Corporate Governance

SEC v. BofA: Judge Rakoff Rejects the Settlement (Part 4)

Posted on September 15, 2009
Judge Rakoff's second concern was the explanation for the settlement provided by the Bank.  The Bank adopted a somewhat belligerent tone, loudly proclaiming its complete innocence ('vigorously' asserting innocence in the language of the opinion)...

SEC v. BofA: Judge Rakoff Rejects the Settlement (Part 3)

Posted on September 15, 2009
So why didn't the Commission charge the individuals?  The Commission largely relied on an absence of intent.  With the officers relying on counsel, the Commission could not show that they knew or were reckless in not knowing about the false statements...

The Role of Stock Exchanges in Corporate Governance: The Dominant Players (Part 2)

Posted on September 14, 2009
We are discussing The Role of Stock Exchanges in Corporate Governance, a report issued by the OECD.  The study examined ten exchanges (some of which were, in turn, clusters of exchanges, such as Euronext), ranging from NYSE/Nasdaq, to Warsaw to Tokyo...

The Role of Stock Exchanges in Corporate Governance (Introduction)

Posted on September 14, 2009
In the corporate governance area, there are few issues quite as important as the role of stock exchanges in the governance process.  Stock exchanges can play a substantial or limited role in the process.  In the United States, they are major players, requiring boards with a majority of independent directors and various committees, likewise staffed with independent directors...

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The Role of Stock Exchanges in Corporate Governance: Demutualisation and the Retention of Regulatory Responsibility (Part 3)

Posted on September 14, 2009
We are discussing The Role of Stock Exchanges in Corporate Governance, a report issued by the OECD. The precise role of stock exchanges in the regulatory process has been an often discussed issue.  Demutualisation and the conversion to for-profit companies has, however, raised the importance of the discussion to a new level...

The Case for Access: The British Experience

Posted on September 12, 2009
Those who allege that access will cause substantial disruption in the corporate governance process have a serious weakness:  the facts. Access has been in place in Great Britain for years with no apparent harm.  Indeed, we note that in a letter submitted by the Association of British Insurers, Peter Montagnon, Director of Investment Affairs, had this to say: Experiences in the UK and other markets have shown that the ability to nominate directors does not lead to frivolous nominations...

Corporate Governance Reform and the ABA (Part 1)

Posted on September 11, 2009
The ABA Task Force on Delineation of Governance Roles and Responsibilities came out with a Report that received some mention but otherwise disappeared into the morass that is corporate governance.  There is so much going on, between the SEC, the Delaware courts, and Congress, that reports unconnected to specific developments get much play...

Churchill's Motion to Amend Judgment to Dismiss

Posted on September 11, 2009
On July 21, 2009, Churchill attorney Qusair Mohamedbhai filed a motion under C.R.C.P. Rule 59 to amend the trial court judgment to dismiss the case.  Followers of this case will remember that after the jury verdict finding Churchill's First Amendment rights had been violated and awarding $1...

Corporate Governance Reform and the ABA (Part 2)

Posted on September 11, 2009
We are discussing a Report produced by the ABA Task Force on Delineation of Governance Roles and Responsibilities.  The Report is a good overview of the roles played by three interest groups in the governance debate, shareholders, directors, and regulators...

Stockman v. Heartland Industrial Partners: In the Case of Indemnification, Goals Trump Contract

Posted on September 10, 2009
This blog extensively covered United States v. Stockman, involving criminal charges brought against officers and directors of Collins & Aikman Corporation ('C & A') for defrauding investors, banks, and creditors. The U.S. Attorney dropped its charges on January 9, 2009, providing a cursory explanation for its decision...

Foreign Listings and the US: Sarbanes Oxley to the Rescue

Posted on September 09, 2009
How things have evolved.  Two years ago, the corporate governance debate was about the competitive harm of Sarbanes-Oxley (see Criticizing the Critics: Sarbanes Oxley and Quack Corporate Governance) and the need to restrict shareholder litigation in order to return the US to the pinnacle in global markets...

Executive Compensation: The Excess and the Agony

Posted on September 08, 2009
The Institute for Policy Studies has put out a report on executive compensation called "America's Bailout Barons," which more or less reveals the content.  Among other things, the report concluded: The 20 US financial firms that have received the most bailout dollars from taxpayers awarded their top five executive officers, in the three years through 2008, pay packages worth a combined $3...

Not Always a Paradise

Posted on September 08, 2009
Great Britain has sometimes been labeled a shareholders paradise.  Unlike the United States, large shareholders have access to the company's proxy statement for their nominees.  They also get a say on pay and directors must be elected by a majority of the votes cast...

Justice Stevens and the Federal Securities Laws

Posted on September 07, 2009
Articles have begun to speculate that Justice Stevens is ready to announce his resignation from the Supreme Court.  The speculation is based his hiring of a single clerk, rather than the usual four.  Retired Justices apparently get one clerk...

The Madoff Report is Out

Posted on September 05, 2009
After releasing the executive summary earlier this week, the Commission released the full report of the Inspector General on the Madoff debacle.  The report can be found here.   The report is full of nuggets.  We mention one of them...

The Full Madoff Report is Out

Posted on September 05, 2009
After releasing the executive summary earlier this week, the Commission released the full report of the Inspector General on the Madoff debacle.  The report can be found here.   The report is full of nuggets.  We mention one of them...

SEC v. Bank of America: A Dissatisfied Judge Rakoff and A Questionable Stance on Privilege

Posted on September 04, 2009
Last week or so, the SEC and Bank of America filed with Judge Rakoff their views of the case.  In some respects, the two documents represented irreconcilable versions of the same case.  For Bank of America, it had done nothing wrong.  The disclosure was entirely accurate...

Barristers Best and The Race to the Bottom

Posted on September 04, 2009
Ranking law blogs is notoriously hard to do.  Do you rank by traffic, an approach used by Paul Caron when he does a quarterly list?  If you rank by traffic, do you go with individual IP addresses or page views?  Do you rely on the number of links to your blog, a method used for example by Google?  (Ranking of blogs, including the influence of blogs on US News rankings, is examined in greater detail in Of Empires, Independents, and Captives: Law Blogging, Law Scholarship, and Law School Rankings)...

Madoff and the Report of the Inspector General: The Failure to Look Around the Corner

Posted on September 03, 2009
We discussed yesterday, briefly, the Summary of the Report of the Inspector General on its "Investigation of Failure of the SEC To Uncover Bernard Madoff's Ponzi Scheme."  As we noted, the SEC received a number of credible reports and complaints over the years and conducted three examinations (run by OCIE and/or examiners from regional offices) and two investigations (conducted by the Division of Enforcement) of Madoff between 1992 and 2008 when the scheme finally collapsed...

Madoff and the Report of the Inspector General: The Failure to Look Around the Corner (Part 2)

Posted on September 03, 2009
We are discussing the executive summary of the report ("Investigation of Failure of the SEC To Uncover Bernard Madoff's Ponzi Scheme") by the Inspector General on the failure of the SEC to uncover the Madoff ponzi scheme sooner.  The Enforcement Division conducted two investigations (and probably should have conducted a third)...

Public Pension Plans, Labor Unions, and the Benefits of Shareholder Activism

Posted on September 02, 2009
Remember in the prior administration the complaints that surfaced because of shareholder activism by pension plans, particularly ones sponsored by unions?  We recall, in particular, the editorial written by  Justice Scalia's son (Eugene) criticizing union shareholder activism and calling on the Department of Labor to do something about it, a position that engendered a reply from this Blog...

Public Pension Plans, Labor Unions, and the Benefits of Shareholder Activism (Continued)

Posted on September 02, 2009
Institutional investors (including union pension plans) achieve fewer dismissals and greater settlement amounts.  What else?  According to Institutional Monitoring Through Shareholder Litigation, they also generate improvements in governance...

The SEC and the Madoff Report

Posted on September 02, 2009
A summary of the Report by the Inspector General of the SEC has been posted on the Commission's web site, a long with a comment by Chairman Mary Schapiro.   The full 450 page missive will eventually follow. The study concludes that there was no impropriety by anyone working on the case, including the SEC official who had a relationship with Madoff's niece...

Access and the Opposition: Be Careful What You Wish For

Posted on September 01, 2009
We've noted before the often short sighted approach taken by opponents to shareholder access.  The Cox Commission proposed a wholly ineffective form of access (requiring an access bylaw to pass first) yet it was opposed with enormous vehemence.  The consequence has been a change in administration and an even more invasive form of access (one that is much better and promises to be more effective)...

Access and Its Opponents: The Inevitability of Access

Posted on August 31, 2009
Access is inevitable.  As we have written (The SEC, Corporate Governance, and Shareholder Access to the Board Room), the denial of access only occurred because, in the early days of the proxy rules, issuers opposed it and, frankly, so did shareholders...

Access and Its Opponents: The Vital Role of the Nominating Committee

Posted on August 29, 2009
We are the first to note that access upsets the current state of the law.  Delaware allows any shareholders to nominate directors, the proxy rules effectively take that right away.  Many of the letters, therefore, contained pleas to leave things as they were, as if this supported the state law role in the governance process...

Access and Its Opponents: The Ostensible Improvement in Corporate Governance

Posted on August 28, 2009
One of the much repeated arguments against access has been that corporate governance has so improved over the last few years (since SOX), that this additional right is not needed.  The letters usually refer to the same developments:  The adoption of majority vote provisions (which we address in a separate post), the increase in the number of independent directors on the board, and the use of independent chairmen/lead directors...

Access and Its Opponents: The Ostensible Evidence of Majority Voting Provisions

Posted on August 27, 2009
One of the main arguments made in opposition to access has been the widespread adoption of majority vote provisions.  Somehow, the evidence implies, access will undergo something similar and, in the corporate governance realm, a thousand access flowers will bloom...

Access and Its Opponents: The Ostensible Benefits of Private Ordering

Posted on August 26, 2009
Many have taken the position that the SEC is taking a "one size fits all" approach that should be eschewed in favor of private ordering.  Private ordering is a concept that suggests companies ought to put in place provisions that uniquely fit their own needs and circumstances and, that, presumably, includes the views of management and owners...

BofA and the Merger with Merrill Lynch: Heroics Not Weakness

Posted on August 26, 2009
The Atlantic Monthly has an article about the pressure put on BofA and its CEO, Ken Lewis, to close the deal to purchase Merrill Lynch.  See The Final Days of Merrill Lynch.  Treasury Secretary Henry Paulson apparently threatened Lewis with removal if he tried to use the material adverse condition clause to get out of the merger...

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