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...
Fiduciary Duties and Non-Executive Directors
An earlier post had discussed a recent Australian judgment on the role and duties of a non-executive director, Australian Securities and Investment Commission v. MacDonald. More recently, according to a report on the Corporate Law and Governance blog, the Inner House of the Court of Session of Scotland has again commented on the role of non-executive directors. (The Court of Session is Scotland’s...
Corporate Frauds and Regulatory Shortcomings: SEC’s Madoff Report
A few days ago, the U.S. SEC’s Office of Inspector General (OIG) released a report (over 450 pages) identifying various lapses that led to SEC’s failure to uncover Madoff’s Ponzi scheme much earlier than December 2008 when the scandal broke out. To the interested reader, the executive summary might be more manageable given the length of the main report. The principal findings of SEC’s...
Swiss Accounts and Banking Secrecy: Contrasting Outcomes
After prolonged discussions, the US and Swiss authorities came to an agreement earlier this month whereby UBS would disclose details of certain US account holders who are suspected of evading US taxes. The Time Magazine outlines the terms: Under the terms of the new agreement, the IRS will submit a request to Swiss tax authorities to divulge within one year the names of clients suspected of...
SEC Issues Permanent Ban on Abusive Short Sales
In the aftermath of the financial crisis, the US Securities and Exchange Commission (SEC) had issued a temporary ban on the practice of “naked” short sales. By way of a recent press release, SEC has now made the ban permanent. The Press Release defines a “naked” short sale as one where “the investor sells shares “short” without first having borrowed them”. While the Indian securities...
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