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 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.

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.

scholarly journals Creditor-Focused Corporate Governance: Evidence from Mergers and Acquisitions in Japan

2011 ◽  
Vol 46 (4) ◽  
pp. 1051-1072 ◽  
Author(s):  
Vikas Mehrotra ◽  
Dimitri van Schaik ◽  
Jaap Spronk ◽  
Onno Steenbeek
Keyword(s):  
Corporate Governance ◽  
Mergers And Acquisitions ◽  
Dominant Role ◽  
Sharp Contrast ◽  
Distinctive Features ◽  
Target Firms ◽  
The World ◽  
Main Bank ◽  
The U.S

AbstractMergers in Japan have the dubious distinction of not creating wealth for shareholders of target firms, in sharp contrast to what occurs in much of the rest of the world. Using a sample of 91 mergers from 1982 through 2003 we document several distinctive features of the merger market in Japan: Mergers tend to be countercyclical and appear to be driven chiefly by creditor concerns. In particular, where the merging firms share a common main bank, we find that merger gains are lower. Overall, our results point to a market that is distinctly less shareholder focused than that in the U.S., and a market where creditors play an important, perhaps dominant, role in corporate governance.

SEC charges broker-dealer for failure to protect against insider trading by employees

2015 ◽  
Vol 16 (1) ◽  
pp. 59-62
Author(s):  
Daniel A. Nathan ◽  
Tiffany Rowe
Keyword(s):  
Insider Trading ◽  
Private Equity ◽  
Public Information ◽  
Securities And Exchange Commission ◽  
Confidential Information ◽  
Securities Litigation ◽  
Content Type ◽  
Improper Use ◽  
Failure To Protect ◽  
Securities Laws

Purpose – To alert broker-dealers to Securities and Exchange Commission charges brought against a broker-dealer for ineffective controls over employee use of confidential information and to provide guidance regarding development and implementation of controls to protect against improper use of material non-public information by employees. Design/methodology/approach – Reviews Securities and Exchange Commission settlement order with broker-dealer for violations of securities laws for failure to adequately prevent insider trading by employees and provides guidance for implementing control to prevent insider trading. Findings – The Securities and Exchange Commission’s charges are the first to be brought against a broker-dealer for failure to adequately protect against insider trading. A broker used a customer’s confidential information regarding an impending acquisition by a private equity firm to purchase stock in the target company. The broker-dealer settled charges of violations of the federal securities laws for failing to adequately establish, maintain, and enforce policies and procedures to protect against insider trading by employees with access to confidential client information. Originality/value – Practical guidance regarding internal controls at broker-dealers from experienced securities litigation and regulation lawyers.

scholarly journals Comparison of risk management regulation from a corporate governance perspective within the German and united states legal areas

2014 ◽  
Vol 3 (4) ◽  
pp. 138-148
Author(s):  
Remmer Sassen
Keyword(s):  
United States ◽  
Risk Management ◽  
Corporate Governance ◽  
The United States ◽  
Securities And Exchange Commission ◽  
Future Research ◽  
Governance System ◽  
National Interests ◽  
Legal Norms ◽  
The U.S

Risk management is one of the main corporate governance components or management tasks. This paper details a comparison of risk management regulation from a corporate governance perspective of listed stock corporations in Germany and the United States (U.S.). Obviously, there are differences and commonalities between the national legal norms and the regulatory levels of risk management in both countries. The comparison helps to understand different traditions and practices in terms of how significant corporate governance rules are for risk management. Therefore, this article intends to inspire future research on the regulation of risk management across different regions and explore the relevance of national interests in the regulation of risk management. A principal finding of the comparison is that the U.S. corporate governance system seems to be more strongly regulated than the German system. This results from the powerful and coordinating role of the U.S. Securities and Exchange Commission (SEC). Thus, the seemingly more liberal system of non-binding standards in the U.S. has a higher impact on the regulation of risk management than in Germany.

scholarly journals Corporate governance: A risk management approach

2013 ◽  
Vol 10 (2) ◽  
pp. 104-113 ◽  
Author(s):  
Tracy Xu ◽  
Hugh Grove ◽  
Philipp Schaberl
Keyword(s):  
Risk Factors ◽  
Risk Management ◽  
Corporate Governance ◽  
Boards Of Directors ◽  
Securities And Exchange Commission ◽  
Annual Reports ◽  
Management Approach ◽  
Rating Systems ◽  
Public Companies ◽  
The U.S

Risk management committees are now required for all U.S. financial institutions that are regulated by the U.S. Federal Reserve Bank. All U.S. public companies must now report their risk management activities for both Board of Directors and top management in their 10 K annual reports to the U.S. Securities and Exchange Commission (SEC). This paper analyzes one approach to risk management for public companies and their Boards of Directors. Since 2011, Disclosure Insight Inc. has issued risk ratings for over 1500 public companies in US. Its risk rating is based on the number, nature, and timing of 100 risk factors, which are across major categories, such as the SEC investigative activity, auditor issues, capital market events, and corporate governance issues. Our study finds significant positive abnormal risk-adjusted returns for companies with lower risk ratings and these companies also outperform the S&P500. Thus, this paper should be of interest to investors, company executives, and risk management committees, as well as SEC and other regulators. Alternatively, risk management committees in public companies could just establish their own rating systems, based upon their own key factors, as opposed to using the Disclosure Insight Inc. aggregate rating approach for all 100 risk factors.

Informed Options Trading Prior to Takeover Announcements: Insider Trading?

2019 ◽  
Vol 65 (12) ◽  
pp. 5697-5720 ◽  
Author(s):  
Patrick Augustin ◽  
Menachem Brenner ◽  
Marti G. Subrahmanyam
Keyword(s):  
Stock Market ◽  
Insider Trading ◽  
Informed Trading ◽  
Securities And Exchange Commission ◽  
Equity Options ◽  
Corporate Insiders ◽  
Beneficial Ownership ◽  
Options Trading ◽  
Option Volume ◽  
The U.S

We quantify the pervasiveness of informed trading activity in target companies’ equity options before the announcements of 1,859 U.S. takeovers between 1996 and 2012. About 25% of all takeovers have positive abnormal volumes, which are greater for short-dated, out-of-the-money calls, consistent with bullish directional trading before the announcement. Over half of this abnormal activity is unlikely due to speculation, news and rumors, trading by corporate insiders, leakage in the stock market, deal predictability, or beneficial ownership filings by activist investors. We also examine the characteristics of option trades litigated by the Securities and Exchange Commission (SEC) for alleged illegal insider trading. Although the characteristics of such trades closely resemble the patterns of abnormal option volume in the U.S. takeover sample, we find that the SEC litigates only about 8% of all deals in it. This paper was accepted by Lauren Cohen, finance.

Liu v. S.E.C.: Supreme Court’s narrowing of SEC disgorgement raises questions for insider trading cases

2020 ◽  
Vol 21 (1) ◽  
pp. 63-68
Author(s):  
Alan R. Friedman ◽  
Dani R. James ◽  
Gary P. Naftalis ◽  
Paul H. Schoeman ◽  
Chase Henry Mechanick
Keyword(s):  
Insider Trading ◽  
Design Methodology ◽  
Content Type ◽  
Legitimate Business ◽  
Case Subject ◽  
The Supreme Court ◽  
Expert Analysis ◽  
History Of ◽  
Practical Implications ◽  
The U.S

Purpose To analyze the U.S, Supreme Court’s decision in Liu v. S.E.C., 140 S. Ct. 1936 (2020) and its potential implications for insider trading cases. Design/Methodology/Approach Provides context on the history of disgorgement in SEC enforcement proceedings; discusses factual and procedural background underlying the Liu decision; summarizes the Court’s opinion and rationale, with a particular focus on the Court’s pronouncements regarding the permissible scope of SEC disgorgement as an equitable remedy; identifies and explores three possible issues in insider trading cases that may be affected by the Court’s narrowing of SEC disgorgement. Findings In Liu, the Supreme Court narrowed SEC disgorgement by stating that, as a general matter, SEC disgorgement is not permitted where: (1) the proceeds are not remitted to investors; (2) one defendant is made to disgorge profits that were received by someone else; or (3) the amount of disgorgement fails to deduct legitimate business expenses, in each case subject to possible exemptions as outlined by the Court. Practical implications This rule may call into question whether courts may: (a) order disgorgement against insider traders, given the difficulty of identifying investors who have been harmed; (b) order insider traders to disgorge profits earned by others on account of their violations; or (c) order insider traders to pay civil penalties under Section 21 A of the Exchange Act based on profits earned by others. Originality/Value Expert analysis and guidance from experienced securities enforcement lawyers with expertise in insider trading.

Relationship between Code of Corporate Governance and Corporate Financial Performance (An Empirical Study of Food Companies Listed on KSE)

GIS Business ◽  
2017 ◽  
Vol 12 (4) ◽  
pp. 01-09
Author(s):  
Asma Rafique Chughtai ◽  
Afifa Naseer ◽  
Asma Hassan
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Securities And Exchange Commission ◽  
Executive Directors ◽  
Agency Conflicts ◽  
Cross Sectional ◽  
Return On Equity ◽  
Governance Practices ◽  
Code Of Corporate Governance ◽  
The Impact

The crucial role that implementation of Code of Corporate Governance plays on protecting the rights of minorities, shareholders, local as well as foreign investors cannot be denied. Companies all over the world are required to implement their respective Code of Corporate Governance for avoiding agency conflicts between companies management and stakeholders and for assuring transparency in accountability. This paper aims at exploring the impact of implementation of corporate governance practices (designed by Securities and Exchange Commission of Pakistan) have on the financial position of companies. For explanatory variables of the study, composition of the board as per the Code of Corporate Governance that comprises of presence of independent, executive and non-executive directors has been taken into consideration. Return on equity has been taken as an indicator of firms profitability i.e. the dependent variable. For this study, companies listed on food producing sector of Karachi Stock Exchange have been screened for excogitation of the relationship. It is an empirical research based on nine years data from 2007–2015. Using Hausman Test for selecting the data analysis technique between Fixed or Random, Fixed Cross Sectional Panel Analysis has been used for analysis of the data collected. Findings indicate that presence of independent, executive and non-executive directors as per the code requirements levies a significant impact on the profitability of companies indicated by return on equity. It is, thus concluded that companies should ensure compliance with code of governance practices to reduce not only the agency issues but also to increase their profitability.

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