Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Saturday, January 27, 2007

Interview with Vanguard's CEO

Today's NY Times has an interview with Vanguard CEO John Brennan.  Among the topics discussed:  the competitive landscape (Charles Schwab and Fidelity); SOX (he's a fan); and investor education.  See  A Fund Giant Not Fretting About No. 1.

January 27, 2007 in News Stories | Permalink | Comments (0) | TrackBack (0)

Globalization of Capital Markets

Two stories in today's WSJ dealing with the globalization of the U.S. capital markets:  It reports that NYSE and Tokyo Stock Exchange are exploring an allliance, Behind a Link Of NYSE, Tokyo Are Two Friends, and that the likelihood of NASDAQ's bid for the LSE succeeding are down, Nasdaq Declines to RaiseIts Bid for LSE.

January 27, 2007 in News Stories | Permalink | Comments (0) | TrackBack (0)

Another Stock Option BackDating Investigation

KB Homes is the latest to announce a formal SEC investigation into stock option backdating.  See SEC Begins Formal Probe Of KB Home Stock Options

January 27, 2007 in News Stories | Permalink | Comments (0) | TrackBack (0)

Friday, January 26, 2007

SEC Approves Changes to BrokerCheck

On Jan. 18, 2007 the SEC approved NASD rule changes to NASD BrokerCheck dealing with the kinds of information about brokers that would be publicly available through the system. Most of the release discusses the rule change dealing with the reporting of "historic complaints," defined as customer complaints that are more than two years old and that have not been settled or adjudicated, as well as matters that have been resolved for less than $10,000 and are no longer reported on a registration form.  NASD will release historic complaints only if three conditions are met:  (1) the matter became a historic complaint after the implementation of the Rule; (2) the most recent historic complaint or currently reported customer complaint is less than ten years old; (3) the person has a total of three or more currently disclosable events. 

January 26, 2007 in SEC Action | Permalink | Comments (0) | TrackBack (0)

Re-Thinking Regulation in the Era of Global Securities Markets

SEC Chairman Cox spoke Jan. 25, 2007 at the Securities Regulation Institute on the challenges presented to the SEC by increasing globalization of the capital markets.  He stated:

The way for the United States to maintain robust investor protections while building healthy international markets is first, to ensure that our regulatory regime at home is both sturdy enough to withstand the onslaught of today's new technologies and the challenges of high volume cross border trading; second, to ensure that our regulations are in every respect cost-justified; and third, to cooperate with our fellow securities regulators abroad to implement agreed-upon regulatory objectives on a global level.

January 26, 2007 in SEC Action | Permalink | Comments (0) | TrackBack (0)

It's the Globalization, Stupid

NY Times commentary joins the debate over whether Wall Street is losing its competitive edge and says the other markets are just competing better as barriers between markets break down.  See About Those Fears of Wall Street’s Decline ...

January 26, 2007 in News Stories | Permalink | Comments (0) | TrackBack (0)

No Progress in NASDAQ-LSE Talks

Negotiations have stalled over price in Nasdaq's quest to acquire the London Stock Exchange.  Saturday is the deadline for a negotiated deal.  See WSJ, LSE-Nasdaq Talks Look Unlikely
Amid Chasm Over Acquisition Price.

January 26, 2007 in News Stories | Permalink | Comments (0) | TrackBack (0)

Competing Bidders for EOPT

In the contest to take over Equity Offices Property Trust, Blackstone raised its bid by 11%, coming back after Vornado had topped its initial bid last week.  Blaackstone says it doesn't want this to be the next RJR Nabisco battle.  See BlackstoneRaises Stakes In EOP Battle.

January 26, 2007 in News Stories | Permalink | Comments (0) | TrackBack (0)

Critique of Socially Resonsible Investing

For a commentary on the "dark secrets" of socially responsible investing, see WSJ, What Should Bill Gates Do?

January 26, 2007 in News Stories | Permalink | Comments (1) | TrackBack (0)

Empty Voting by Hedge Funds in the Spotlight

A lead story in the WSJ today focuses on "empty voting" by hedge funds -- the practice of borrowing shares and voting them -- and how it may influence voting contests.  The practice has been growing in recent years and has attracted the attention of the SEC.  A study by Henry Hu and Bernard Black from the U. of Texas Law School studies empty voting in 22 instances worldwide from 2001-06.  See OUTSIDE INFLUENCE How Borrowed Shares .Swing Company Votes

January 26, 2007 in News Stories | Permalink | Comments (0) | TrackBack (0)

Proxy Contest for Tribune Board?

The WSJ speculates that the Chandler family, the largest shareholder of the Tribune, may announce a proxy contest for more seats on the board as the Tribune considers proposals for its future, including a merger proposed by the Chandlers.  See Chandlers May Fight for More Tribune Board Seats.

January 26, 2007 in News Stories | Permalink | Comments (0) | TrackBack (0)

Thursday, January 25, 2007

NASAA Unveils Pro-Investor Legislative Agenda for the 110th Congress

The North American Securities Administrators Association (NASAA) today outlined a sweeping legislative agenda that supports efforts to advance investor protection and promote a strong and effective regulatory environment to maintain investor confidence in the capital markets.

NASAA’s legislative agenda seeks to preserve the authority of state regulators to protect investors; strengthen the mechanisms currently in place that provide redress to investors for wrongdoing by industry participants; maintain federal laws designed to insure corporate accountability and shareholder confidence; promote sound and effective regulatory initiatives; and improve the scope and breadth of investor education efforts.

January 25, 2007 in Other Regulatory Action | Permalink | Comments (0) | TrackBack (0)

Codification of Interpretations to Research Analysts and Research Reports Rule 2711

Executive Summary:
NASD has filed for immediate effectiveness a proposed rule change to codify certain interpretations under Rule 2711 (Research Analysts and Research Reports). The interpretations include many that previously were set forth in two joint interpretive memoranda. The proposed rule changes also include additional interpretations regarding the definition of research report, the distribution of third-party research through soft-dollar arrangements, and the supervisory requirements with respect to the distribution of both member research and third-party research. This Notice also contains two additional interpretations of the Rule 2711 provisions that prohibit research analysts from participating in the solicitation of investment banking business and road show presentations.  See the complete Rule Filing.

January 25, 2007 in Other Regulatory Action | Permalink | Comments (0) | TrackBack (0)

SEC Charges Florida Man with Unauthorized Use of Other's Online Accounts

On January 25, the Commission filed a complaint in the  United  States
   District Court for the Middle District of Florida charging  twenty-one
   year old Aleksey Kamardin with participating in a fraudulent scheme to
   manipulate the prices of numerous stocks through the unauthorized  use
   of other people's online brokerage accounts.

   The complaint  alleges  that  between  July  13  and  Aug.  25,  2006,
   Kamardin, or others acting in concert, commandeered the online trading
   accounts of unwitting investors at various broker-dealers,  liquidated
   existing equity positions and, using the resulting proceeds, purchased
   thinly traded stocks in order to  create  the  appearance  of  trading
   activity and pump up the price of the stocks.  The  complaint  further
   alleges that in seventeen instances, Kamardin,  in  his  own  account,
   bought shares in the thinly traded issuer just prior to or at the same
   time that compromised accounts were made to buy shares,  creating  the
   false appearance of market activity.  Shortly  after  the  intrusions,
   Kamardin sold all of his shares at the inflated  prices.  In  all  but
   three of these instances, Kamardin realized a profit from his trading,
   netting a total profit of $82,960.

      The SEC's Office of Investor Education and Assistance  has  previously
   issued an investor  alert,  available  on  the  SEC's  website,  which
   provides tips for avoiding becoming a victim of an  online  intrusion.

January 25, 2007 in SEC Action | Permalink | Comments (0) | TrackBack (0)

SEC, Euronext Regulators Sign Regulatory Cooperation Arrangement

Today, the Securities and Exchange Commission and the College of Euronext Regulators announce the signing of a comprehensive arrangement to facilitate cooperation in market oversight in view of the pending combination between the NYSE Group, Inc. and Euronext N.V. into NYSE Euronext, Inc. Through this Memorandum of Understanding (MOU), the regulators express their commitment to close cooperation and collaboration to promote investor protection, foster market integrity, and maintain investor confidence and systemic stability in connection with the regulation of the combined group.

MOU will not go into effect until publication by Euronext Paris S.A. of a declaration that the thresholds for acceptance of the NYSE Euronext offer have been reached.

The authorities making up the College of Euronext Regulators are the

Authority for the Financial Markets (AFM), Netherlands;
Autorité des Marchés Financiers (AMF), France;
Banking Finance and Insurance Commission (CBFA), Belgium;
Comissão do Mercado de Valores Mobiliários (CMVM), Portugal; and
Financial Services Authority (FSA), United Kingdom.

See the Memorandum of Understanding for further information.

January 25, 2007 in SEC Action | Permalink | Comments (0) | TrackBack (0)

SEC Extends Compliance Dates for Reg NMS

The Securities and Exchange Commission has extended for a limited period of time three of the future compliance dates for Rule 610 and Rule 611 of Regulation NMS. The Commission is extending the three compliance dates to give automated trading centers additional time to complete the rollout of their new or modified trading systems. The Completion Date of Oct. 8, 2007, remains unchanged.

Rule 610 is intended to assure fair access to quotations, limit fees for accessing quotations, and require self-regulatory organizations (SROs) to prohibit their members from displaying quotations that lock or cross quotations previously displayed by other markets. Rule 611 requires trading centers to establish policies and procedures to prevent “trade-throughs” – the execution of trades at prices inferior to the best-priced quotations displayed by automated trading centers. Automated trading centers must operate trading systems that comply with the automated response and other requirements of Regulation NMS. The trading systems can be operated by an SRO or operated by a broker-dealer that displays its quotes on the NASD’s Alternative Display Facility.

The Commission has extended the Trading Phase Date until March 5, 2007 (previously Feb. 5, 2007), the Pilot Stocks Phase Date until July 9, 2007 (previously May 21, 2007), and the All Stocks Phase Date until Aug. 20, 2007 (previously July 9, 2007).

January 25, 2007 in SEC Action | Permalink | Comments (0) | TrackBack (0)

EBay Announces Big Stock BuyBack

EBay announced it would buy back up to 2 billion of its shares over the next two years, amid concerns that scams on its auctions market will harm its reputation.  See eBay Announces Aggressive Buyback .

January 25, 2007 in News Stories | Permalink | Comments (0) | TrackBack (0)

Merill Lynch CEO Got $48 Million in Pay

Merill Lynch's CEO, Stan O'Neal, received total compensation of $48 million in 2006, up 30% from 2005, making him the second highest paid CEO on Wall St.  (Goldman Sach's CEO got $54 million.)  See WSJ, Merrill's $48 Million Chief.

January 25, 2007 in News Stories | Permalink | Comments (0) | TrackBack (0)

U.S. Markets Face Increasing Foreign Competition

The WSJ examines the central finding of several recent studies that received wide attention -- that increased regulation of U.S. markets is decreasing its competitive edge -- and finds that the increased competition results from other competitive forces.  Foreign markets have improved their performance, including increasing their own regulation, to provide more competition.  See In Call to Deregulate Business, a Global Twist.

January 25, 2007 in News Stories | Permalink | Comments (0) | TrackBack (0)

Amex Hires Investment Banker

The American Stock  Exchange has hired Morgan Stanley to advise it on strategies for going public or merging with another exchange, either domestic or foreign.  See WSJ, Amex Hires Morgan Stanley, Prepares for an IPO or Merger.

January 25, 2007 in News Stories | Permalink | Comments (0) | TrackBack (0)