Posts Tagged ‘Jones Day’

Delaware Court Confirms Accounting Experts’ Authority to Decide Disputes

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Wednesday August 28, 2013 at 8:45 am
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Editor’s Note: The following post comes to us from Elizabeth C. Kitslaar, partner in the corporate practice at Jones Day, and is based on a Jones Day publication by Ms. Kitslaar and James A. White. This post is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here.

On July 16, the Delaware Supreme Court [1] published an opinion that confirms and clarifies the scope of an accounting expert’s authority to resolve post-closing financial disputes that parties have agreed to submit for resolution under the terms of a definitive business acquisition agreement. This decision reaffirms alternative dispute resolution as the procedure of choice for quickly resolving complicated, technical financial issues that sometimes arise in the context of purchase price adjustments.

Post-closing purchase price adjustments are almost universally present in definitive agreements for the sale of a business. [2] These provisions—which include earn-out clauses, working capital adjustments, and debt/net debt true-ups—require an adjustment to the purchase price paid at closing, based on calculations relative to pre-closing targets, standards, or formulas. Such provisions set forth not only the methodology for determining the amount of the adjustment, but also a resolution process in the event the parties disagree on the amounts to be paid. These processes typically include (i) an exchange of the relevant financial calculations and access to work papers and supporting documentation, (ii) submission by the recipient party of objections to the calculation, (iii) a period of time within which the parties will attempt to resolve the dispute in good faith, and (iv) submission of the unresolved issues to a neutral accounting firm for ultimate resolution. [3]

…continue reading: Delaware Court Confirms Accounting Experts’ Authority to Decide Disputes

2013 Proxy Season: A Turning Tide in Corporate Governance?

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Friday August 23, 2013 at 9:34 am
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Editor’s Note: The following post comes to us from Robert A. Profusek, partner focusing on mergers and acquisitions at Jones Day, and is based on a Jones Day publication by Mr. Profusek, Lyle G. Ganske, and Lizanne Thomas.

The 2013 proxy season has ended, and many public companies are in a period of relative calm on the governance front before the season for shareholder proposal submissions begins in a few months. This post reflects on some of the highlights of the past proxy season and a few events and trends that may shape the 2014 season.

Declining Influence of Proxy Advisory Firms

Events in the 2013 proxy season have signaled that the era of blind adherence to proxy advisory firms’ recommendations may be waning, at least to some degree. JPMorganChase’s success in defeating a highly contested independent board chair proposal for the second year in a row provides some evidence that the influence of proxy advisory firms is decreasing, at least as to non-core governance issues outside the executive compensation area. The JPMorganChase shareholder proposal won the support of only 32.2 percent of the votes cast at its 2013 annual meeting, despite Glass Lewis’s and ISS’s recommendations in favor of the proposal. A Wall Street Journal article relating to the vote even included this gem of a quote from a VP of proxy research at Glass Lewis: “Our power is probably shrinking a bit.” Would that it were so—investors’ reclaiming the power of the shareholder franchise would be good news for corporations and their boards, and for investors as well.

…continue reading: 2013 Proxy Season: A Turning Tide in Corporate Governance?

NY State Department of Financial Services at the One-Year Mark

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Tuesday May 28, 2013 at 9:21 am
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Editor’s Note: The following post comes to us from Jayant W. Tambe, partner focusing on litigation concerning securities, derivatives, and other financial products at Jones Day, and is based on a Jones Day commentary; the full text, including footnotes, is available here.

Since the New York State Department of Financial Services (“DFS”) began operations in late 2011, the agency appears to have lived up to its billing as an activist regulator of insurers and financial institutions. DFS has taken on several novel issues and will likely continue to do so. Insurers and financial institutions doing business in New York should keep DFS on their radar given the scope of its regulatory mandate and its initial enforcement activities since inception. Institutions outside New York may also want to monitor DFS’s initiatives, which may pique the interest of federal or state law enforcement and regulatory agencies in other jurisdictions and lead to similar or parallel initiatives.

DFS’s Actions Since Inception

On October 3, 2011, the former New York State Banking and Insurance Departments were combined to create DFS. The 4,400 entities DFS supervises have about $6.2 trillion in assets and include all insurance companies in New York, all depository institutions chartered in New York, the majority of United States-based branches and agencies of foreign banking institutions, mortgage brokers in New York, and other financial service providers.

…continue reading: NY State Department of Financial Services at the One-Year Mark

SEC and Actively Managed Exchange Traded Funds

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Sunday January 13, 2013 at 8:34 am
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Editor’s Note: The following post comes to us from Jayant W. Tambe, partner focusing on litigation concerning securities, derivatives, and other financial products at Jones Day, and is based on a Jones Day alert.

Nearly three years after the U.S. Securities and Exchange Commission (“SEC”) effectively froze the creation of actively managed and leveraged exchange traded funds (“ETFs”) that utilize options, futures, swaps, and other derivatives as part of their investment strategies, the SEC has lifted the moratorium on the use of derivatives by actively managed funds while continuing to restrict the use of derivatives by leveraged ETFs. The SEC’s decision follows a Concept Release issued last August soliciting comments on the issue from the public. ETFs, which are typically registered as open-ended investment companies under the Investment Company Act of 1940 (the “’40 Act”), usually require exemptive relief from the SEC because certain common features of ETFs do not comport with the strict provisions of the ’40 Act.

On December 6, 2012, in a speech to the American Law Institute’s Conference on Investment Adviser Regulation in New York City, Norm Champ, Director of the Division of Investment Management, announced the SEC has reversed course and “will no longer defer consideration of exemptive requests under the Investment Company Act relating to actively managed ETFs that make use of derivatives.” In his speech, Director Champ made clear the SEC’s decision was subject to two important conditions, each designed to address the concerns by the SEC back in March 2010 when it first imposed the moratorium on derivatives. To that end, issuers seeking to create an actively managed ETF that employs derivatives will be required to represent: “(i) that the ETF’s board periodically will review and approve the ETF’s use of derivatives and how the ETF’s investment adviser assesses and manages risk with respect to the ETF’s use of derivatives; and (ii) that the ETF’s disclosure of its use of derivatives in its offering documents and periodic reports is consistent with relevant Commission and staff guidance.”

…continue reading: SEC and Actively Managed Exchange Traded Funds

 
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