CLS Blue Sky Blog | Columbia Law Schools Blog on Corporations and the Capital Markets

Time 2020-09-13 14:05:31

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Delaware courts have recently had opportunities to address the dual conditions for management of controlling stockholder conflict transactions under Kahn v. M F Worldwide Corp., 88 A.3d 635 (Del. 2014) (“MFW”) and its progeny.  That MFW structure provides a valuable tool for deal planners seeking to avoid litigation risk despite the presence of a controlling stockholder.  The courts’ analysis under MFW provides extensive guidance regarding the effective implementation of measures for conflict management at both the board- and stockholder-levels, and that guidance may be applied in the context of transactions with and without a controlling stockholder conflict.Dual Read more On September 3, the Antitrust Division of the U.S. Department of Justice (DOJ) announced that it is publishing a Merger Remedies Manual. Significantly, the new manual recognizes that “in some cases a private equity purchaser may be [a] preferred” purchaser of divestiture assets. At the very least, according to the manual, the “Division will use the same criteria to evaluate both strategic purchasers and purchasers that are funded by private equity or other investment firms.”To be sure, the Division will still evaluate proposed acquisitions of divestiture assets by private equity firms to ensure that the acquisition preserves competition. Read more Though mergers and acquisitions bring companies together in expensive and thoroughly documented transactions, many end eventually in ruptured unions. In a recent study of 1,365 mergers and acquisitions by S P 500 firms between 1983 and 2010, we found that 46 percent of corporate unions resulted in divorces, with up to 77 percent of the breakups representing failures of the parties to build lasting relationships. But what accounts for the unsuccessful bonds?We answer this question and discover statistical trends by constructing a new and comprehensive data set of corporate divorces. To identify solid evidence about traceable mergers and acquisitions, we Read more As American businesses, including financial institutions, adjust their operations in the wake of the coronavirus pandemic (COVID-19), the need to work closely with state regulators has become increasingly apparent. As anticipated, under the current federal administration we have seen state regulatory agencies react in the wake of perceived reduction in federal enforcement.[1] State attorneys general and regulatory agencies are well staffed with enforcement and industry professionals. Two leaders in these efforts to fill in the regulatory gap in the banking and financial services industry have been the New York Attorney General and the New York State Department of Financial Read more Columbia Law Professor John C. Coffee, Jr.’s Corporate Crime and Punishment delivers a hard-hitting and provocative analysis of the securities law enforcement landscape and the choices that lie ahead.  With SEC senior staff changes probable in any new administration, Coffee’s perspective is particularly well-timed.  Overall, this is a book designed to make us strongly disagree about important issues in a very good and productive way – a book that all who genuinely care about securities enforcement need to read, whatever their own views.Coffee’s central thesis is that corporate America is undergoing a “crisis of underenforcement” marked by lenient resolutions Read more On September 3, 2020, the U.S. Department of Justice released its updated Merger Remedies Manual (the “Manual”).  The Manual emphasizes the DOJ’s strong preference for “structural” remedies (i.e., divestitures) over “behavioral” or “conduct” remedies to address potential competitive harms that result from either horizontal or vertical mergers.  In addition, the Manual stresses the DOJ’s commitment to strict implementation of and compliance with agreed-upon remedies.  This follows last month’s announcement by the DOJ regarding the establishment of the Office of Decree Enforcement and Compliance.In 2018, Assistant Attorney General Makan Delrahim signaled the DOJ’s preference for structural remedies when he announced Read more Material adverse change/effect (“MAC”) clauses have evolved into important risk-allocation mechanisms that are commonly included in high-profile mergers and acquisitions (“M A”) and financing deals. They typically allow lenders or buyers to either terminate an agreement without cost or penalty or renegotiate the agreement from a position of strength. When the prospects for business are dark, desperate lenders and buyers seek to rely on the ex-post triggering function of MAC clauses to avert disaster.The uncertainty caused by COVID-19, exacerbated in the UK by Brexit, has forced many market participants to re-examine their deals. While some have managed to adjust, others Read more Delaware courts have recently had the opportunity to evaluate and discuss management of potential conflicts.  That guidance may be particularly salient in the context of insider transactions and down-rounds, which may animate potential conflicts and lead to difficult litigation for corporate fiduciaries.  This post focuses on guidance gleaned from Delaware cases regarding measures for conflict management at the stockholder level, including the effect of equal treatment or a rights offering, exercise of consent rights, and the use of a disinterested stockholder vote.Equal Treatment and Rights OfferingsSignificant stockholders or groups of stockholders, when alleged to have caused a company Read more Recent Delaware case law offers useful guidance regarding options for management of potential conflicts.  Those cases demonstrate that conflicts can be mitigated by board or stockholder actions and that such measures for managing conflicts should be thoughtfully tailored to the circumstances.  This post focuses on guidance from Delaware courts regarding measures that can be implemented at the board-level for management of potential conflicts, including the role of disinterested and independent directors, the effect of abstentions and recusals, and the use of an independent committee.  The courts’ guidance is particularly valuable in light of the current market challenges driving at least Read more Ample research has focused on bidding behavior and competition dynamics in mergers and acquisitions and how they affect takeover premiums, deal completion rates, and other economic outcomes (e.g., Aktas, de Bodt, and Roll (2010), Boone and Mulherin (2007, 2008), Jennings and Mazzeo (1993), Eckbo (1983), and Ruback (1983)). The analysis of changes in firm valuations around deal announcements is especially important to determining whether the market considers a deal as value-creating or value-destroying.In a recent paper, I shed light on the private takeover process, the period between the time a deal is initiated and the date it is publicly Read more In the last few months, the UK and EU have separately outlined major plans that will soon bring a renewed focus to their fight against money laundering. Businesses will need to prioritise ensuring that their anti-money laundering (“AML”) controls are up-to-date and effective, and should be prepared for an increasing number of enquiries and investigations.UK Economic Crime Levy. HM Treasury is currently consulting on the introduction of a levy paid by entities in the ‘AML-regulated sector’ (including financial services, accounting and law firms) to raise £100 million per year for further government action to combat money laundering.[1] The Read more Asset securitizations have become a prominent type of financial transaction in recent decades. According to the Securities Industry and Financial Markets Association, $3.3 trillion worth of mortgage- and other asset-backed securities were issued in 2006. This number fell to $1.6 trillion in 2008 and rebounded to $2.4 trillion in 2016, compared with $1.5 trillion issuances of corporate debt in 2016. While research documents various benefits from securitization, the complexity and financial reporting opacity of these transactions have raised concern among academics, practitioners, and standard-setters. In particular, given the complex structure and disclosures, market participants have found it difficult to assess Read more The COVID-19 pandemic has dramatically changed how businesses operate, resulting in unprecedented stock market effects. While the U.S. stock market has historically shown little to no reaction to an infectious disease outbreak, COVID-19 precipitated a global stock market downturn now known as the “stock market crash of 2020” (Baker et al., 2020). The natural inclination of investors and the media is to wonder whether anyone could have seen it coming. We suggest that corporate insiders with geographic proximity to China and the early developments of COVID-19 were more attentive to, and better understood, the potential effects of COVID-19 on their Read more New developments last week will allow companies to raise funds in a direct listing. On Wednesday, the Securities and Exchange Commission (SEC) approved the NYSE’s rule change that will permit companies to raise capital in a direct listing. Prior to this change, the NYSE only permitted sales by selling shareholders in a direct listing. This week the Nasdaq filed a similar rule change proposal with the SEC that would also allow companies to sell newly issued primary shares in a direct listing on the Nasdaq Global Select Market.Both the NYSE’s new rule and the Nasdaq’s rule proposal retain existing Read more For a brief moment last month, Kodak Corporation’s stock soared from $2 a share to more than $33 a share on news that it might obtain substantial government financing. At that peak, Kodak director George Karfunkel unloaded shares then worth $116 million. If he had sold them, he might have been at grave legal risk.  As a director, Karfunkel likely had nonpublic information about Kodak’s prospects, and, if so, his fiduciary duties would have forbidden him from trading. But Karfunkel didn’t sell his shares – he gave them to a charity he runs.Karfunkel is not alone.[1] NYU finance Read more The SEC has given the New York Stock Exchange (NYSE) clearance to allow companies to raise capital in connection with a direct listing on the NYSE. A direct listing is an alternative to a traditional underwritten IPO that allows a private company to list its equity securities without an underwritten offering. The NYSE and The Nasdaq Stock Market (Nasdaq) both currently permit companies to directly list shares held by pre-IPO stockholders, such as employees and early stage investors, without an underwritten offering. The NYSE s rule amendment adds a new type of direct listing that will permit a private company to Read more Private markets have contributed significantly to capital formation in the U.S. economy, particularly for small companies that are often considered the engine for creating new jobs and for accelerating economic growth (see, e.g., Zhao, Harris, and Lam, 2019). The amount of capital raised in private markets has, in fact, outpaced that raised in public markets during recent years. In 2017, for example, $2.4 trillion was raised in U.S. private markets and $2.1 trillion raised in public ones. Almost 70 percent of the former amount came from private placements: sales of unregistered securities in private offerings, mostly to accredited investors.[1] Read moreWe are here today to talk about excellence in corporate governance.  Before I begin, I have to remind you that the views I represent are my own and not necessarily those of the Securities and Exchange Commission or my fellow Commissioners. As with other pursuits in life, governing a corporation well requires a solid set of core values.  These values are often rooted in childhood lessons, so I will offer a cautionary tale.  A friend of mine—over his wife’s objection—taught his toddler son to answer “Money!” when asked “What is the most important thing in the world?”  Their son was Read more What should a judge do when creditors claim that they were harmed by management and a board’s carelessness or disloyalty?  If the creditors were shareholders, the judge would apply fiduciary duty doctrines to determine liability.  Yet it’s unclear what legal doctrines offer creditors redress.  In a new chapter, we examine how judges have struggled with that issue over much of American history.  We pay special attention to the approach of judges in Delaware, the most important jurisdiction for corporate law.  We trace three generations of jurisprudence that each takes a different approach to whether judges should use equitable doctrines to Read moreGood morning. This is an open meeting of the U.S. Securities and Exchange Commission, under the Government in the Sunshine Act. I would like start today’s meeting by welcoming Commissioner Crenshaw to her first open meeting.Today [August 26], we are considering amendments to modernize the description of business, legal proceedings, and risk factor disclosures that companies are required to make under Regulation S-K.  These amendments are part of the Commission’s broader efforts to retroactively review and improve our public company disclosure framework and related requirements.First, I want to put this work in context.  The rules we adopt today Read moreLet me start with a warm welcome to our newest colleague, Commissioner Crenshaw. She has been a tremendous asset to the Commission for many years, and I know that she will continue to serve the agency, investors, and the public with great distinction. I also want to thank the staff for their hard work on today’s rule.[1] They’ve done exemplary work under trying circumstances, and I am, as always, grateful.The final rule the majority adopts today, however, is silent on two critical subjects: diversity and climate risk disclosures. At the proposing stage for this rule, I was encouraged The accredited investor definition is the single most important investor protection in the private market.[1] Today’s amendments purport to “update” that definition while leaving in place 38-year old wealth thresholds, declining to index the thresholds to inflation, and declining to provide economic analysis to show how the failure to index will affect American investors—the bulk of whom are seniors—going forward.With its actions today, the Commission continues a steady expansion of the private market, affording issuers of unregistered securities access to more and more investors without due regard for the risks they face, and without sufficient data or analysis Read more Companies are typically not compelled to disclose environmental and social (E S) information because this information does not meet the materiality standard used in many jurisdictions. However, some shareholders have an explicit mandate to screen potential investments based on E S criteria. The growing popularity of socially responsible investing, which accounts for more than one in four dollars under professional management in the United States (US SIF 2018), has raised questions about the optimal standard of materiality for E S information. Recent statements by the SEC’s Investor Advisory Committee indicate that the environmental and social information provided by firms lacks the materiality, comparability, Read more Recent enforcement actions by the Federal Trade Commission (FTC or Commission) and the Department of Justice (DOJ) demonstrate the agencies’ continued close scrutiny of merging parties’ compliance with divestiture orders. Last month, the FTC required Alimentation Couche-Tard Inc. (ACT), a gas station and convenience store operator, to pay a $3.5 million fine to settle allegations that it violated an order requiring the divestiture of certain stores to secure approval of its acquisition of Holiday Stationstores, Inc. (Holiday). This month, the DOJ announced a settlement with CenturyLink for violations of a 2018 merger consent decree, whereby the DOJ required CenturyLink to Read more CEOs have increasingly been speaking out on social issues that are not directly related to their core businesses. Why are they doing so, and what are the consequences for their companies?In a new paper, I examine the phenomenon of CEO activism.  Using textual analysis of the public statements and social media posts of CEOs, I classify a statement as activist if the CEO comments on gender equality, racial diversity, immigration, gun control, environmental issues, universal healthcare, or human rights. In total, there are 187 activist statements by CEOs of S P 500 firms in the 2014-2019 period – most of Read more Unpredictability has dominated the economic climate over the last six months and likely will continue in the months ahead. Companies that swiftly and thoughtfully assess and respond to evolving challenges will most effectively manage through the pandemic. This theme applies with equal force when it comes to executive compensation. The volatility of the business cycle challenges compensation committees to proactively assess compensation programs and to pivot, fine-tune or stay the course, as events warrant.­­­Assessing 2020 Performance. Director discretion will be as important as ever when it comes to assessing and rewarding 2020 performance. If a company’s preset financial Read more Governance failures at for-profit corporations are the topic of frequent media stories, judicial opinions, and academic analyses. Nonprofit governance, however, has received significantly less attention. This lack of attention is not because nonprofits are immune from governance failures, and recent allegations against the National Rifle Association may prove the point. In our paper, Nonprofit Governance in an Age of Compliance,  we identify the factors that give rise to critical nonprofit governance failures, and we offer attainable reforms to address them.Most nonprofit governance failures stem from the key legal difference between nonprofit and for-profit corporations. By law, nonprofits are Read moreToday [August 21], the Commission proposed amendments to the national market system (“NMS”) plan governing the consolidated audit trail (“CAT NMS Plan”). The proposed amendments are designed to enhance data security related to the ongoing development and operations of the consolidated audit trail ( CAT ). In 2016, the Commission approved the CAT NMS Plan prepared by FINRA and the national securities exchanges (collectively, the “SROs”) which included various security requirements.[1] Today’s proposal would take additional steps to reduce cybersecurity risks and is the latest in a series of Commission actions to move the development of the CAT forward and enhance Academics and practitioners, including lawyers, emphasize the importance of conservative accounting to lenders and corporate boards, allowing them to intervene and take corrective actions at an early stage. However, conservative accounting may also increase the risk of false alarms and prompt excessive interventions. In light of this downside, the overwhelming and in many cases unconditional support that conservative accounting often receives is puzzling.We aim to reconcile the support for conservatism with the concern for false alarms by showing that managers ability to gather additional evidence following accounting reports changes the balance between the benefits and costs of conservative accounting. Read more It is a pleasure to participate in San Francisco s Innovation Office Hours. The Federal Reserve Bank of San Francisco is a leader of our engagement with the tech community. And the Federal Reserve s Innovation Office Hours serve as an important forum to engage on innovation in the financial system with financial institutions, fintechs, technology companies, nonprofits, and other stakeholders. We have benefited from learning about the work you are doing to promote healthy innovation in financial services and payments. This event covered a number of important topics, including regulatory technology, blockchain, cybersecurity, and digital banking. The breadth of topics and Read more In 2017, Puerto Rico and certain of its affiliates filed “bankruptcy” petitions under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act ( PROMESA ).  These cases are pending in the U.S. District Court for  Puerto Rico; however, under the law Judge Laura Taylor Swain in New York was appointed to preside over the cases.  My new paper – Puerto Rico; Act III – provides an overview of where things stand  and where they might be heading.PROMESA is a bankruptcy law, with various bells and whistles attached. In addition to its restructuring provisions, the law creates the Financial Read more Competition v Privacy. Competition and consumer authorities are increasingly considering the implications of digital platforms’ ownership and use of consumer data and whether concerns about harm to privacy are indicative of a lack of competition.For a long time the orthodoxy in the EU had been that competition authorities were sensitive to the possible issues of data concentration, but, equally, were careful to contain their analysis. The prevailing view was best summarized by the EU Court of Justice that “any possible issues relating to the sensitivity of personal data are not, as such, a matter for competition law, they Read more Insurance companies try to detect and reduce risk. Health insurers encourage preventative care, fire insurers insist on functioning sprinklers, police insurers investigate alleged misconduct and drop departments that tolerate excessive force, and Hollywood insurers flag risky scenes as requiring stunt doubles. These efforts make sense – it is the insurer’s money on the line if the client makes a claim – and they tend to benefit society.Unfortunately, something is different about D O insurance, which protects directors and officers from suits by shareholders alleging self-dealing or mismanagement. As Professors Tom Baker and Sean Griffith concluded from extensive interviews, “D O insurers Read more The Jumpstart Our Business Startups (JOBS) Act, enacted in April 2012, was designed to make it cheaper for emerging growth companies (EGCs) to access capital and, by weakening disclosure requirements, easier for them to conduct initial public offerings (IPOs). Its impact on EGCs has been a focus of academic literature in accounting and finance, with Chaplinsky et al. (2017) showing that the act increases indirect costs for some EGC IPOs because of increased information asymmetry between the firm and potential shareholders. The upshot is that small private firms may prefer to be directly acquired rather than engage in an IPO. Read more In response to the COVID-19 pandemic, the Consumer Financial Protection Bureau (CFPB) recently announced that it will adjust its supervision program by rescheduling a portion of its planned examination work. Instead, the agency will conduct prioritized assessments, which it describes as higher-level inquiries intended to cover a greater number of institutions and help the CFPB ensure that entities are attentive to practices that may result in consumer harm. Among the areas the CFPB intends to prioritize is compliance by Paycheck Protection Program (PPP) lenders with the fair lending laws. This Advisory answers some common questions from PPP lenders who may Read more The 2008 financial crisis triggered a surge of interest in regulating consumer financial markets. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 created the Consumer Financial Protection Bureau (CFPB) to safeguard consumer interests. Since 2011, the CFPB has accepted complaints about the financial products and services provided by the depository institutions under its jurisdiction. Since 2013, the CFPB has released a complaint database to the public. The data include individual complaints, their submission dates, complainants’ 5-digit ZIP Codes, types of products and issues (without narratives), and the names and responses of the banks involved.The purpose of Read more The current pandemic, blind spots in information flows through supply lines, the shutdowns in meat processing plants around the world, the ongoing shortages in personal protective equipment and, most recently, the scandal involving British retailer Boohoo, have all underscored the importance of resilient, sustainable, legally compliant and ethical supply chains.  In addition to geographic and industry-specific challenges, issues relating to health and safety, labor practices and climate risk have become top priorities for investors, regulators and consumers.  Failure to ensure proper oversight and management of supply chains can result in significant reputational and economic losses, as well as regulatory scrutiny.  Read more The last six months have been marked by profound changes in how we live and interact with one another. The COVID-19 pandemic has cast a spotlight on societal inequities and racial injustice and reinvigorated dialogue around sustainability and environmental reform. While lawyers have long engaged with corporate governance and more specifically ESG-related issues,[1] the dialogue on those issues has recently focused sharply on the role of the corporation and the extent to which corporations should consider stakeholder interests other than stockholder pecuniary gain.In this post, we take a closer look at online insurer Lemonade, Inc.’s successful July 2 Read more On July 23, 2020, the Commodity Futures Trading Commission (CFTC or Commission) voted 3-2 to approve a final rule (Final Rule) on the cross-border application of certain swap provisions under the Commodity Exchange Act (CEA).1 The Final Rule represents a significant rulemaking implementing Title VII of the Dodd-Frank Act.Chairman Heath P. Tarbert said the Final Rule “provides critically needed regulatory certainty to the global swaps markets” and “properly balances protection of our national interests with appropriate deference to international counterparts.”2BackgroundIn 2010, the Dodd-Frank Act amended the CEA to create a new regulatory framework for swaps. Congress added Read more On July 22, the SEC finalized a sweeping rule change to enhance the transparency around the role of proxy advisers. This follows an earlier proposal to reform the process for including shareholder proposals in a company’s proxy statement.[1] These developments may give companies more ammunition against shareholder activism, while also highlighting the lack of transparency in the relationship between shareholders and companies. Even though the new rules address proxy advisers, it sets the stage for a closer look at how asset managers handle their relationship with corporations.Virtually every large asset manager relies on proxy advisers in deciding how Read more Last August, the Business Roundtable (an organization of around 200 corporate CEOs) announced it was amending its Principles of Corporate Governance to eliminate the statement that the “primary purpose” of a corporation was to serve its shareholders.  The CEOs wanted to reconcile the statement of principles to what they felt they actually do namely, balance the interests of a number of corporate stakeholders, including customers, employees, suppliers, and communities.The amendment reinvigorated the “shareholders vs. stakeholders” debate. The shareholder wealth maximization absolutists, like Professor Stephen Bainbridge at UCLA and a number of op-ed columnists at the Wall Street Journal Read more The coronavirus may have ended the office era. Even though governments allowed businesses to reopen, few workers have returned to offices. It is not clear how many will ever return. Tech giant Facebook, for example, plans to shift up to half of employee to remote work arrangements. Adjusting to this new normal requires firms to revisit and revise many practices and processes.One of the most essential processes in corporate life is “onboarding” new directors: preparing them for their role at the company through a strategic process. Some analysts have even asked whether it is possible to onboard Read more The COVID-19 pandemic of 2020 – as well as government orders to contain it – have prevented countless people, babysitters to basketball players, from fulfilling their contracts. Are all of these parties legally liable for breaching their contracts? Or are they excused due to this extraordinary event? What about payments made in advance, such as tickets bought for a concert that has now been canceled, or a dorm room leased at a college that is now closed?This coronavirus is new, but wars, floods, and even other pandemics have upset innumerable contracts over the years. In response, our courts Read more To many, the core securities laws on disclosure, fraud, and insider trading are desirable from an investor-protection perspective. But the dominant law and economics view is dubious of this thinking. Under this view, securities prices are discounted to reflect obstacles to the cash flows investors expect to receive, thereby preserving the returns those investors would expect even absent those obstacles. Information asymmetry in the stock market presents such an obstacle, and is therefore addressed by such a discount. Private ordering thus saves the day.In Marginal Benefits of the Core Securities Laws, I aim to shed more light on Read more Interest in the environmental, social and governance (ESG) policies of companies and their impact on the wider community has continued to increase amongst institutional investors, retail shareholders and the media during the first half of 2020. The COVID-19 pandemic and the Black Lives Matter movement have both resulted in the “S” in ESG becoming rapidly more important as companies seek to reaffirm their public image in response to such events, defying any concerns that ESG issues would fall to the wayside at the onset of an economic crisis. In this article, we review some of the key ESG developments and Read more In my new paper, I explain how the creation of responsible artificial intelligence (AI) can address why women and under-represented minorities have a difficult time gaining a foothold in male-dominated industries. This is an especially important topic today as companies may hesitate to use AI because they fear that it may create discriminatory outcomes.The ability of job applicants to submit materials online can leave employers with far more information than they need, giving rise to new technological methods for screening applicants. However, some companies have gone further by creating AI programs to not only screen resumes and cover letters, Read more As we approach the first anniversary of the Business Roundtable’s abandonment of shareholder primacy and embrace of stakeholder governance, and the fourth anniversary of our development for the World Economic Forum of The New Paradigm:  A Roadmap for an Implicit Corporate Governance Partnership Between Corporations and Investors to Achieve Sustainable Long-Term Investment and Growth, we thought it useful to consider in broader context the key issues of corporate governance and investor stewardship today.  While there is no universal consensus, the question underlying these issues can be expressed as:  What is the corporation trying to achieve?  What is its objective Read more Shareholder action is restricted to a binary choice, a decision that requires a “yes” or a “no.”  For example, shareholders may be asked whether or not to participate in a tender offer, redeem SPAC shares, exercise preemptive rights, or approve a proposed shareholder resolution.My forthcoming article, The Case for Non-Binary, Contingent, Shareholder Action, challenges this limited binary regime and calls for amending the law so that shareholders could act contingently, thus allowing more nuanced decisions.  They could incorporate relevant information without having to rely on costly disclosure rules and condition their actions on the acts of others, such Read more Investments in private companies by way of share purchases from existing shareholders (secondary transactions) raise a unique set of complexities, which are often overlooked. Share issuances in company-led financing rounds (primary issuances) grab most of the headlines. However, secondary transactions present important opportunities for purchasers and paths to exit for existing shareholders, and they often mark a milestone for the company itself. At the same time, a purchaser can feel that it must walk a tightrope to diligence and structure and complete a secondary transaction – although, upon closer review, there is often significant room for negotiation and Read more On July 31, the IRS and Treasury proposed regulations (the “Carried Interest Regulations”) on the taxation of carried interest under Section 1061 of the tax code.  Section 1061 was added to the tax code as part of the 2017 tax reform legislation and generally provides that capital gain allocated under certain carried interest arrangements is eligible for the favorable 20% U.S. federal income tax rate only if the underlying asset was held for more than three years at the time of sale.The Carried Interest Regulations are, on the whole, consistent in most respects with the manner in which most Read more BreakingviewsNew Citi CEO Can Lead on ESG If NotReturnsSeptember 10, 2020Cleary M A Watch Corwin Defense Fails, but Shareholders LoseAnyhowSeptember 10, 2020PubCo @ CooleyCFTC Warns of Climate ChangeRiskSeptember 10, 2020Business Law Prof BlogFinancial Advice Faces RoughLandscapeSeptember 10, 2020D O DiaryBattles Rage over Digital ForensicFindingsSeptember 9, 2020Conference BoardDirectors Should Use SocialMediaSeptember 9, 2020PubCo @ CooleyCalifornia Court Enforces Delaware Exclusive ForumProvisionSeptember 9, 2020Jim Hamilton s WorldSecurities Group Urges Delay of Labor Department FiduciaryRuleSeptember 9, 2020Corporate Securities Law BlogDelaware Chancery Nixes Management Block on Director Privileged-InfoAccessSeptember 9, 2020Wall Street JournalDOJ Gets New Acting FraudChiefSeptember 8, 2020Jim Hamilton s WorldCII to Press Review of NYSE Direct ListingRulesSeptember 8, 2020Deal Lawyers.comDelaware Chancery Limits Abstention Defense to DirectorConflictsSeptember 8, 2020CFA InstituteCan Blockchain Help FinancialReporting?September 8, 2020Business Law Prof BlogWhat People Think of InsiderTradingSeptember 8, 2020D O DiaryBoard Diversity Suit HitsDanaherSeptember 7, 2020Conference BoardFord Foundation Boss on Corporations and SocialChangeSeptember 7, 2020Jim Hamilton s WorldEx-Regulators Talk Chinese CompanyDelistingsSeptember 7, 2020Delaware Corporate Commercial Litigation BlogDelaware Chancery Explains How Caremark Claim Passed DemandTestSeptember 7, 2020Justice DepartmentDOJ Issues New Merger RemediesManualSeptember 7, 2020ReutersGM, Honda Deepen North AmericanTiesSeptember 3, 2020D O DiaryGAP Sued Over BoardDiversitySeptember 3, 2020Jim Hamilton s WorldSenior Fraud Rises inPandemicSeptember 3, 2020Delaware Business Litigation ReportDelaware Chancery Nixes an Implied Covenant ClaimSeptember 3, 2020ReutersMacy s Rethinks theHolidaysSeptember 2, 2020DealbookFed Governor Warns of More EconomicRisksSeptember 2, 2020Delaware Business Litigation ReportDelaware Chancery Nixes Complaint onDilutionSeptember 2, 2020PubCo @ CooleySEC Stays Order Approving NYSE DirectListingsSeptember 2, 2020Jim Hamilton s WorldSupply-Chain Financing Disclosure Gets ItsDueSeptember 2, 2020ReutersU.S. Mulls BelarusianSanctionsSeptember 1, 2020D O DiaryIs New Accredited Investor DefinitionProgress?September 1, 2020Securities and Exchange CommissionSEC Awards Joint Whistleblowers $2.5millionSeptember 1, 2020Financial TimesGerman Parliament Probes WirecardFiascoSeptember 1, 2020Jim Hamilton s WorldCigna, Anthem Get Nothing in Suit Over BustedDealSeptember 1, 2020ReutersDelta, American match United in Dropping ChangeFeesAugust 31, 2020Cooley M ADelaware Chancery Clarifies Board Quorum August 31, 2020D O DiaryTwo Forces Undermine Securities ClassActionsAugust 31, 2020Securities and Exchange CommissionSEC Awards $1.25 million toWhistleblowerAugust 31, 2020Delaware Corporate Commercial Litigation BlogDelaware Chancery Addresses Third-Party BeneficiaryIssuesAugust 31, 2020ReutersUnited Airlines Dumps ChangeFeesAugust 30, 2020D O DiarySecurities Suits Against Tech Hit Record Levels in2019August 30, 2020Professor BainbridgeIs Salesforce Engaging in Stakeholder Capitalism orWokewashing?August 30, 2020Securities Regulation and Corporate Governance MonitorSEC Cuts Filing FeeRateAugust 30, 2020Business Law Prof BlogDelaware Chancery Tip Toes onCaremarkAugust 30, 2020ReutersFed Rewrites Approach to Inflation and LaborMarketAugust 27, 2020Conference BoardSEC Flops on Investment ManagerReportAugust 27, 2020Jim Hamilton s WorldShareholders at theGatesAugust 27, 2020Securities Regulation and Corporate Governance MonitorSEC Expands Accredited Investor August 27, 2020Deal Lawyers.comDelaware Chancery OKs Fraud Claim Based on RepresentationBreachAugust 27, 2020ReutersSEC OKs NYSE Direct ListingProposalAugust 26, 2020Delaware Business Litigation ReportDelaware Chancery Enforces FeeShiftingAugust 26, 2020Cleary M A Watch, Cooley M ADelaware Chancery Affirms Directors Can Get Management-Counsel CommunicationsAugust 26, 2020PubCo @ CooleySEC Fees Drop for Fiscal2021August 26, 2020ReutersPalantir to Go Public in DirectListingAugust 25, 2020New York TimesWhy TikTok WillLoseAugust 25, 2020PubCo @ CooleyBoards Grapple with RacialDiversityAugust 25, 2020Jim Hamilton s WorldINX Plans Registered TokenIPOAugust 25, 2020Corporate Securities Law BlogFifth Circuit Nixes Section 14(a) Case Over Proxy StatementOmissionsAugust 25, 2020Cleary M A WatchHow TikTok Divestment Order AffectsCFIUSAugust 24, 2020Truth on the MarketMore on Zuckerberg Emails and InstagramDealAugust 24, 2020D O DiaryMandate D O InsurerRotation?August 24, 2020PubCo @ CooleySEC Mulls Power to Fix EDGAR WithoutNoticeAugust 24, 2020Jim Hamilton s WorldPCAOB Reports on Broker-DealerInspectionsAugust 24, 2020PubCo @ CooleyEconomic Forum Offers Way to Value HumanCapitalAugust 23, 2020Jim Hamilton s WorldFifth Circuit Nixes Claim that Proxy Statement TooPessimisticAugust 23, 2020Securities Regulation and Corporate Governance MonitorSEC to Consider Reg S-KChangesAugust 23, 2020Davis Polk BriefingSEC Committee Questions Lack of Diversity in Asset ManagementIndustryAugust 23, 2020Business Law Prof BlogDelaware Chancery Issues Key Rulings on M A ContractInterpretationAugust 23, 2020ReutersAirbnb Files Confidentially forIPOAugust 20, 2020New York TimesUber, Lyft Get EmploymentReprieveAugust 20, 2020D O DiaryAustralia Sued over Sovereign Bond Climate-ChangeDisclosureAugust 20, 2020Jim Hamilton s WorldSEC Asks NYSE for More Information on DataFeesAugust 20, 2020Corporate Securities Law BlogNinth Circuit Reverses SEC DisgorgementAwardAugust 20, 2020New York TimesApple Now Worth Record $2trillionAugust 19, 2020Securities and Exchange CommissionSEC Names New EnforcementDeputyAugust 19, 2020Professor BainbridgeBusiness Roundtable Statement DrawingSkepticismAugust 19, 2020Securities Regulation and Corporate Governance MonitorSEC Offers Guidance on Supplemental Material, ConfidentialityRequestsAugust 19, 2020Dodd-Frank.comDelaware Chancery OKs Fee-Shifting Clause in StockholderAgreementAugust 19, 2020ReutersOracle Joins TikTokBiddingAugust 18, 2020D O DiaryUpdate on McDonald s v. 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