Miscellany

This week I just direct your attention to various items.

First, the NYSE recently proposed a rule change that would exempt closed end funds from the requirement of holding annual shareholder meetings.  Closed-end funds are frequently the subject of activist attacks – here I blogged about a Second Circuit case that struck down a takeover defense measure in a Nuveen fund – so a rule change here would be, you know, significant.  Anyway, here is the link to the comments the SEC has received, and the one I found particularly useful, was by the Working Group on Market Efficiency and Investor Protection in Closed-End Funds, which is a collection of law and business professors.

Second, Project 2025 is all in the news these days as a preview of what a second Trump administration might look like, and it turns out, there are proposals for changes to the federal securities laws.

We have the usual conservative stuff, like, get rid of disclosure requirements pertaining to “social, ideological, political, or ‘human capital’ information that is not material to investors’ financial, economic, or pecuniary risks or returns.”  Obviously, the issue here, unaddressed in the document, is that most commenters would agree that only financially material information should be required; the disagreement is over what that means.  And that becomes very obvious in the document, because it singles out the climate change disclosure rules as expensive and therefore ripe for repeal, but it never argues that they require disclosure of immaterial information (though to be fair, the document is full of proposals to repeal climate change-related regulation, and I haven’t read all of it; maybe somewhere else there’s an argument that climate change is financially immaterial).

Anyway, there’s also a proposal that three SEC commissioners be permitted to override the Chair with respect to placing items on the agenda, and pace Jarkesy, they’d allow defendants to choose whether their cases are heard in federal court or administrative courts (which incidentally seems similar to a proposal by Christopher Walker and David Zaring, though their paper is not cited). 

Digital assets would be commodities unless the holder has a contractual right to a share of earnings, or, in the case of liquidation, a claim on the assets.

They’d also simplify firm categories to public, private, and small (based on public float or – interestingly, beneficial owners rather than street name owners), and remove accreditation requirements.  Which as I understand it would functionally mean that companies could choose whether to file registration statements or not.  Intriguingly, however, they do propose to:

Abolish Rule 144 and other regulations that restrict securities resales and instead require a company that has sold securities to provide sufficient current information to the market to permit reasonable investment decisions and secondary sales.

I’m not sure how that proposal interacts with the earlier proposal to segment the market cleanly into public, private, and small firms, but there you go. 

Third, a historian at the University of Delaware, Professor Dael Norwood, is researching Delaware’s history of permitting corporations to vote in local elections; he’s blogged about his findings here and here.

And finally, here is a story about how the new trend of retail stores locking up products is backfiring, because it makes it harder for customers to actually, you know, buy stuff.  What intrigues me is how it seems as though stores are making these decisions based more on vibes than actual data, and rejecting the obvious solutions like hiring more staff to police the aisles (or even just to open the cabinets).  Efficient markets are supposed to force corporate managers to make more reasoned choices, no?  But apparently the heuristic “employees are an expense, do everything but hire people” is very tough to combat.  Even at companies like Walmart, which adopt pay for performance metrics.