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Article
Publication date: 12 September 2008

William McGuiness, Peter L. Simmons, Robert C. Schwenkel and John E. Sorkin

The purpose of this paper is to explain the implications of a June 11, 2008 decision by the US District Court for the Southern District of New York in CSX Corp. v. The Children's…

125

Abstract

Purpose

The purpose of this paper is to explain the implications of a June 11, 2008 decision by the US District Court for the Southern District of New York in CSX Corp. v. The Children's Investment Fund Management (UK) LLP concerning beneficial ownership and reporting obligations under Section 13(d) of the Securities Exchange Act of 1934 for long parties to cash‐settled total return equity swaps.

Design/methodology/approach

The paper summarizes the decision, discusses the court's analysis as written by Judge Lewis A. Kaplan, notes the court's limitation of its ruling to the facts of the case, explains why two funds that “compare notes” may be considered a group, discusses the permanent injunction against the defendants enjoining them from future violations of Section 13(d), and analyzes the implications of the judge's decision.

Findings

A new decision by the federal district court in New York creates uncertainty regarding whether the long party to a cash‐settled total return equity swap will be deemed to beneficially own the publicly traded reference security for purposes of Section 13(d) of the Securities Exchange Act of 1934. Holders of cash‐settled total return swaps have historically relied on the absence of the legal right to vote or dispose of the reference security as a basis not to file a 13D with respect to the shares referenced in those swap contracts. The new decision casts doubt on that reasoning, and finds that an investor that consciously structured its swap contracts to try to end‐run its otherwise applicable reporting obligations was deemed to beneficially own the shares subject to the swaps, and accordingly had violated Section 13(d) by failing to file a Schedule 13D in the required time.

Practical implications

The ruling is important for financial institutions and investors who deal in derivatives such as equity swaps and who must determine whether and when reporting under Section 13(d) is required.

Originality/value

The paper is an analysis and provides guidance by experienced securities lawyers.

Details

Journal of Investment Compliance, vol. 9 no. 3
Type: Research Article
ISSN: 1528-5812

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Article
Publication date: 5 May 2015

John E. Sorkin, Abigail Pickering Bomba, Steven Epstein, Jessica Forbes, Peter S. Golden, Philip Richter, Robert C. Schwenkel, David Shine, Arthur Fleischer and Gail Weinstein

To provide an overview of the guidance for proxy firms and investment advisers included in the Staff Legal Bulletin released this year by the Securities and Exchange Commission…

192

Abstract

Purpose

To provide an overview of the guidance for proxy firms and investment advisers included in the Staff Legal Bulletin released this year by the Securities and Exchange Commission (SEC) after its four-year comprehensive review of the proxy system.

Design/methodology/approach

Discusses briefly the context in which the SEC’s review was conducted; the general themes of the guidance provided; the most notable aspects of the guidance; and the matters that were expected to be, but were not, addressed by the SEC.

Findings

The guidance does not go as far in regulating proxy advisory firms as many had anticipated it would. The key obligations specified in the guidance are imposed on the investment advisers who engage the proxy firms. The responsibilities, policies and procedures mandated do not change the fundamental paradigm that has supported the influence of proxy firms – that is, investment advisers continue to be permitted to fulfill their duty to vote client shares in a “conflict-free manner” by voting based on the recommendations of independent third parties, and continue to be exempted from the rules that generally apply to persons who solicit votes or make proxy recommendations.

Practical implications

The SEC staff states in the Bulletin that it expects that proxy firms and investment advisers will conform to the obligations imposed in the Bulletin “promptly, but in any event in advance of [the 2015] proxy season.”

Originality/value

Practical guidance from experienced M&A lawyers.

Details

Journal of Investment Compliance, vol. 16 no. 1
Type: Research Article
ISSN: 1528-5812

Keywords

Available. Content available
Article
Publication date: 5 May 2015

Henry A Davis

132

Abstract

Details

Journal of Investment Compliance, vol. 16 no. 1
Type: Research Article
ISSN: 1528-5812

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Book part
Publication date: 19 May 2009

Donald C. Wood

Bosco, Liu, and West's chapter on underground lotteries in rural China is one that begs permission to cross the boundaries between parts of this volume, for it deals with the…

Abstract

Bosco, Liu, and West's chapter on underground lotteries in rural China is one that begs permission to cross the boundaries between parts of this volume, for it deals with the integration of the Chinese economy with others, and it also poses certain moral questions about the nature of markets and rationality in economic exchanges (see also Suarez, this volume). But the authors, after reviewing the evidence, ultimately conclude that China's underground lotteries must be viewed in relation to that country's phenomenal economic development in recent decades. They show that the rise of illegal underground lotteries in China is tightly connected to the development of the modern capitalist economy there, and that although it seems at first glance to be powered by irrationality and superstition, it actually functions according to capitalist principles – at least as viewed by the participants. They also argue that rural villagers who place bets in them are not mere victims of nonsensical beliefs or of opportunistic “outsiders,” but rather that they are participating in their own way in a system in which luck clearly plays a very large role, but one over which they have little control, and one that is grounded in the historical commercialized economy of China (see also Richardson, 1999). It is interesting to note the way that participants rationalize the lottery and their actions through their assumption that it is rigged – their approach to it is markedly different from that of someone from, for example, Japan or the United States, where such a lottery is assumed from the start to not be rigged. Bosco and co-authors well demonstrate here the importance of viewing a cultural phenomenon as part of a greater whole, and one in a constant state of flux.

Details

Economic Development, Integration, and Morality in Asia and the Americas
Type: Book
ISBN: 978-1-84855-542-6

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