
Contents
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I. Introduction I. Introduction
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II. Insider Trading—Regulating Securities Trading by Corporate Fiduciaries and Their Tippees II. Insider Trading—Regulating Securities Trading by Corporate Fiduciaries and Their Tippees
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A. Section 16 of the Securities Exchange Act A. Section 16 of the Securities Exchange Act
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B. Emergence of a Broad Federal Insider Trading Prohibition—Section 10(b) and Rule 10b-5 B. Emergence of a Broad Federal Insider Trading Prohibition—Section 10(b) and Rule 10b-5
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C. The SEC’s Activism in the Insider Trading Corporate Governance Context C. The SEC’s Activism in the Insider Trading Corporate Governance Context
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1. Tender Offer Insider Trading—A Return to Yesteryear 1. Tender Offer Insider Trading—A Return to Yesteryear
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2. Regulation FD—Solving the “Loose-Lip” Executive Dilemma 2. Regulation FD—Solving the “Loose-Lip” Executive Dilemma
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3. The Sanctity of Family Relationships 3. The Sanctity of Family Relationships
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III. Qualitative Materiality—Seeking to Impact Normative Fiduciary Conduct Through the Guise of Disclosure III. Qualitative Materiality—Seeking to Impact Normative Fiduciary Conduct Through the Guise of Disclosure
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IV. Rebounding from a Failed Attempt to Create Federal Minimum Standards IV. Rebounding from a Failed Attempt to Create Federal Minimum Standards
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A. The SEC’s Response—Disclosure of “Fairness” A. The SEC’s Response—Disclosure of “Fairness”
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B. Recognition of a Federal Claim Based on State Law B. Recognition of a Federal Claim Based on State Law
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V. The Federal Tender Offer Regimen—Composing the Rule Book V. The Federal Tender Offer Regimen—Composing the Rule Book
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VI. The SEC’s Impact on Corporate Governance by Means of “Undertakings” VI. The SEC’s Impact on Corporate Governance by Means of “Undertakings”
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VII. SEC Enforcement Actions Against Officers and Directors VII. SEC Enforcement Actions Against Officers and Directors
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VIII. Focusing on “Gatekeepers”—Accountants and Attorneys VIII. Focusing on “Gatekeepers”—Accountants and Attorneys
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IX. Conclusion IX. Conclusion
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3 The SEC’s Impact on the Federalization of Corporate Governance—A Traditional Perspective
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Published:March 2018
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Abstract
This chapter examines, from a traditional perspective, several areas where the Securities and Exchange Commission (SEC) has impacted corporate governance in a meaningful way. By way of example, these subjects include insider trading, qualitative materiality, the role of gatekeepers (such as outside directors, attorneys, and accountants), the Commission’s use of disclosure to influence conduct, the implementation by subject companies of undertakings pursuant to SEC enforcement proceedings, and mergers and acquisitions (including tender offers and going-private transactions). This chapter’s focus is on the manner in which the SEC for well over 50 years has impacted corporate governance by means of exercising its rule-making and oversight authority.
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