Monthly Archives: September 2019

Cyber Risk Board Oversight

Steve W. Klemash is Americas Leader at the EY Center for Board Matters, Pete Cordero is Managing Director-Cybersecurity and Chuck Seets is Americas Assurance Cybersecurity Leader, both at EY. This post is based on their EY memorandum.

In this Transformative Age, technology can make the impossible possible, but it also opens the door to exponentially increased cybersecurity risk.

A company’s board plays an important oversight role and is well-positioned to guide management in the development of an effective cybersecurity risk program.

In spring 2019, the EY Center for Board Matters hosted a series of private dinners as well as its second annual day- long Cybersecurity Board Summit. These gatherings brought together board members for discussions on the latest challenges and leading practices in overseeing cybersecurity risk. Their conversations centered on cyber threats, the processes and controls that can detect and mitigate such threats, the importance of planning and preparing for cyber incidents, and the board’s oversight role.

Read on to learn what we heard in person from over 100 directors who collectively represent in excess of 200 public companies.


SEC Guidance for Investment Advisers and Proxy Advisory Firms: An Analysis

Cydney S. Posner is special counsel at Cooley LLP. This post is based on a Cooley memorandum by Ms. Posner.

At an open meeting [on August 21, 2019], the SEC voted (three to two) to publish guidance aimed at addressing some of the long-simmering controversy surrounding the reliance by investment advisers on proxy advisory firms. Do investment advisers rely excessively on proxy advisory firms for voting recommendations? How can they rely on proxy advisory firms and still fulfill their own fiduciary obligations? Are issuers allowed a fair chance to raise concerns about proxy advisory firm recommendations, particularly errors and incomplete or outdated information that forms the basis of a recommendation? Are conflicts of interest sufficiently transparent or addressed? What about the argument expressed by some that proxy advisory firms are essentially faux regulators with too much power and little accountability? (Ok, sorry, that last one didn’t come up.)


Confidentiality and Inspections of Corporate Books and Records

Justin T. Kelton is a Partner at Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara, Wolf & Carone, LLP. This post is based on an Abrams Fensterman memorandum by Mr. Kelton and is part of the Delaware law series; links to other posts in the series are available here.

In Tiger v. Boast Apparel, Inc., — A.3d —, 2019 WL 3683525 (Del. Aug. 7, 2019), the Delaware Supreme Court recently ruled on an issue of first impression: whether Section 220 inspections of corporate books and records are presumptively subject to confidentiality orders. The Court’s decision, which reverses a recent line of cases that found a presumption of confidentiality, may significantly impact Section 220 demands and subsequent litigation arising from these proceedings.

Background and the Chancery Court’s Decision

In Tiger, the plaintiff delivered a Section 220 demand to the defendant, the stated purposes of which were to “value his shares, investigate potential mismanagement, and investigate director independence.” Id. at *2. The defendant responded by proposing a confidentiality agreement that would have barred the plaintiff from using the documents in subsequent litigation. The parties negotiated over the proposed confidentiality terms, but were unable to reach an agreement. Id. The plaintiff then filed a Section 220 action, and the Court of Chancery was called upon to decide the scope of the parties’ confidentiality obligations. Id. The Chancery court ordered “an indefinite confidentiality period lasting up to and until [the plaintiff] filed suit based on facts learned through his inspection, after which confidentiality would be controlled by the applicable court rules.” Id. The plaintiff appealed to the Delaware Supreme Court.


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