Published January 25, 2010
Corporate Governance , News and Articles
Tags: Abe Friedman, Byron Georgiou, Corporate Governance, Edward Greene, Isaac Corre, Jay Eisenhofer, Jeffrey Gordon, John Coates, Joseph Bachelder, Joseph Grundfest, Kayla Gillan, Lucian Bebchuk, Michal Barzuza, Proxy, Proxy Access Roundtable, Richard Ferlauto, Robert Clark, Roy Katzovicz, Scott Hirst, SEC, Securities and Exchange Commission, shareholder, Stephen Lamb, Steven Davidoff, The Harvard Law School, The Harvard Law School Forum
by Scott Hirst, for The Harvard Law School Forum at Harvard Law School, January 25, 2010.
The Harvard Law School Program on Corporate Governance recently released as a working paper the transcript of the Program’s Proxy Access Roundtable, which was held late last year. The working paper containing the transcript is available here. The editors, Lucian Bebchuk and Scott Hirst, have also submitted the transcript to the Securities and Exchange Commission as a comment on the Commission’s proposed rule on proxy access, Facilitating Shareholder Director Nominations, and hope that it will be a useful contribution as the Commission considers rulemaking on the subject.
The Roundtable brought together prominent participants in the debate – representing a range of perspectives and experiences – for a day of discussion on the subject. The day’s first two sessions focused on the question of whether the Securities and Exchange Commission should provide an access regime, or whether it should leave the adoption of access arrangements, if any, to private ordering on a company-by-company basis. The third session focused on how a proxy access regime should be designed, assuming the Securities and Exchange Commission were to adopt such an access regime. The final session went beyond proxy access and focused on whether there are any further changes to the arrangements governing corporate elections that should be considered. Further information about the Roundtable is available here. The transcript was edited by the participants and the editors, with the aim of retaining the spirit of the Roundtable while ensuring that the message of each participant is clearly and accurately conveyed to readers…(continue reading)
Published September 17, 2009
Corporate Governance , News and Articles
Tags: Bank, Corporate Governance, FDIC, Group of 30’s, Harvard Law School, Investors, Jeffrey Gordon, Lehman Brothers, MMF, Money Market Fund, Money Market Reform, NAV, Reserve Fund, SEC, Short term, The Harvard Law School Forum
by Jeffrey N. Gordon, for The Harvard Law School Forum at Harvard Law School, September 17, 2009.
Despite last year’s near-miss of a Money Market Fund catastrophe, the SEC’s current Money Market Reform proposal asks for only modest reforms that fail to address the key issues of this $3.8 trillion financial intermediary; indeed, that may well aggravate systemic risk. First, the proposal does not appreciate that there are really two separate MMF types, retail MMFs and institutional MMFs, with different regulatory needs. Retail MMF investors are looking for a bank account that combines safety with a higher rate of interest. For them there is no substitute for fixed NAV, “safety and soundness” portfolio constraints and deposit insurance paid for with risk-adjusted premiums. Institutional MMFs, which now account for approximately 60% of MMF assets, function as low-cost providers of a corporate treasury function for large business entities. This outsourcing saves these entities (corporations, life insurers, pension funds) the need to assemble individual portfolios of money market instruments the value of which would of course fluctuate. Institutional MMFs thus should not carry a fixed NAV or the associated portfolio constraints. Second, the SEC proposal fails to appreciate how MMF regulation creates systemic risk by artificially increasingly the supply of short term finance. The consequence is to shift maturity transformation away from banks to short term credit markets, which, as last fall demonstrated, may seize-up in times of financial distress. As suggested by the Group of 30’s report in February 2009, whether money market funds are a desirable innovation needs full scale examination…(continue reading)