Monthly Archives: November 2018

Weekly Roundup: October 26-November 1, 2018

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This roundup contains a collection of the posts published on the Forum during the week of October 26–November 1, 2018.

Effective Board Evaluation

2018 CPA-Zicklin Index

CEO and Executive Compensation Practices: 2018 Edition

2018 Canadian Proxy Season Review

Amended NASDAQ Rules for Shareholder Approval

New Ruling on the Fujifilm-Xerox Transaction

The ISS Equity Plan Scorecard

Materiality and Efforts Qualifiers—Some Distinctions, Some Without Differences

A Fully Operational Token Platform

Leveling the Hunting Field

Leveling the Hunting Field

Lizanne Thomas is partner at Jones Day. This post is based on a Jones Day memorandum by Ms. Thomas. Related research from the Program on Corporate Governance includes Pre-Disclosure Accumulations by Activist Investors: Evidence and Policy by Lucian Bebchuk, Alon Brav, Robert J. Jackson Jr., and Wei Jiang, and The Law and Economics of Blockholder Disclosure by Lucian Bebchuk and Robert J. Jackson Jr. (discussed on the Forum here).

Like any predator, a wolf must carefully time its strike when pursuing prey. Certain species of shareholder activists operate under a similar imperative. Flawed disclosure rules in the United States give them an unfair advantage.

A few years ago, hedge fund Pershing Square—which popped up on Oct. 9 with a 1.1 percent stake in coffee company Starbucks—went after retailer J.C. Penney. Along with its ally Vornado Realty, Pershing accumulated 11.6 million shares in August 2010, putting the fund just below a 5 percent effective ownership stake. That is the threshold that requires mandatory reporting to the Securities and Exchange Commission. Once crossed, the buyer must publicly disclose its stake within a leisurely 10-day window.


Do an Insider’s Wealth and Income Matter in the Decision to Engage in Insider Trading?

Juha-Pekka Kallunki is Professor at the Oulu Business School at the University of Oulu and Visiting Professor at Stockholm School of Economics and the Aalto University School of Business. This post is based on an article recently published in the Journal of Financial Economics, authored by Professor Kallunki; Jenni Kallunki, Oulu Business School at the University of Oulu; Henrik Nilsson, Professor at Stockholm School of Economics; and Mikko Puhakka, Professor at the Oulu Business School at the University of Oulu. Related research from the Program on Corporate Governance includes Insider Trading Via the Corporation by Jesse Fried (discussed on the Forum here).

A body of literature shows that corporate insiders’ trades predict future abnormal returns, suggesting that insiders generally exploit their information advantage about firm prospects to make trading decisions (e.g., Seyhun, 1986; Lakonishok and Lee, 2001; and Cohen et al., 2012). However, the abnormal returns that insiders have been reported to earn are, on average, surprisingly small to justify them engaging in informed trading, given the potential costs involved. In particular, the general public and regulatory authorities monitor insiders’ trading and impose costs on insiders when trading is perceived to be opportunistic and self-serving. These costs comprise both the potential reputational losses imposed by outside investors and the media and the potential legal sanctions taken by the regulator.


A Fully Operational Token Platform

Robert Rosenblum is partner and Amy Caiazza is an associate at Wilson Sonsini Goodrich & Rosati. This post is based on a Wilson Sonsini memorandum by Mr. Rosenblum, Ms. Caiazza, Julie KrosnickiAaron FriedmanTyler Kirk, and Ajani Husbands.

Too often, token issuers have been asking the wrong legal and regulatory questions, and sadly, they have too often been receiving bad answers to those questions. In the frothy environment for tokens that (may have) recently cooled off, questions that token issuers often asked were, “How quickly can I do my token offering?”, or sometimes, “How quickly can I do a legally compliant token offering?” The question that token issuers should have been asking, we believe, is, “How do I finance and deploy a fully operational and legally compliant token platform as quickly and efficiently as possible?” That is the question we will try to answer in this post.


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