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Commissioner Gallagher recently lamented that the SEC has played a "significant role" in the rising influence of proxy advisory firms and the increasing willingness of investors to rely on them.  He blamed the rules adopted in 2003 under the Investment Advisers Act, which focused on an investment adviser's fiduciary obligation to its clients when the adviser has the authority to vote its clients' proxies. 
7 years 3 months ago
It's springtime, and Ponzi schemes are in full bloom. Here is a summary of stories that were reported this month. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what's in the news, not writing or verifying it. Leonard Ansill was arrested in connection with an alleged $1.1 million Ponzi scheme in which he offered investments to six investors that were supposedly funded with mortgages that he never actually held. Daniel Bonventre, Jerome O'Hara, and George Perez, former employees of Bernard L. Madoff Investment
7 years 3 months ago
While we wait for the SEC to act on the Dodd-Frank mandate on recoupment of executive compensation, Walmart will be facing an unusual shareholder proposal on the topic this coming week.
7 years 3 months ago

Last week I published a blog post on the US Supreme Court’s unanimous decision in Bullock v. BankChampaign, N.A., No. 11-1518 (May 13, 2013) (pdf), that focused on the Court’s application of the noscitur a sociis canon to the bankruptcy nondischargeability statute dealing with “defalcation in a fiduciary capacity.”

I write this second blog post discussing Bullock because I think the case will prove especially noteworthy for those who deal with the concept of “recklessness” in their civil practice.

7 years 3 months ago
By JOANNE KAUFMAN No long chats with the doorman. No umbrellas or wet boots in the hall. No welcome mats or decorations on the front door. No wearing flip-flops in the lobby. These are but a few of the more extreme rules that apartment boards in New York City have imposed, or at least thought about imposing, on the residents of their buildings. The average co-op or condominium has two dozen house rules. “Typically, they’re quality-of-life rules meant to benefit everyone in the closed community,” said Toni Hanson, a vice president and senior managing director of Douglas Elliman. While there’s good sense behind many of these rules — don’t hang or shake things out the window; lay off the stereo before or after a certain hour — certain strictures can charitably be described as quirky, not to say capricious or overreaching. Your home is your castle? Think again. It’s all, of course, in the interest of helping a building full of strong-minded New Yorkers coexist in (relative) harmony. Co-op boards have long issued directives about deportment and decorum, and condo boards are increasingly following suit. For the most part, they are well within their rights. Residents can either get with the program or get behind a co-op coup to remove the big-brother board members in their midst.

Read More from: Shenwick & Associates

7 years 3 months ago
By JESSICA SILVER-GREENBERG and CATHERINE RAMPELL The nation’s largest private student lender, Sallie Mae, is cleaving itself into two companies — a move that will create a new home for more than $100 billion of student loans amid broad concerns from federal authorities and consumer advocates that graduates hobbled by debt are increasingly falling behind on their payments.The overhaul by Sallie Mae is playing out as college students, facing persistent unemployment and a sluggish economy, are defaulting on their loan payments at a rate of 13.4 percent, a level not seen for more than a decade, according to the latest statistics from the Department of Education.

Read More from: Shenwick & Associates

7 years 3 months ago
The recent PCAOB reproposed auditing standards on related parties and significant unusual transactions also include a modification to Auditing Standard No. 12, Identifying and Assessing Risks of Material Misstatement, focused on executive compensation. 
7 years 3 months ago
When is a loan document not evidence of a loan, but rather of an equity investment? In their article, “Ninth Circuit Favors Substance Over Form in Fitness Holdings" Thompson & Knight Partner Ira L. Herman and Associate Evelyn Breithaupt discuss the nuances of the Ninth Circuit decision in In re Fitness Holdings International Inc. (2013 U.S. App. LEXIS 8729). This ruling and similar decisions permit the recharacterization of an obligation labeled as debt, as equity. This decision is an important reminder that although parties may structure a transaction to look like a loan, courts have the inherent authority to determine what the transaction really is and are not bound by what it is called. The decision warns that payments made on account of a recharacterized loan may constitute a distribution on account of an equity interest, subject to “clawback” as a fraudulent transfer. The article was published by Law360 on May 6, 2013. 
7 years 3 months ago
When is a loan document not evidence of a loan, but rather of an equity investment? In their article, “Ninth Circuit Favors Substance Over Form in Fitness Holdings" Thompson & Knight Partner Ira L. Herman and Associate Evelyn Breithaupt discuss the nuances of the Ninth Circuit decision in In re Fitness Holdings International Inc. (2013 U.S. App. LEXIS 8729). This ruling and similar decisions permit the recharacterization of an obligation labeled as debt, as equity. This decision is an important reminder that although parties may structure a transaction to look like a loan, courts have the inherent authority to determine what the transaction really is and are not bound by what it is called. The decision warns that payments made on account of a recharacterized loan may constitute a distribution on account of an equity interest, subject to “clawback” as a fraudulent transfer. The article was published by Law360 on May 6, 2013. 
7 years 3 months ago
The US Supreme Court has long taught the importance of certain canons of interpretation unique to bankruptcy law, the more significant ones being:
  • The Fresh-Start Policy:  A primary purpose of bankruptcy is to relieve the debtor "from the weight of oppressive indebtedness and permit him to start afresh...." (Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934).
  • Equality of Distribution:  "[H]istorically one of the prime purposes of the bankruptcy law has been to bring
7 years 3 months ago
Seeking injunctive relief, shareholders of Groupon complained that the company improperly aggregated separate and distinct amendments to Groupon's 2011 incentive plan to be voted on at its annual meeting on June 13, 2013. In the initial proxy statement, a proposal on the company's ballot asks shareholders to approve amending the plan to increase the total number of shares currently authorized as well as the amount that could be granted to any individual. 
7 years 3 months ago
A taboo subject, I realize.  Every time I mention that I gave up caffeine a year ago, people just shut down.  They say, “Whoa, not me!” and run away as quickly as possible before I can open my mouth to explain.  Well, no one—except maybe a hacker—can keep me from saying my piece here! Let me say at the outset that I love coffee – good coffee, that is.  I’m a snob.  That watered down crap you get at most restaurants doesn’t cut it.  I buy the good stuff.  I brew the good stuff.  You sneer, “I thought you gave up coffee!”  Caffeine yes, I did, but coffee, no.  I do drink decaf.  “But decaf has some caffeine!” you again sneer (this is how every conversation that gets past the clenched jaw phase goes).  I drink decaf black tea, too, by the way.  What I will say is that a decaf tea in the morning and a cup of decaf coffee twice a week does not a caffeine habit make!

Read More from: Spiritually Bankrupt

7 years 3 months ago

The US Supreme Court has long taught the importance of certain canons of interpretation unique to bankruptcy law, the more significant ones being:

7 years 3 months ago
President Obama has named Kara Stein, Democrat, and Michael Piwowar, Republican as nominees for SEC Commissioners.  Both are currently Senate aides.  Ms. Stein is currently legal counsel and senior policy advisor to Senator Jack Reed, who is a senior member of the Senate Banking Committee, and would replace Commissioner Elisse Walter.  If confirmed, her term would expire in June 2017. 
7 years 3 months ago
by Barbara Altimus Shreero Judge Christopher M. Klein's decision to accept the City of Stockton's petition for bankruptcy on April 1, 2013 set the stage for a battle over whether public workers' pensions can be reduced through municipal reorganization. Stockton's public revenues tumbled dramatically when the recession hit, leaving Stockton unable to meet its day-to-day obligations. Stockton slashed its police and fire departments, eliminated many
7 years 4 months ago
As many readers of our blog probably know, IRAs (Individual Retirement Accounts) are exempt under New York State Debtor and Creditor Law and the federal Bankruptcy Code. An exempt asset means that an individual can file for Chapter 7 bankruptcy and keep that asset after the bankruptcy filing. The reason for this exemption is twofold: (1) IRAs are deemed "spendthrift trusts" under New York State and federal law; and (2) the purpose of the law is to give debtors a "fresh start" with some assets, and especially to protect retirement monies for debtors. As with many topics in bankruptcy, sometimes there is not necessarily a clear answer to an issue. While the law is clear with respect to IRAs (New York State law provides that IRAs of any value are exempt assets, with limited exceptions, and the Bankruptcy Code allows exemption of up to $1,245,475 in IRAs or Roth IRAs), what about inherited IRAs? An inherited IRA is an IRA that debtor inherits from a family member, generally a parent, and the distinction from a regular IRA is that the debtor's earnings were not used to fund the IRA, but instead the monies were rolled over from the IRA of a deceased family member, usually after the death of the family member.

Read More from: Shenwick & Associates

7 years 4 months ago
WILMINGTON, Del. -- (Mealey's) Former joint compound producer Bondex International Inc. and its related holding company Specialty Products Holding Corp. face an estimated $1.16 billion in pending and future asbestos personal injury claims, about double what the companies estimate their asbestos liabilities at, a federal bankruptcy judge in Delaware overseeing the companies' joint Chapter 11 case ruled May 20 (In re:  Specialty Products Holding Corp., et al., No. 10-11780, D. Del. Bkcy.; 2013 Bankr. LEXIS 2051)
7 years 4 months ago
The Council of Institutional Investors is urging the SEC to take action in response to news reports that Broadridge will discontinue its practice of providing voting tallies to proponents of shareholder proposals. It is unclear whether many were even aware that Broadridge was providing this information to shareholder proponents who used the company to distribute materials to investors.
7 years 4 months ago