RiskMetrics Group discusses here an NYSE rule change that will no longer allow brokers to vote uninstructed client shares in uncontested director elections. The new rule is scheduled to take effect for the 2010 proxy season, but groups such as Business Roundtable and the Society of Corporate Secretaries & Governance Professionals argue it will disenfranchise … Continue Reading
The Federal Reserve and the U.S. Department of Treasury have recently begun new lending to encourage investors to buy securities backed by consumer and small business loans. The lending program, known as TALF for Term Asset-Backed Securities Loan Facility, could be a favorable investment opportunity for large investors at the same time that it provides … Continue Reading
Earlier this week the U.S. Senate began consideration of a bill that would require States to obtain the identity of a corporation’s beneficial owners as part of the incorporation process. Most states allow the formation of a variety of business entities without asking for the names of owners. Numerous law enforcement agencies claim criminals use … Continue Reading
The SEC announced yesterday a new initiative to improve internal procedures for evaluating tips, complaints, and referrals. It is no coincidence that the announcement comes at a time when the SEC is facing stinging criticism as more facts surrounding the $50 billion Bernard Madoff fraud are showcased in the news. Namely, Harry Markopolos, a rival hedge fund … Continue Reading
The NYSE has extended until June 30, 2009 the temporary lowering of its market-capitalization standard for listed companies. In addition, the NYSE has temporarily suspended the $1 minimum price requirement. The NYSE stated that its actions reflect the Exchange’s “determination that suitable companies should remain listed during the current period of unusual market volatility and … Continue Reading
As reported at The Corporate Counsel earlier this week, SEC Commissioner Luis Aguilar has recently lamented the fact that there was a sharp decrease last year in the number of retail investors who voted their proxies. The drop is attributed to the new e-proxy rules. Apparently, most retail shareholders are less likely to participate in … Continue Reading
Senators Grassley and Levin have introduced a bill that would require certain hedge funds to register under the Investment Company Act and the give the SEC the long-desired power it needs to examine them. The SEC tried to regulate hedge funds under the Investment Advisers Act a few years ago, but the D.C. Circuit ruled … Continue Reading
Yesterday, President Obama announced that the Treasury had adopted new guidelines for financial institutions that are receiving government assistance. The Treasury press release discusses these new restrictions.… Continue Reading
The collapse of the market for auction rate securities (“ARS”) left investors who thought they had a safe, liquid investment with illiquid securities. While there have been a number of government settlements with sellers of ARS, the agreements have focused on providing a recovery for small investors, leaving corporate and institutional purchasers of these securities … Continue Reading
Several news outlets are reporting that the SEC is investigating Apple, presumably in connection with recent announcements about Steve Jobs’ medical issues. Jobs was diagnosed with pancreatic cancer in 2003, which was publicly disclosed almost a year later when he announced he was cured following surgery. In June 2008, the press raised concerns over Jobs’ … Continue Reading
What does 2009 hold in store for the SEC? A good indicator is Mary Schapiro’s testimony to the Senate Nominating Committee yesterday. Ms. Schapiro is President-elect Obama’s nominee to serve as Chairman of the SEC. In contrast to previous sentiments as head of FINRA that she would like to reduce overly burdensome regulation (according to … Continue Reading
As 2009 begins, perhaps the best indicator of board structure and corporate governance trends is the annual review of boards of directors recently completed by RiskMetrics Group. RiskMetrics has compiled data from last year’s proxy statements at S&P 1,500 companies, yielding the following trends: 50% of companies continue to have classified boards, down 2% from … Continue Reading
As 2008 ends, consider yet another indication that this was a terrible year for financial markets: there has been only one IPO in the US in the last four months according to IPO research firm Renaissance Capital. The U.S. total for 2008 was 43 new issues raising $50 million or more, which makes this the … Continue Reading
The SEC has approved new rules for credit rating agencies designed to increase transparency of the rating process and decrease conflicts of interest. Some critics contend the big three credit-rating agencies (Standard & Poor’s, Moody’s, and Fitch) bear significant blame for the current economic crisis because they over-rated what turned out to be risky subprime … Continue Reading
According to RiskMetrics, the Laborers’ International Union of North America and the International Brotherhood of Teamsters don’t think Treasury’s bailout program does enough to curb executive compensation. The unions want a number of reforms, including: Incentive compensation not to exceed one times annual salary; Stock option awards tied to increased company performance relative to a … Continue Reading
The SEC enforcement manual, dated October 6, 2008, now states that the staff should not ask a party to waive the attorney-client or work product privileges when investigating potential securities laws violations. As previously discussed here, the Department of Justice adopted a similar procedure in September to change its must-criticized policy of labeling companies uncooperative … Continue Reading
The division of corporate finance of the SEC released a new staff legal bulletin on Friday dealing with shareholder proposals on company proxy statements. One aspect of the bulletin concerns a hypothetical shareholder proposal that requires the board of directors to amend the company’s charter. The question at hand is whether the proposal can be … Continue Reading
Do the Red Flag Rules of the FTC and the federal banking agencies apply to broker-dealers registered with the SEC? The short answer seems to be “Yes.” The Red Flag Rules require “financial institutions” and “creditors” with “covered accounts” to protect against identity theft by implementing written programs designed to detect and prevent identity theft. … Continue Reading
The FTC has granted a six-month delay for enforcement of its Red Flag Rules, previously discussed here. Note that the other agencies responsible for the rules, including the National Credit Union Administration, the Federal Deposit Insurance Corporation, the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision … Continue Reading
The SEC has had four new final rule releases in the last two days, all of which deal with short selling: 1. Release 34-58785 requires certain institutional investment managers to file their short sales and positions of certain securities on Form SH. The disclosures will not be available to the public, for competitive reasons, but … Continue Reading
Following the signing of the Emergency Economic Stabilization Act of 2008 on Friday, the SEC issued a statement that the ban on short selling financial institution stock will expire late on Wednesday night. Some fear the lifting of the ban will cause financial institution stock to decline even more. As evidence they point to the … Continue Reading
The list of 799 “financial companies” that cannot be subject to short sales by order of the SEC is growing. The SEC has authorized major stock exchanges to identify additional companies that should be added to the list, and the NYSE and NASDAQ have added at least 299 and 71 companies, respectively. To identify companies, … Continue Reading
