Yearly Archives: 2012

Best Practices for Preparing a Clawback Agreement

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on
Wednesday, November 21, 2012
, ,
More from: , ,

The following post comes to us from Scott J. Davis, head of the US Mergers and Acquisitions group at Mayer Brown LLP, and Michael E. Lackey, Partner-in-Charge of Mayer Brown’s Washington, D.C. office. This post is based on a Mayer Brown memorandum.

Scenario

A large corporation is sued over the alleged breach of a substantial contract. Due to the complex nature of the contract, the corporation’s business executives frequently sought advice from in-house counsel when entering into, and performing under, the agreement. The corporation’s in-house counsel has concerns that sensitive documents reflecting attorney-client communications—or even in-house counsel’s own work product—may be produced by mistake, given the volume of email and electronic documents that must be reviewed quickly.

Clawback Provisions Provide Protections and Cost Savings

Even when a party to a litigation employs precautions to prevent the inadvertent disclosure of privileged documents, some privileged materials are likely to slip through. Recognizing this likelihood, litigants commonly enter into “clawback agreements” at the start of discovery. Typically, a clawback agreement permits either party to demand the return of (that is, to “claw back”) mistakenly produced attorney-client privileged documents or protected attorney work product without waiving any privilege or protection over those materials.

Clawback agreements allow parties to specifically tailor their obligations (if any) to review and separate privileged or protected materials in a manner that suits their needs. For example, before discovery begins, the parties can agree on how they will search for and separate privileged or protected materials from their document productions. So long as the parties abide by the agreement, they will be permitted to take back any privileged or protected material inadvertently produced. Thus, parties can reduce their exposure to costly and time-consuming discovery disputes over whether the protection of privileged material was waived by its production.

READ MORE »

CEO Employment Contracts and Non-compete Covenants

Posted by Randall S. Thomas, Vanderbilt University, on
Tuesday, November 20, 2012
, ,
More from:

Randall S. Thomas is a John Beasley II Professor of Law and Business at Vanderbilt Law School.

In our recent working paper, When Do CEOs Have Covenants Not to Compete in Their Employment Contracts?, we undertake the first comprehensive study of contractual restrictions on CEOs’ post-employment competitive activities. The large random sample of nearly 1,000 CEO employment contracts for 500 companies was selected from the S&P 1500 from the 1990s through 2010. We find that about 70% of CEO contracts have post-employment competitive restrictions. We also find more covenants not to compete (CNCs or noncompetes) in longer-term employment contracts and at profitable firms. In addition, our study uses a nuanced state-by-state CNC strength of enforcement index to test the variance of CEO noncompetes across jurisdictions.

READ MORE »

Recent Trends in US Securities Class Actions against Non-US Companies

Posted by the Harvard Law School Forum on Corporate Governance & Financial Regulation, on
Tuesday, November 20, 2012
, , ,
More from: , ,
Editor’s Note: Elaine Buckberg is Senior Vice President at NERA Economic Consulting. This post is based on a NERA publication by Robert Patton; the full publication, including footnotes, is available here.

The volume of US securities class action litigation targeting companies outside the US has recently reached record levels, despite a 2010 decision by the US Supreme Court, in Morrison v. National Australia Bank, which substantially restricted the extraterritorial reach of many such cases. This increase is attributable in large part to a wave of suits filed against Chinese companies listed on US stock markets. Even excluding Chinesecompany litigation, however, the pace of US securities class actions against non-US companies has not fallen below the levels observed prior to the Morrison decision.

On the other hand, Morrison may have had some effect on settlement sizes. In the past several years, there have been few very large settlements in US securities class actions against non-US companies, a development that, as discussed below, may be attributable in part to the decision. This article surveys recent trends in filings of US securities class actions against non-US company defendants, drawing upon data up to mid-2012. It also discusses trends in settlements, and concludes by reviewing the outlook for such litigation going forward.

READ MORE »

November 2012 Dodd-Frank Progress Report

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on
Monday, November 19, 2012
, ,
More from: , ,

The following post comes to us from Margaret E. Tahyar and Gabriel D. Rosenberg of the Financial Institutions Group at Davis Polk & Wardwell LLP. This post discusses a Davis Polk report, which is available here. A post about the previous progress report is available here. Other posts about the Dodd-Frank Act are available here.

This posting, the November 2012 Davis Polk Dodd-Frank Progress Report, is one in a series of Davis Polk presentations that illustrate graphically the progress of the rulemaking work that has been done and is yet to occur under the Dodd-Frank Act. The Progress Report has been prepared using data from the Davis Polk Regulatory Tracker™, an online subscription service offered by Davis Polk to help market participants understand the Dodd-Frank Act and follow regulatory developments on a real-time basis.

In this report:

  • As of November 1, 2012, a total of 237 Dodd-Frank rulemaking requirement deadlines have passed. Of these 237 passed deadlines, 144 (61%) have been missed and 93 (39%) have been met with finalized rules.
  • In addition, 133 (33.4%) of the 398 total required rulemakings have been finalized, while 132 (33.2%) rulemaking requirements have not yet been proposed.
  • Major rulemaking activity this month included the Federal Reserve, FDIC and OCC final rules on stress testing. Additionally, the SEC proposed a rule on capital, margin and segregation requirements for swap dealers and major swap participants.

Questioning ‘Law and Finance’: US Stock Market Development, 1930-70

Posted by Brian R. Cheffins, University of Cambridge, on
Monday, November 19, 2012
, ,
More from:

Brian Cheffins is a Professor of Corporate Law at the University of Cambridge.

Since the late 1990s, a “law and finance” literature emphasizing quantitative comparative research on the relationship between national legal institutions on the one hand and corporate governance and financial systems on the other has achieved academic prominence. An important tenet of the law and finance literature is that corporate law “matters” in the sense it does much to explain how durable and robust equities markets develop. While “law and finance” has an important forward-looking normative message, namely that countries must enact suitable laws to reach their full economic potential, the thesis that corporate law influences stock market development seems to be well-suited to offer insights into if, when and how a country develops a corporate economy widely held companies dominate. Law and finance thinking implies that this should not occur in the absence of corporate law providing significant stockholder protection. In Questioning “Law and Finance”: U.S. Stock Market Development, 1930-70, recently published on SSRN, we draw upon events occurring in the United States to cast doubt on this logic.

READ MORE »

Enhancing Disclosure in the Municipal Securities Market: What Now?

Posted by the Harvard Law School Forum on Corporate Governance & Financial Regulation, on
Sunday, November 18, 2012
, , , ,
More from:
Editor’s Note: Elisse B. Walter is a Commissioner at the U.S. Securities and Exchange Commission. This post is based on Commissioner Walter’s recent remarks before the Bond Buyer’s California Public Finance Conference in San Francisco, California, which are available here. The views expressed in this post are those of Commissioner Walter and do not necessarily reflect those of the Securities and Exchange Commission, the other Commissioners, or the Staff.

So, here we are in California — in beautiful San Francisco. For better and for worse, California municipal finance is national news.

As an SEC Commissioner, my job in general doesn’t get me involved in the specifics of the individual municipal finance debates covered in today’s news — at least not in my official capacity.

My job is to protect investors in the roughly $4 trillion municipal securities market, maintain fair, orderly and efficient markets, and facilitate capital formation.

And, as a member of the Commission that serves the public as the investor’s advocate, I want to remind everyone that, without the trust and willingness of investors, projects that are critical to our country’s infrastructure could suffer. These include vital projects such as water, schools, roads, hospitals, and many others.

I’d like to talk about the importance of better protection for muni investors and how the Commission under Chairman Schapiro’s leadership is enhancing investor protection. I’ll also share my personal observations on the “what now” question that follows the issuance of our recent Report on the Municipal Securities Market.

As I walk through this, I want to make it clear that your support in these efforts is critical — that whatever we do, it will be done better if we have your input and support.

READ MORE »

U.S. Export Laws and Related Trade Sanctions

Posted by Stanley Keller, Edwards Wildman Palmer LLP, on
Saturday, November 17, 2012
,
More from: ,

Stanley Keller is a partner at Edwards Wildman Palmer LLP. This post is based on an Edwards Wildman guidance note.

I. Export Laws at a Glance

Most U.S. companies are aware at least generally that U.S. export laws regulate activities such as the shipment of tangible products out of the country and that certain countries are subject to strict economic sanctions. But many companies are unaware of the actual breadth and complexity of U.S. export laws and regulations and what impact those laws have on their business — the result being that many companies do not even know that they are in a legal minefield until it is too late.

The problem that many companies run into is that, though U.S. export laws were intended to focus on the export of sensitive goods to hostile countries and keeping potentially dangerous items out of the hands of persons intent on harming the U.S., the regulations that implement these laws — the very dense and complicated Export Administration Regulations (“EAR”) enforced by the Commerce Department — cover virtually every commercial good and technology originating in the U.S. Additionally, as explained below, the EAR cover much more than the shipment of goods from the U.S. to a foreign country. Rather, the EAR cover the re-export of U.S.-origin goods from one foreign country to another, as well as the release of technology to a foreign national located in the U.S. When overlaid with dozens of stand-alone economic sanctions programs enforced by the Treasury Department, such as the U.S. embargoes of Iran and Cuba, these laws and regulations come together to form a complicated web that effects virtually every U.S. company that does business overseas or that has a product for which there is a market overseas.

When these laws and regulations are violated, the sanctions can be severe. At a minimum, goods can be returned or seized by U.S. or foreign customs officials. More ominously, huge fines (up to twice the value of the transaction) can be imposed, willful violations can result in significant jail time for individuals, and resulting internal investigations and/or government investigations can be burdensome, distracting, very expensive, and cause serious reputational harm to a company.

READ MORE »

Dodd-Frank Principles and Provisions

Posted by the Harvard Law School Forum on Corporate Governance & Financial Regulation, on
Friday, November 16, 2012
, , , ,
More from:
Editor’s Note: Mary Schapiro is Chairman of the U.S. Securities and Exchange Commission. This post is based on Chairman Schapiro’s remarks at the George Washington University Center for Law, Economics and Finance Regulatory Reform Symposium, available here. The views expressed in this post are those of Chairman Schapiro and do not necessarily reflect those of the Securities and Exchange Commission, the other Commissioners, or the Staff.

Four years ago, this nation was suffering from a near-collapse of our financial system.

While there are differences of opinion as to what was the most significant trigger, a bi-partisan Senate Committee report — known as the Levin-Coburn Report — asserted that the crisis was the result of “high risk, complex financial products; undisclosed conflicts of interest; and the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street.”

While this period of our history will be written and re-written over and over again, Congress and the Administration knew that the status quo was unacceptable. So together they passed landmark legislation to address many of the issues that were highlighted by that tumultuous period.

The Dodd-Frank Wall Street Reform and Consumer Protection Act is a vital and comprehensive response to the financial crisis — an event that devastated the American economy, cost the American people trillions of dollars and millions of jobs, and undermined the confidence that our financial system requires if it is to thrive and support a growing economy.

The sweeping scope of this financial reform legislation sometimes obscures the fact that, despite its breadth, it is rooted in a handful of sound principles that should have been more firmly in place before the crisis, and whose embrace serves to make markets more stable and efficient. Simple principles like. . . .

READ MORE »

Regulatory Capital: January 1, 2013 Deadline Eased

Posted by Dwight C. Smith, Morrison & Foerster LLP, on
Friday, November 16, 2012
, , ,
More from: ,

Dwight C. Smith is a partner at Morrison & Foerster LLP focusing on bank regulatory matters. This post is based on a Morrison & Foerster client alert by Mr. Smith.

The three federal bank regulatory agencies announced [1] that their proposed new capital rules based on Basel III (and other Basel standards) [2] would not take effect on January 1, 2013, a date previously proposed apparently in order to adhere to international consensus. The announcement was overdue. The comment period for the three proposed capital rules ended only a few weeks ago on October 22, 2012. The agencies received hundreds of comments that they will have to digest in order to finalize the rules, making implementation on January 1, 2013, a practical impossibility.

January 1, 2013, was set by international agreement as the effective date for new Basel-based rules in all countries. The United States will not be the only jurisdiction to miss this deadline. The Basel Committee on Banking Supervision (the “BCBS”) released preliminary reviews of the implementation of Basel III in the European Union, the United States, and Japan. Only Japan has new rules in place. The European Parliament is expected to take up its version of the new rules, colloquially known as CRD IV, on November 20, 2012, in plenary session. If Parliament approves CRD IV, it will go to the European Council for review. Finalization, accordingly, will take several months.

The announcement leaves two questions that the agencies did not answer.

READ MORE »

Corporate Governance and Risk-Taking in Pension Plans

Posted by R. Christopher Small, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on
Friday, November 16, 2012
, ,
More from: ,

The following post comes to us from Hieu Phan of the Department of Management at the University of Massachusetts Lowell and Shantaram Hegde, Professor of Finance at the University of Connecticut.

In our paper, Corporate Governance and Risk-Taking in Pension Plans: Evidence from Defined Benefit Asset Allocations, forthcoming in the Journal of Financial and Quantitative Analysis, we examine whether good corporate governance leads to a larger allocation of pension assets to risky securities as compared to safe investments. Defined benefit (DB) plans are one of the most important private retirement schemes in corporate America. Although pension regulations require firms to establish separate trusts to manage and invest DB pension plan assets, these pension plans are owned by the sponsoring corporations and the plan asset allocations are made under the influence of, if not the direction and control of, the plan sponsors. Depending on the firm and plan characteristics as well as the market environment, firms may have different incentives in investing pension assets, namely, either risk-taking by allocating a larger share of plan assets to risky asset classes (e.g., equity) or risk management by investing heavily in safe asset classes (e.g., cash, government debt, and guaranteed insurance contracts).

READ MORE »

Page 7 of 63
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 … 63