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CALIFORNIA CORPORATE & SECURITIES LAW

Implementation Issues Abound For The SEC’s Proposed Clawback Rules

When adopted, the incentive compensation clawback rules recently proposed by the Securities and Exchange Commission are likely to present issuers with a number of implementation challenges.  Some of these challenges have been discussed in prior posts.  Below is a brief outline of just a few of the many and multifarious headaches that I foresee for…

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SEC Clawback Proposal Overlooks Contract Law Fundamentals

In proposing the clawback rules for stock exchanges mandated by Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Securities and Exchange Commission evinces little regard for contrary provisions in existing contracts: Further, we do not view inconsistency between the proposed rule and rule amendments and existing compensation contracts,…

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Does Mandated Unbundling Deprive Stockholders The Right To Vote On The Whole?

A forthcoming academic paper looks for bundling in more than 1,500 management proposals between 2003 and 2012.  Bundling occurs when multiple matters are combined into a single proposal.  The authors, James Cox, Fabrizio Ferri, Colleen Honigsberg, and Randall Thomas, conclude that bundling occurs far more frequently than had been suggested by prior studies.  They recommend that the Securities…

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Should The SEC Adopt Governance Principles (For Itself)?

When I served as Commissioner of Corporations for the State of California, I was sometimes asked about the other Commissioners.  However, I never concerned myself with the “other Commissioners” because there were no other Commissioners.  Unlike some other states, California had no Securities Commission, just a Commissioner.  In light of recent criticism of several instances of unilateral…

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Oxfam America Argues SEC Has “Unlawfully Withheld And Unreasonably Delayed” Resource Extraction Rule

I’ve often wished that my legal acumen could be judged by the same standard as professional baseball players.  If that were the case, I could be wrong nearly 60% of the time and yet be considered one of the greatest legal mavens of all time.  I would also be happy if I were subject to the…

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To Conjoin Or Not To Conjoin – California Sometimes Gets It Wrong

This is as an easy mistake to make.  I say so because I’ve made it more than once.  The name of the landmark Depression era legislation regulating our national securities markets is the Securities Exchange Act of 1934; the name of the regulator is the Securities and Exchange Commission.  Compare Sections 1 and 4 of 48…

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Does The SEC Have Hedging Backwards?

Last week, the Securities and Exchange Commission announced that it is proposing new rules requiring “disclosure about whether directors, officers and other employees are permitted to hedge or offset any decrease in the market value of equity securities granted by the company as compensation or held, directly or indirectly, by employees or directors.”  Although this formulation…

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Oxfam America Takes A Stand, But Does It Have Standing?

Recently, I wrote about Oxfam America’s new lawsuit against the Securities and Exchange Commission for failing to adopt a final rule implementing Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  I heard from one reader who pointed out that Oxfam America must establish standing.  This is a point that I mentioned when…

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Oxfam America Sues The SEC (Again) For Dilatory Rule Making

Recently, I wrote of the shamelessness of the Securities and Exchange Commission targeting late filers even while it continues to miss many legal deadlines itself.  In that post, I mentioned that the SEC adopted resource extraction rules only after being sued by Oxfam America.  See also Waiting for the SEC . . . and Supreme Court Fails To…

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Why Doesn’t The SEC Post SubCommittee Recommendations?

Last Thursday, the Investor Advisory Committee held another meeting.  The agenda included this rather vague agenda description: Discussion of Definition of Accredited Investor (which may include a recommendation of the Investor as Purchaser Subcommittee) The actual meeting did in fact include a discussion of the recommendation of the subcommittee.  The recommendation, however, was (and as of July…

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