The Report of the Examiner in the Chapter 11 proceedings of Lehman Brothers Holdings Inc. provides details about certain transactions that were carried out in the company and the manner in which they were accounted for in its books. The key transaction is question is referred to as “Repo 105”, and the New York Times Dealbook’s White Collar Watch has a nice summary: The examiner’s report gives us...
Political Contributions by Companies
Last week, the U.S. Supreme Court pronounced an important judgment in Citizens United v. Federal Election Commission on the issue of political spending by corporations in elections. The New York Times has a summary: Overruling two important precedents about the First Amendment rights of corporations, a bitterly divided Supreme Court on Thursday ruled that the government may not ban political...
U.S. Financial Reforms: The “Volcker Rule”
Last week, the U.S. unveiled a series of reforms to deal with some of the lessons learnt from the financial crisis. Following is an extract of the President’s remarks that outline the proposals: First, we should no longer allow banks to stray too far from their central mission of serving their customers. In recent years, too many financial firms have put taxpayer money at risk by operating hedge...
Recent proposals for a Tobin Tax
Recently, the UK government proposed the levying of a ‘Tobin tax’ or a financial transactions tax to recover the cost of bailouts in recession situations. The proposal has not won many supporters; indeed, India is one of the countries which has opposed the tax. Despite initial rejections of the idea, the IMF is said to be considering the implications of such a tax. Named after the economist James...
‘Principal place of business’ – Oral Arguments in Hertz v. Friend
An earlier post had discussed the issue in Hertz v. Friend, which calls upon the United States Supreme Court to determine what is the ‘principal place of business’ of a corporation having operations in more than one State. The Court heard the matter on 10th November, and the transcript is available here. Unfortunately, while it makes interesting read, the potential the case seemed to have for a...
Law Firms and Joint Ventures
A few months ago, we had posted about a paper by Professor Jayanth Krishnan on issues that revolve around the opening up of the Indian legal sector to foreign law firms. He has now released the results of another interesting piece of research titled The Joint Law Venture: A Pilot Study that examines the rate of success or failure of joint ventures between law firms by looking closely at the...
United States Supreme Court considers a corporation’s ‘principal place of business’
An important question, with significant implications for contemporary corporate law theory will be heard by the United States Supreme Court on November 10. The matter in question is Hertz Corp. V. Friend (08-1107), which poses the question of which State can be considered to be a corporation’s ‘principal place of business’. The issue has arisen against the backdrop of a class action against the...
Corporate Governance Accreditation
In Singapore, there is a proposal for listed companies to seek voluntary accreditation of their corporate governance processes and framework from an independent body. This is akin to the ISO certification process. As this report suggests, while such accreditation will better inform retail investors regarding corporate governance practices followed in a company, this could also be riddled with...
The Insider Trading Debate Resurfaces
With the SEC recently charging hedge fund manager Raj Rajaratnam and others for insider trading, the debate regarding the scope of insider trading and its (un)desirability in capital markets has resurfaced. SEC’s complaint filed in the District Court in New York indicates that Rajaratnam, through his hedge fund Galleon, had traded in stocks of 10 different companies while in possession of inside...
Regulating Derivatives
According to one school of thought, the excessive use of derivatives, particularly credit default swaps (CDSs) was a key cause of the global financial crisis. Related to this is the argument that progressive liberalisation of rules governing derivatives accelerated their downfall. In an interesting debate titled Regulate OTC Derivatives by Deregulating Them, Professor Lynn Stout traces the...
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