- See eg SL Schwarcz, “Leverhulme Lecture: The Global Finan cial Crisis and Systemic Risk” (2010). Available at http://ssrn.com/abstract=1707051 (accessed 19 January 2011).
- For a synopsis of events leading to the financial crisis and some of the initiatives adopted in response in various countries, see eg IBA Task Force on the Financial Crisis, The International Bar Association's Task Force on the Financial Crisis: A Survey of Current Regulatory Trends (October 2010). Available at www.ibanet.org/Article/Detail.aspx?ArticleUid=2C72F588-7222-47C9-83E4–7DB0A0A8BF1C (accessed 19 January 2011).
- Ibid.
- 15 USC 78n(a). The revisions were introduced by the Securities and Exchange Commission as a rule Facilitating Shareholder Director Nominations, 17 CFR Parts 200, 232, 240 and 249 (SEC Proxy Access Rule).
- Report of the Senate Committee on Banking, Housing, and Urban Affairs regarding The Restoring American Financial Stability Act of 2010, S Rep No 111–176 (2010) 36.
- Aviv Pichhadze, “Private Equity, Ownership, and Regulation” (2010) 14 Journal of Private Equity 17, 20–22.
- Ibid.
- Report of Senate Committee, supra n 5, 1.
- Schwarcz, supra n 1, 4 (noting that without regulation, exter nalities caused by systemic risk would not be prevented). For discussion on public interest theories of regulation, see eg A Ogus, Regulation: Legal, Form and Economic Theory (Oxford, Hart Publishing, 2004).
- Report of the Senate Committee, supra n 5, 146.
- Ibid.
- JT Bostelman, RE Buckholz, and MR Trevino, Public Company Deskbook (2010) (PLIREF-PCDB s 12:3.1) (WL). For a brief history of the proxy access debate, see eg DF Larcker and B Tayan, “Proxy Access: A Sheep, or Wolf in Sheep's Clothing?” (8 July 2010) Rock Center for Corporate Governance at Stanford University Closer Look Series: Topics, Issues and Controversies in Corporate Governance No CGRP-06. Available at http://ssrn.com/abstract=1678063 (accessed 19 January 2011).
- For discussion on private interest theories of regulation, see eg SP Croley, “Theories of Regulation: Incorporating the Admin istrative Process” (1998) 1 Columbia Law Review, 56.
- See eg JA Grundfest, “The SEC's Proposed Proxy Access Rules: Politics, Economics, and the Law” (2010) 65 Business Lawyer 361 (arguing, at 365, that proxy access generates “megaphone externalities” by drawing attention to union and pension fund causes even if their nominees have little chance to win nomina tion). Grundfest also identifies internal inconsistencies within the SEC Proxy Access Rule but a discussion of this is beyond the scope and purpose of this article.
- Ibid, 378.
- Ibid.
- For example, Schapiro, Chair of the SEC, has expressed her com mitment to the introduction of the SEC Proxy Access Rule in the past: “Speaking for myself,… I intend to make proxy access – meaningful opportunities for a company's owners to nominate its directors – a critical part of the Commission's agenda in the coming months” (Testimony Concerning Enhancing Investor Protection and Regulation of the Securities Markets (Chairman Mary Schapiro, 26 March 2009). Available at www.sec.gov/news/testimony/2009/ts032609mls.htm (accessed 19 January 2011)).
- Pichhadze, supra n 6.
- E Wymeersch, “What Systemic Risks May Concern Specific Players/Activities such as Derivatives, CCPs and Hedge Funds? How to Mitigate Them?” (2010) Financial Law Institute Working Paper Series S&C 2010-02, 1. Available at www.law.ugent.be/fli/wps/showwps.php?wpsid=176 (accessed 19 January 2011). Schwarcz, however, argued that the vagueness of the term begs for a definition (SL Schwarcz, “Systemic Risk” (2008) 97 Georgetown Law Journal 193, 196).
- Schwarcz, supra n 19, 198. See also A Hudson, The Law of Finance (London, Sweet & Maxwell, Thomson Reuters, 2009), 28–29.
- Establishing a Framework for Systemic Risk Regulation: Hearing Before the Committee on Banking, Housing and Urban Affairs, United States Senate (23 July 2009) (statement of Mary L Schapiro, Chairman, SEC). Available at www.sec.gov/news/testimony/2009/ts072309mls.htm (accessed 19 January 2011).
- Ibid.
- J Stewart and R Ayres, “Systems Theory and Policy Practice: An Exploration” (2001) 34 Political Sciences 79.
- Ibid, 88.
- N Luhmann and Law as a Social System, trans KA Ziegert (Oxford University Press, 2004). See also G Teubner, Law as an Autopoietic System (Oxford, Blackwell Publishers, 1993).
- R Nobles and D Schiff, “Introduction”, in Luhmann, supra n 25, 48.
- Ibid, 49.
- Ibid.
- WB Arthur, “Positive Feedbacks in the Economy” (1990) 262 Scientific American 92.
- Pichhadze, supra n 6, 21.
- Ibid, 20–22.
- US SEC, “What We Do – The Investor's Advocate: How the SEC Protects Investors, Maintains Market Integrity, and Facili tates Capital Formation”. Available at www.sec.gov/about/whatwedo.shtml (accessed 19 January 2011).
- TL Hazen, Law of Securities Regulation, 6th edn (2011) 1 Law Sec Reg §1.4 (WL).
- Pichhadze, supra n 6.
- MA Sargent and DR Honabach, Proxy Rules Handbook (2010) (Proxy Rules Hdbk § 1.1) (WL).
- Ibid. Briefly stated, Berle and Means observed that by the early 1930s the wealth of corporate America was concentrated in the hands of that nation's largest corporations, and that these corporations have experienced the separation of ownership from control (AA Berle and GC Means, Modern Corporation and Private Property (New York, Macmillan, 1933)).
- Pichhadze, supra n 6, 21.
- As Vagts observed, “[a] shift in corporate legal structure appro priate enough for the corporate giant might be burdensome or even disastrous for the intermediate concern as well as for the midget” (DV Vagts, “Reforming the ‘Modern’ Corporation: Perspectives from the German” (1966) 80 Harvard Law Review 23, 32).
- Sargent and Honabach, supra n 35; and Pichhadze, supra n 6.
- The findings by Brancato and Rabimov serve to illustrate the extent of institutionalisation in the US. They found, for example, that total institutional assets increased from $2.7 tr in 1980 to $27.1 tr in 2006. Total institutional holdings increased from $8.7 bn in 1950 (or 6.1% of total equity markets) to $12.9 tr in 2006 (or 66.3% of total equity markets) (in CK Brancato and S Rabimov, The 2008 Institutional Investment Report: Trends in Institutional Investor Assets and Equity Ownership of US Corpo rations (The Conference Board, 2008)).
- Pichhadze, supra n 6. See also Aviv Pichhadze, “The Nature of Corporate Ownership in the USA: The Trend Towards the Market Oriented Blockholder Model” (2010) 5 Capital Markets Law Journal 63.
- O Williamson, “The Economics of Governance” (2005) 95 American Economic Review 1.
- Pichhadze, supra n 6, 20.
- Pichhadze, supra n 6, 20.
- Luhmann, supra n 25, 105–20.
- For example, it has been observed that ownership structure affects such matters as (i) takeovers and defensive measures adopted by firms to thwart such activity, (ii) conflict-of-interest rules and related party rules, (iii) significant corporate action and disclosure rules, and (iv) board independence (see eg RR. Kraakman et al (eds), The Anatomy of Corporate Law: A Comparative and Functional Approach (Oxford University Press, 2004); and LABebchuk and A Hamdani, “The Elusive Quest for Global Governance Standards” (2009) 157 University of Pennsylvania Law Review 1263).
- Williamson, supra n 42.
- Administration in the context of the capital markets refers to securities regulators such as the SEC.
- Pichhadze, supra n 6.
- See, generally, Pichhadze, supra n 6; LE Strine, Jr, “One Fun damental Corporate Governance Question We Face: Can Corporations be Managed for the Long Term Unless Their Powerful Electorates Also Act and Think Long Term? (2010)
- Business Lawyer; Aviv Pichhadze, “Institutional Inves tors as Blockholders” (2010) Osgoode CLPE Research Paper No 13/2010. Available on SSRN: http://ssrn.com/abstract=1600743 (accessed 19 January 2010).
- TN Carver, “The Diffusion of Ownership of Industries in the United States” (1925) 11 Proceedings of the Academy of Political Science in the City of New York, Popular Ownership of Property: Its Newer Forms and Social Consequences 39, 39; RL Cox, “Policy-holder Ownership and Interest through Investment of Life Insurance Funds” (1925) 11 Proceedings of the Academy of Political Science in the City of New York, Popular Ownership of Property: Its Newer Forms and Social Consequences 75.
- RD Naess, “Changing Patterns of Individual Equity Invest ment” (1964) 20 Financial Analysts Journal 4, 77.
- Comment, “The Meaning of ‘Control’ in the Protection of Investors” (1951) 60 Yale Law Journal 311, 321.
- See eg H Hansmann and R Kraakman, “The End of History for Corporate Law”, in JN Gordon and MJ Roe (eds), Convergence and Persistence in Corporate Governance (Cambridge University Press, 2004), 33, 48–49.
- Pichhadze, supra n 6.
- Hudson, supra n 20, 29.
Law and Financial Markets Review
Volume 5, 2011 - Issue 3