Unresolved Business: Federal Corporate Governance Enhancements

2018 ◽  
Author(s):  
Marc I. Steinberg
Keyword(s):  
Corporate Governance ◽  
Insider Trading ◽  
Securities And Exchange Commission ◽  
Federal Courts ◽  
Professional Conduct ◽  
State Law ◽  
Federal Law ◽  
Tender Offers ◽  
Federal Level ◽  
Federal Statute

This chapter analyzes and recommends federal corporate governance enhancements that should be implemented. These enhancements, which should be adopted in a measured and directed manner, are necessary to remediate certain deficiencies that currently exist. Consistent therewith, this chapter focuses on several important matters that merit attention, including the undue deference by federal courts to state law, the appropriate application of federal law to tactics undertaken in tender offers, the need for a federal statute encompassing insider trading, and the propriety of more vigorous oversight by the Securities and Exchange Commission (such as with respect to the “current” disclosure regime, the SEC’s Standards of Professional Conduct for Attorneys, and the Commission’s neglecting at times to invoke its statutory resources). Thus, the analysis set forth in this chapter identifies significant deficiencies that currently exist and recommends measures that should be implemented on the federal level to enhance corporate governance standards.

The SEC’s Impact on the Federalization of Corporate Governance—A Traditional Perspective

2018 ◽  
Author(s):  
Marc I. Steinberg
Keyword(s):  
Corporate Governance ◽  
Mergers And Acquisitions ◽  
Insider Trading ◽  
Securities And Exchange Commission ◽  
Outside Directors ◽  
Tender Offers ◽  
Going Private ◽  
Rule Making

This chapter examines, from a traditional perspective, several areas where the Securities and Exchange Commission (SEC) has impacted corporate governance in a meaningful way. By way of example, these subjects include insider trading, qualitative materiality, the role of gatekeepers (such as outside directors, attorneys, and accountants), the Commission’s use of disclosure to influence conduct, the implementation by subject companies of undertakings pursuant to SEC enforcement proceedings, and mergers and acquisitions (including tender offers and going-private transactions). This chapter’s focus is on the manner in which the SEC for well over 50 years has impacted corporate governance by means of exercising its rule-making and oversight authority.

Vertical and Horizontal Problems in Financial Regulation and Corporate Governance

2018 ◽  
Author(s):  
Jonathan R. Macey ◽  
Maureen O'Hara
Keyword(s):  
Corporate Governance ◽  
Financial Institutions ◽  
Insider Trading ◽  
Financial Regulation ◽  
Fiduciary Duty ◽  
Federal Law ◽  
Regulatory Arbitrage ◽  
Holding Companies ◽  
The Third ◽  
And Control

This chapter discusses vertical and horizontal problems in financial regulation and corporate governance. More specifically, it examines three contexts in which efforts to mitigate systemic risk and moral hazard in capital markets and financial institutions clash with long-standing principles of corporate governance. The first issue relates to the so-called “vertical” challenge between financial institutions and the separately incorporated holding companies that own and control them. The second issue relates to the “horizontal” challenge, in which regulatory arbitrage occurs between the banking subsidiaries of complex holding companies and their less-regulated nonbank and shadow bank siblings. The third and final issue deals with the conflict between the conception of fiduciary duty in the federal law of insider trading and the concept of fiduciary duty in state law.

Does insider trading pay?

2019 ◽  
Vol 26 (2) ◽  
pp. 647-664
Author(s):  
Aneta Spaic ◽  
Claire Angelique Nolasco ◽  
Lily Chi-Fang Tsai ◽  
Michael S. Vaughn
Keyword(s):  
Insider Trading ◽  
Choice Model ◽  
Securities And Exchange Commission ◽  
Federal Courts ◽  
Criminal Proceedings ◽  
Financial Benefit ◽  
Criminal Cases ◽  
Average Amount ◽  
Content Type ◽  
Her Family

Purpose This paper analyzes trading and tipping activities in insider trading litigation decided by federal courts from January 1, 2012 to December 31, 2014. Design/methodology/approach Legal documents from the US Securities and Exchange Commission, LexisNexis and Westlaw databases were coded to determine profile, patterns of trading and settlement outcomes. Findings Results of statistical analysis indicate that a defendant in both civil and criminal cases is more likely to trade on the information when he/she receives a direct, financial benefit from breaching his/her duty of confidentiality. The defendant tipper is also more likely to pass on the information to a close personal friend, business associate or family member. The average amount of profit of defendants in both civil and criminal proceedings substantially exceeds the average amount of their settlements. Originality/value This paper offers support for the rational choice model – insider trading is often based on rational calculations of benefits not only to the defendant but also to his/her family and associates. Although the threat of civil enforcement and criminal proceedings may possibly deter him/her from committing the crime, results indicate that the amounts of settlement in both proceedings are considerably lower than the amount of profits obtained from the offense.

Mergers and Acquisitions

2021 ◽  
pp. 239-266
Author(s):  
Marc I. Steinberg
Keyword(s):  
Mergers And Acquisitions ◽  
Federal Government ◽  
National Policy ◽  
Necessary Condition ◽  
Primary Role ◽  
Federal Law ◽  
Tender Offers ◽  
Federal Level ◽  
Going Private ◽  
Takeover Bids

This chapter focuses on mergers and acquisitions (M&A), entailing going-private transactions, tender offers, proxy contests, mergers, and similar types of transactions. While the framework established by the SEC and Congress on the federal level is commendable, significant gaps exist. This chapter focuses on these gaps and recommends specified measures that should be implemented. The recommended measures are directed toward elevating the federal government’s role to serve as the principal regulator overseeing the M&A process. Among the measures that should be adopted are that: state anti-takeover statutes should be federally preempted; the legitimacy of tactics undertaken in response to takeover bids should be within the province of federal law; and a necessary condition as to whether an offensive or defensive maneuver is permissible and given effect is whether the requisite shareholder approval has been obtained. Importantly, the recommendations advanced in this chapter do not materially impede M&A transactions, recognize that shareholder voice merits a primary role in this process, and correctly place matters of national policy with the federal government rather than the applicable state of incorporation.

Summary of Recommendations for Adoption

2021 ◽  
pp. 301-322
Author(s):  
Marc I. Steinberg
Keyword(s):  
Corporate Governance ◽  
Mergers And Acquisitions ◽  
Insider Trading ◽  
Securities And Exchange Commission ◽  
Business Practices ◽  
Due Diligence ◽  
Securities Litigation ◽  
Legitimate Business ◽  
Adoption And Implementation ◽  
The U.S

This chapter summarizes key recommendations that are proffered throughout this book. Recommendations that are proposed encompass the areas of the disclosure framework, issuer exemptions from Securities Act registration, exemptions for resales of securities, the Securities Act registration framework, due diligence in registered offerings, the federalization of corporate governance, private securities litigation, insider trading, mergers and acquisitions, and the Securities and Exchange Commission. In total, well over 100 recommendations are set forth in this chapter. Hence, this book has identified problematic areas, analyzed their shortcomings, and recommended solutions that should ameliorate the deficiencies that exist. With the adoption and implementation of the recommendations made herein, the U.S. securities framework should become more transparent, even-handed, and investor-oriented without imposing undue burdens on legitimate business practices.

The Nineteenth-Century Perspective on Federal Judicial Power

2021 ◽  
pp. 73-84
Author(s):  
James E. Pfander
Keyword(s):  
Nineteenth Century ◽  
Federal Courts ◽  
Judicial Power ◽  
State Law ◽  
Federal Law ◽  
The U.S ◽  
The Way

This chapter examines the way nineteenth-century jurists defined the words “cases” and “controversies” in Article III of the U.S. Constitution. It shows that federal courts agreed to hear uncontested applications to claim rights under federal law as “cases” under Article III. But the same courts refused to hear matters governed by state law unless they arose between opposing parties as “controversies” within Article III. This distinction between cases and controversies meant that a claim of right by a petitioner, such as that in a naturalization petition, would qualify as a case, even though the plaintiff did not join an adverse party from whom the plaintiff sought redress.

scholarly journals Degrees of Deference: Applying vs. Adopting Another Sovereign's Law

2018 ◽  
Author(s):  
Kevin M. Clermont
Keyword(s):  
International Law ◽  
Federal Courts ◽  
State Courts ◽  
State Law ◽  
Federal Law ◽  
Local Rule ◽  
The Federalist ◽  
The Status ◽  
Local Courts ◽  
Voluntary Adoption

103 Cornell L. Rev. 243 (2018)Familiar to all Federal Courts enthusiasts is the Erie distinction between federal actors’ obligatory application of state law and their voluntary adoption of state law as federal law. This Article’s thesis is that this significant distinction holds in all other situations where a sovereign employs another’s law: not only in the analogous reverse-Erie resolution of federal law’s constraint on state actors, but also in the horizontal choice-of-law setting and even in connection with the status of international law. Application and adoption are different avenues by which to approach a pluralist world. Application involves the recognition of the other sovereign’s law properly governing by its own force, while adoption follows from voluntary consultation of the other’s law while formulating the local rule of decision in pursuit of fairness, convenience, or other local policies. The applying/adopting distinction can be difficult to draw, but draw it we must because many binary practical consequences turn on it. Those consequences range beyond the federalist implications for federal and state courts to the modifiability of the sovereign’s law and the availability of original and appellate jurisdiction in the local courts.

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