Billionaire Chris Hohn Explains Why Increased Disclosure Will Force Companies To Cut Their Carbon Emissions

Billionaire Chris Hohn Explains Why Increased Disclosure Will Force Companies To Cut Their Carbon Emissions Billionaire hedge fund investor Chris Hohn of TCI Fund Management has generated $12.6 billion in gains over the past two years. Here's how he's trying to get companies to cut their carbon emissions. 

#seclaw #securitiesattorney 

https://www.forbes.com/sites/antoinegara/2021/03/09/billionaire-chris-hohn-explains-why-increased-disclosure-will-force-companies-to-cut-their-carbon-emissions/
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Coast-to-coast representation of investors and financial professionals - Securities Lawyer

SEC Proposes Targeted Changes to Public Liquidity Risk Management Disclosure

The SEC has proposed amendments to public liquidity-related disclosure requirements for certain open-end investment management companies.  Under the proposal, funds would discuss in their annual report the operation and effectiveness of their liquidity risk management program, replacing a pending requirement that funds publicly provide the aggregate liquidity classification profile of their portfolios on Form N-PORT on a quarterly basis. 

The Commission adopted the open-end fund liquidity rule in October 2016 in an effort to promote effective liquidity risk management programs in the fund industry.  Management of liquidity risk is important to funds’ ability to meet their statutory obligation — and their investors’ expectations — regarding redeemability of their shares.  Since adoption, staff has engaged in extensive outreach to identify potential issues associated with the effective implementation of the rule.

This outreach resulted in a series of actions taken by the Commission.  In addition to today’s proposal, the Commission previously adopted a rule that extends by six months the compliance date for the classification and classification-related elements of Rule 22e-4 and related reporting requirements.  In conjunction with this extension, the staff issued new guidance intended to assist funds in complying with the liquidity rule’s classification requirements.  Together with today’s proposal, these actions are aimed at providing investors with accessible and useful information about liquidity risk management of the funds they hold while providing sufficient time for funds to implement the requirement to classify their holdings in an efficient and effective manner.   

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Corporate finance issues or questions? Call Mark Astarita at 212-509-6544 or visit The Securities Law Home Page

Be Wary of Famous People Promoting Penny Stocks

The penny stock market has the potential for significant profits, and of course, significant losses. Investing in start-ups and small companies is speculative, and high risk, but has an allure for a certain type of investor.

One problem with this market segment is the promotion of such investments to individuals who are unsuitable for the investment,

Over the years we have seen well known individuals promote such ventures. Bloomberg Business has an article regarding four-star Army general Wesley Clark's involvement in promoting such ventures, including a Grilled Cheese Truck company, and a hydroponic lettuce company.

According to the article, Clark is one of many former governors, generals, and congressmen who’ve found second careers lending their name to  companies that are willing to pay for prestige. Since he ran for president in 2004, Clark has joined the boards of at least 18 public companies, 10 of them penny-stock outfits, whose shares trade in the “over the counter” markets, a corner of Wall Street where fraud and manipulation are common.

Clark claims that these small start-ups come to him for his global connections and enginnerin background, an area of expertise which does not seem to have any connection to a cheese truck franchise. At the same time, he denies that he is lending an endorsement to the companies, and claims that "Nobody's going to invest in a company just because General Clark is a director."

Perhaps, but if the allure is his engineering background and not an endorsement, why is he making promotional videos, recommending an investment in the company and saying things like "we'd love it if you joined us with an investment" and being filmed in a replica of the oval office?

There is no question that these companies are using Clark's name, and others, to gain legitimacy, and there is nothing wrong with that. Having a famous and respected person as your spokesperson does lend credibility. But does that mean that we should be investing in the company?

The answer to that question is in the last sentence of the article:

The bottom line: Since 2004, Clark has joined the boards of at least 10 penny-stock companies. All but one lost value during his tenure.

For more information - Wesley Clark, Penny-Stock General - Bloomberg Business

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The attorneys at Sallah Astarita & Cox include veteran securities litigators and former SEC Enforcement Attorneys. We have decades of experience in securities litigation matters, including the defense of enforcement actions and representation of investors, financial professionals and investment firms, nationwide. For more information call 212-509-6544 or send an email.

SEC To Propose Rules on Political Spending

The SEC has indicated that it plans to issue a Notice of Proposed Rulemaking on requiring public companies to disclose their spending on politics. The Harvard Law School Forum on Corporate Governance and Financial Regulation has an analysis of the issues - SEC to Propose Rules on Corporate Political Spending by April 2013

Supreme Court Affirms $2 Billion Judgment and $300 Million in Fees for Breach of Fiduciary Duty

The Delaward Corporate and Commercial LItigation Blog has an interesting post regarding this decision, with a link to the 110-page decision which awarded damages over breach of fiduciary duty related to the sale of a company.

Supreme Court Affirms $2 Billion Judgment and $300 Million in Fees for Breach of Fiduciary Duty

Related articles, courtesy of Zemanta:

• Chancery Decides: Not Per Se Breach of Fiduciary Duty for a Board to Fail to have a Succession Plan.
• Review of Recent Key Delaware Corporate and Commercial Decisions
• Do employees owe their employer a fiduciary duty?

Morgan Stanley Cut Facebook Estimates Just Before IPO?

When I posted last week that the Facebook IPO was an opportunity for fraud, and quoted Jim Sallah, the well-known Boca Raton securities attorney, I was talking about stock scammers, not major brokerage firms.
Reuters is reporting, under a headline Morgan Stanley Cut Facebook Estimates Just Before IPO that in the run-up to Facebook's $16 billion IPO, Morgan Stanley the lead underwriter on the deal, unexpectedly  told some of its clients that the firm was reducing its revenue forecasts for the company.

It remains to be seen whether that was fraudulent conduct, but that information, if true, is certainly going to attract the interest of regulators and customer attorneys. The impact of such a statement, in particular coming from the lead underwriter might have contributed to the weak performance of Facebook shares, which sank on Monday and Tuesday - their second and third days of trading - to end more than 18 percent below the IPO price.

Institutions and major clients generally enjoy quick access to investment bank research, while retail clients in many cases only get it later. According to the article, it is unclear whether Morgan Stanley only told its top clients about the revised view or spread the word more broadly. The company declined to comment when asked who was told about the research.

How The IPO Ruined Google

Interesting analysis of how serving shareholders intead of your business model can ruin your company - How the IPO Ruined Google

Two Executives Sued in Texas to Recover Bonuses and Stock Profits Received During Accounting Fraud

Two former executives at an Austin, Texas-based surgical products manufacturer were sued today by the SEC to recover bonus compensation and stock sale profits they received during an accounting fraud at the company. The CEO and CFO of the company have not been charged with personal misconduct, but are still required to reimburse the manufacturer for bonuses and stock profits that they received after the company filed fraudulent financial statements..

"Clawback of incentive compensation and stock sale profits as authorized under the Sarbanes-Oxley Act is yet another reason for CEOs and CFOs to be vigilant in preventing misconduct and requiring that companies comply with financial reporting obligations," said Robert Khuzami, Director of the SEC’s Division of Enforcement.


Two Executives Sued in Texas to Recover Bonuses and Stock Profits Received During Accounting Fraud

Risk Alert on Strengthening Practices for Underwriting of Municipal Securities, and Investor Bulletin on Municipal Bonds

The alert issued by the SEC notes that in recent years there has been significant attention focused on the financial condition of some state and local governments. It cites concerns about the extent of written documentation by broker-dealers of due diligence efforts and supervision of municipal securities offerings. Included in the alert are examples of practices used by broker-dealers that may help to demonstrate due diligence and supervisory reviews, such as detailed written policies and procedures, use to commitment committees, due diligence memoranda, etc. activities.


Risk Alert on Strengthening Practices for Underwriting of Municipal Securities, and Investor Bulletin on Municipal Bonds

Judge Orders Plastics Executive to Pay $49.5 Million in SEC Case

The SEC has announced the successful resolution of its trial against a plastics industry executive charged with lying in SEC filings regarding his ownership of Musicland Stores Corporation stock. The executive and a trust he controlled have been ordered by a federal judge to pay $49.5 million in a final judgment against them. The executive failed to file truthful 13D forms and neglected to make other required filings, which are required when a person acquires beneficial ownership of more than 5 percent of a voting class of a company's publicly traded stock. Because of this the execute and the trust thereby materially misrepresented their ownership of Musicland stock.

Following a 10-day trial in May in federal court in Newark, N.J., a jury returned a verdict finding the executive liable for securities fraud and disclosure violations on all counts against him. The jury also found the MAAA Trust controlled by him liable for disclosure violations.

Judge Orders Plastics Executive to Pay $49.5 Million in SEC Case

Attracting Investors - Movie Industry

Many filmmakers begin their careers by persuading private investors to back them. Indeed, unless you are a star like Kevin Costner or Barbra Streisand, it is rare for a major studio to fi¬nance a beginning filmmaker. Banks will not lend money without substantial collateral. Loans based on pre-sales are difficult to obtain because territory buyers want packages with name actors from an experienced director. That leaves most film¬makers looking to Mom, Dad, and whatever they can scrape up from friends, relatives, and MasterCard. While such resources have financed many films, distributor’s expectations have risen over the years. With a glut of independent motion pictures available, many distributors are not interested in acquiring a feature unless it 1) is shot with name actors; or 2) wins an important film festival.
More at the Entertainment Law Resources Blog

NASD Seeks Comment on New Rule on Member Stock Offerings

Citing unidentified "problems" with private offerings of their own securities by NASD member firms, the NASD is proposing to adopt Rule 2721 - Private Placements of Securities Issued by Members.

The rule will set standards for a PPM and filing of the PPM with the NASD prior to the offering.

The comment period ends July 20, 2007, the link to the notice is in the headline.

SEC Comments on Issuer Filings Now Online

The Internet is a constantly evolving source of information, making research easier and easier. We learned today from the Corporate and Securities Law Blog, that the SEC is placing its comments letters on issuer filings online through EDGAR.

That should make for some interesting reading for all of those IPO class action lawyers.

SEC Correspondence May Come Back to Bite You

Escape From Wall Street

Another example of the problems with the ill-conceived, and hastily enacted SOX Legislation - How Congress put Hong Kong and London in a position to surpass New York as a financial capital

Accredited Investor Change in the Works?

On of the alleged reasons for hedge fund registration was the SEC's allegation that small investors were getting into hedge funds. Of course, such an event is impossible if existing rules and regulations were enforced, since the small investor does not meet the financial requirements to invest in a hedge fund.

Assuming that we want the SEC to have such parental control over investors, my suggestion was to raise financial definition of an accredited investor. Without accredited investors, a fund cannot charge a performance fee. So, instead of $1 million or $200,000, make it $2 million or $500,000, that would keep any small investor out of the funds.

That may be coming. Commissioner Cox spoke about exactly that, and rule proposals will be made in December.

Massive Increase In Reg D Fraud?

Dan Jamieson over at InvestmentNews has an interesting article on an alleged increase in securities fraud, where the scanners are using Reg D to add legitimacy to fraudulent offerings.

The article contains a number of quotes from state securities regulators who are bemoaning the fact that they can no longer require a merit review of offerings in their state, which they claim is leading to an increase in fraud. NSMIA pre-empted state merit review of offerings, leaving the SEC as the only entity with the authority to review the offerings.

Also of interest are various comments regarding the inability of the SEC to conduct any review of those offerings, citing staffing and budget concerns.

And Congress wants to have them review hedge funds? The SEC is understaffed as it is, and unable to perform its function. Congress keeps adding responsibility, without funding, all to the detriment of investors, and the markets.