Corporate governance - Vigil

When Canada’s biggest banks start reporting second quarter earnings this week, investors will be keying in on how the housing market is affecting results, and what management has to say about mortgage growth.

Toronto (May 18, 2017) – FAIR Canada and CARP today announced that they believe the proposed cooperative capital markets regulator (CCMR) is not in the interests of ordinary Canadians.

Corporations have been making news recently with repeated violations of the law. In some cases, such as financial services, the violations have occurred across large segments of an industry. Enforcement officials have imposed billions of dollars in sanctions against all the major U.S. financial institutions and many foreign ones as well. The large sanctions are the result of findings of recurring violations of law as well as recidivism.[1] Why have regulatory standards and enforcement policies led to repeated violations? Will the recent billion dollar sanctions deter future wrongdoing?  In my recent article, Corporate Wrongdoing: Interactions of Legal Mandates and Corporate Culture, I explore these issues by examining the philosophy motivating regulatory policy and action on the part of financial regulators in the U.S. and U.K.

US listings dropped after the dot-com bubble, but the market has largely stabilized, and US public companies today are much larger than in the past.

Kinder Morgan’s stockholders voted at its May 10 annual meeting to adopt a proxy access bylaw – a move the energy infrastructure company’s board of directors had urged them to vote against.

One of the most enduring debates in corporate law centers on why Delaware has become the dominant state in the market for corporate charters. Traditionally, two perspectives dominated the debate, the “race to the top” perspective that sees competition among states as driving legal rules toward efficiency and the “race to the bottom” perspective that sees competition among states as driving legal rules toward the interests of corporate managers. The two dominant perspectives have struggled to explain why approximately half of companies incorporate in Delaware, while the other half incorporate in their home states. Whether the choices are attributable to the quality of state law or to characteristics of the companies themselves or both has given rise to a large, but inconclusive empirical literature.

Recent developments and uncertainties in the securities markets are drawing institutional investors’ attention back to core principles of corporate governance. As investors strive for yield in this post-Great Recession, low interest rate environment, large technology companies’ valuations climb amid the promises of rapid growth.

Item 303 of SEC Regulation S-K requires companies to disclose “known trends and uncertainties” in certain public filings. In securities class action litigation, plaintiffs increasingly allege the omission of such “known trends and uncertainties” as a basis for liability. But Item 303 provides no private right of action.

Good morning, and thank you, Dean Henry, for that kind introduction. It is a pleasure to be here. Thanks also to Alexander Ljungqvist and others from the Salomon Center for the Study of Financial Institutions at New York University, as well as the staff in the Securities and Exchange Commission’s (“SEC”) Division of Economic and Risk Analysis, for organizing today’s [May 10, 2017] Dialogue.

In 2012, the Wall Street Journal (WSJ) reported that Scott Thompson, Yahoo’s CEO, allegedly lied about obtaining a computer science degree. In 2007, the WSJ reported that Chris Albrecht, the head of Time Warner’s HBO unit, allegedly assaulted his girlfriend outside a Las Vegas casino following the Oscar De La Hoya v. Floyd Mayweather Jr. boxing match. These revelations no doubt were personally embarrassing to Mr. Thompson and Mr. Albrecht, but were they important for Yahoo and Time Warner? Specifically, do these personal indiscretions imply firm-level consequences and are signals of personal integrity important for firm value?

Activist investors, a perennial nuisance for chief executives, are becoming an existential threat.

Robust public markets are the fuel that ignites America’s economic engine and wealth creation. Companies list on U.S. exchanges to access a steady, dependable stream of capital to grow and create jobs, and investors choose our markets because they are the world’s most trusted venues for long-term wealth creation.

What are the dynamics through which corporate boards fail? While the corporate governance literature examines the relations between board composition and financial performance, it pays little attention to how exactly such relations unfold.

On May 4, 2017, the U.S. House of Representatives Financial Services Committee voted to advance the Financial CHOICE (“Creating Hope and Opportunity for Investors, Consumers, and Entrepreneurs”) Act (Version 2.0) to the House of Representatives for further consideration and a vote. The CHOICE Act is designed to rewrite many of the rules and provisions contained in the Dodd-Frank Wall Street Reform and Consumer Protect Act (“Dodd-Frank”). The proposed legislation was passed on a party-line vote of 34-26 and has advanced to the full House for a vote at some future date. The legislation is expected to pass the House due to its Republican majority. However, after passage by the House, the bill will be taken up by the U.S. Senate, where a 60-vote majority will be required. To date, Senate Democratic lawmakers have voiced their objections to the CHOICE legislation and have vowed to filibuster.

In the 1970s and ’80s, as financial conglomerates grew significantly and diversified their operations, they increasingly faced conflicting duties and interests. For instance, thanks to their widening range of activities, firms found themselves obliged under agency law to disclose information to clients even when doing so violated duties of confidence to other clients. Firms also began to participate directly in transactions involving their clients, creating conflict between firms’ financial interests and fiduciary duties to clients. At the time, courts and scholars in the United States and United Kingdom observed the fundamental tension between firms’ organizational practices and the fiduciary duties they owed. Some saw in this “fiduciary dilemma” an existential problem: firms, ultimately, would need to slim down their operations, perhaps even to disaggregate, to avoid fiduciary liability.

On April 10, 2017 Wells Fargo released the independent directors’ report on sales practices at its community bank. While the report covers familiar elements of the widely-publicized accounts-creation problems at the bank, it also takes an inside look at the organization to determine what caused the problems in the first place and what allowed them to persist for years before last fall’s regulatory enforcement actions. The report cites the following as principal causes:

Twitter Proxy Voting Guide by CorpGov.net. Twitter, Inc. operates as a global platform for public self-expression and conversation in real time. The company offers various products and services, including Twitter that allows users to create, distribute, and discover content; and Periscope, a mobile application that enables user to broadcast and watch video live with others. Twitter is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votes of one fund families when I checked and voted. Their annual meeting is coming up on May 22, 2017. I will be in attendance, presenting our proposal to study cooperatives, so stop by and say hello.