices Act (“FCPA”). The SEC claimed' [...]
The pay restrictions at the seven companies overseen by the Pay Czar are apparently causing discomfort and posing the possibility that there will be an outflow of talent to less regulated (or non-regulated) firms. The Pay Czar has, according to reports, expressed "concern" over this possibilty.
The possibility has [...]
In Van Asdale v. International Game Technology (IGT), plaintiffs sued defendant for retaliatory discharges under the Whistleblower protection provision in the Sarbanes Oxley Act (SOX) and Nevada state law. IGT moved for summary judgment. The U.S. District Court for the District of Nevada granted IGT’s motion. In reversing, vacating and [...]
In a previous post this blog covered the First Circuit’s decision in SEC v. Tambone, the case against James R. Tambone and Robert Hussey, executives of Columbia Funds Distributor, Inc., for violations of federal securities laws. Neither defendant made false statements, but the SEC alleged that they distributed prospectuses [...]
This post represents the final post of a three part series focused on NASDAQ's exemption rule for foreign private issuers.
Israel has the second largest number of foreign issued securities listed on the NASDAQ. The rules Israeli companies most commonly deviate from are:
Rule 5605(b) and (e) – Nomination and Composition of [...]Founded in 1971, the NASDAQ stock exchange currently lists approximately 3,200 domestic and foreign companies. Domestic issuers must comply with the corporate governance standards set forth in the NASDAQ 5600 rule series. Foreign issuers may deviate from NASDAQ’s corporate governance standards under Rule 5615(a)(3). Rule 5615(a)(3) provides:
A Foreign [...]
This post is the second part of a three part series exploring NASDAQ's rules regarding foreign private issuer exemptions. In this post, we look at China.
The country with the largest amount of foreign securities listed on NASDAQ is China. Please note of the securities used for sampling, all were incorporated [...]
This post represents the first of a three part series that examines NASDAQ's rules for foreign private issuer exemptions.
Canadian private issuers listed on the NASDAQ most widely utilize home country practices for quorum requirements. The quorum requirement, found in NASDAQ Rule 5620(c), provides: “Each Company . . . shall provide [...]
In Delaware, courts consider boards independent if they contain a majority of independent directors. That the board might include some percentage of interested or non-independent directors, who can influence the decision making process, appears to have little relevancy to the court's analysis. This can be seen In re Nat’l City Corp. [...]
We are commenting on the efforts of Norges Bank Investment Management, a branch of the Norwegian central bank, among other things manages the Norwegian Government Pension Fund, to influence governance practices in the United States. NBIM has submitted four shareholder proposals calling for the separation of chairman and [...]
We are commenting on the efforts of Norges Bank Investment Management, a branch of the Norwegian central bank which, among other things, manages the Norwegian Government Pension Fund to influence governance practices in the United States. NBIM has submitted four shareholder proposals calling for the separation of chairman [...]
Norway provides an example of how to diversify boards without waiting for the "market" to effectuate change. The country requires each board to consiste of at least 40% of each gender. The experience is only in its early stages but appears to be functioning effectively. In other words, requiring [...]
Norway provides an example of how to diversify boards without waiting for the "market" to effectuate change. The country requires each board to consiste of at least 40% of each gender. The experience is only in its early stages but appears to be functioning effectively. In other words, requiring [...]
The interview by Chief Justice Myron Steele was interesting, insightful and, above all else, honest.
He essentially argues for the preeminence of Delaware and the Delaware courts. He views the SEC as having failed miserably and many on the federal courts as unfit to engage in oversight of corporate governance. As [...]
We are discussing the recent interview with Myron Steele, the Chief Justice of the Delaware Supreme Court. The interview be found here.
The final question concerned the recent trend by the Delaware courts to impose liability on directors for willfully failing to respond to danger signals.
In a number of [...]We are discussing the recent interview with Myron Steele, the Chief Justice of the Delaware Supreme Court. The interview be found here.
Chief Justice Steele doesn't view the SEC or the federal courts as having sufficient resources or "familiarity" with corporate governance to oversee the process. Again, the Q&A' [...]
Let’s return to Attorney Donovan’s suggestion during oral argument, that the Supreme Court “consign 8,000 mutual funds to trial.” Given that Donovan spoke as counsel for Harris Associates, L.P. (the fund manager), this is a startling recommendation. Yet, his invitation to litigation was merely a rhetorical flourish. It was [...]
“I suggest you consign 8,000 mutual funds to a trial,” declared Attorney John Donovan during oral argument at the U.S. Supreme Court on Monday. Before the Court was Jones v. Harris Associates on appeal from the 7th Circuit. Plaintiffs Jerry N. Jones, Mary F. Jones and Arline Winerman were [...]
“I suggest you consign 8,000 mutual funds to a trial,” declared Attorney John Donovan during oral argument at the U.S. Supreme Court on Monday. Before the Court was Jones v. Harris Associates on appeal from the 7th Circuit. Plaintiffs Jerry N. Jones, Mary F. Jones and Arline Winerman were [...]
We are discussing the recent interview with Myron Steele, the Chief Justice of the Delaware Supreme Court. The interview be found here.
Chief Justice Steele was asked about the plans to increase the powers of the SEC, an extraordinarily vague question. Presumably it referred mostly to the shareholder bill [...]
Misty Dalke, J. Robert Brown, Randall Peterson, Kinny Bagga, Drew Reitman, Rebecca Rian, William McEachron, Andrew Podore, Tracy Taylor, Gregg Emmel, Christopher Brown, Elizabeth Leibsle, Rachel Taylon
