Common ownership – the phenomenon of firms sharing stockholders with industry competitors – is becoming ubiquitous, with 82 percent of S&P 500 firms having common ownership at the end of 2015 compared with just 17 percent in 1990. At least in theory, a cross-owner has incentives to reduce competition among its portfolio companies because doing so may boost their earnings (likely at the cost of consumers or other companies). For example, common ownership within the…

Thank you Carla [Garrett], members of the Small Business Capital Formation Advisory Committee, Martha [Miller], and the staff in the Office of the Advocate for Small Business Capital Formation.[1] It is nice to join you again for today’s meeting. I am pleased that you will devote today’s meeting to a discussion of the concept release on harmonization of securities offering exemptions. [2] Taking a critical look at our offering exemptions is important for investors…

Shareholder proposals urging corporate boards to report on climate‑related risk made headlines in 2017 when they earned majority support from investors at ExxonMobil, Occidental Petroleum, and PPL.[1] The key to this historic vote was the support of the Big Three index fund managers – BlackRock, State Street, and Vanguard, which broke with management and cast their votes for the proposals.[2] The 2018 proxy season saw several more climate‑related proposals earn majority support, and…

Thank you, Meredith [Cross], for that kind introduction. It is an honor to be with you here today [November 4]. I must begin with my standard disclaimer that the views I represent are my own views and not necessarily those of the Commission or my fellow Commissioners. It is hard to believe that 2019 is almost over. When I think back on the year, one defining theme is broken windows. Why is 2019 the “Year…

Over the past half dozen years, the three of us have written a number of papers on sovereign bond contracts.  In the first set of papers, we documented the stickiness phenomenon (the reluctance of lawyers to modify standard contract language even though obsolescence posed a significant risk of misinterpretation). In the second set of papers, we studied the phenomenon of random mutations to the standard form language that occurred without an apparent rational purpose (…

In response to the sharp increase in campaigns by activist hedge funds in France and Europe generally, a French commission has conducted an extensive investigation and issued a carefully researched, reasonable and balanced report recommending regulatory and procedural changes to rebalance the relationship between companies and activists.  The key recommendations are: “[S]tronger transparency measures applicable to investors taking public positions, directly or indirectly, aimed at influencing an issuer’s strategy, financial position or governance.  An activist…

On October 15, 2019, the U.S. Supreme Court heard oral arguments in Financial Oversight and Management Board for Puerto Rico v. Aurelius Investment, a case that centers on the constitutionality of the appointment process for the members of the federally established board charged with restructuring Puerto Rico’s over $100 billion in debt.  In addition to shedding light on this narrow question about debt, bankruptcy, and the U.S. Constitution, the case highlights the larger, longstanding political…