Bebchuk v. Lipton
Recently, Directorship ran this interesting article on the debate between Marty Lipton and Lucian Bebchuk on the role of shareholders in corporations.
Marty also recently addressed the “Mergers, Acquisitions, and Split-Ups” course at Harvard Law School regarding “The Future of M&A.” The “Harvard Law School Corporate Governance Blog” has a link to this multiple hour address.
Our January Eminders is Posted!
SEC GC’s Brian Cartwright on “Deretailization”
A while back, the SEC’s General Counsel Brian Cartwright delivered this speech on “The Future of Securities Regulation.” The speech provides an interesting look on how we might see the markets and regulation evolve in the future. Below is a speech summary from Robert Jackson of the “Harvard Law School Corporate Governance Blog“:
The speech emphasizes what Brian calls “deretailization,” or the dwindling presence of retail investors in securities markets. Retail investors, who once owned more than 90% of publicly traded equity, now own less than 30%. Moreover, retail investors do not trade some assets at all, including the billions of dollars annually raised in 144A debt offerings. (Some institutions have recently moved to raise equity in 144A offerings as well.) And private equity and hedge funds, which frequently take publicly traded firms private, generally exclude retail investors altogether.
Over the last twenty years, Brian explains, these asset classes have come to dominate capital markets, and retail investing–once the focus of much regulatory behavior–is no longer central to modern securities markets. Instead, individual investors now choose among intermediaries competing for their funds–with the intermediaries, rather than the individual, directly participating in the capital markets.
In light of these trends, the speech argues, regulators should focus their efforts on ensuring that individuals have the necessary tools to choose among intermediaries. That kind of regulation, Brian explains, might ensure that individuals understand that a mutual fund’s past performance may not repeat itself; that additional disclosure allows investors to calculate an actively managed fund’s alpha, or market-adjusted performance; and that investors are able to evaluate a fund’s market-adjusted performance against the fund’s expenses.
- Broc Romanek