sec sealThe Securities and Exchange Commission is primarily concerned with public companies and the securities markets in which the shares of public companies trade. However, in a series of recent speeches and presentations as part of what the agency had called the “Silicon Valley Initiative,” the agency made it clear that it is increasingly concerned with private and pre-IPO companies as well, particularly so-called “unicorns” – that is, the private start-up firms with valuations greater than $1 billion. SEC Chairman Mary Jo White highlighted these concerns in a March 31, 2016 speech at the Rock Center for Corporate Governance at Stanford Law School, a copy of which can be found here.

As summarized in an April 4, 2016 memo from the Fenwick & West law firm about the SEC’s Silicon Valley Initiative, “the SEC is closely watching the conduct of private companies as well as emerging platforms that trade in private company securities, and will bring enforcement cases as needed to protect investors.” The agency’s recent presentations and SEC Chair White’s speech, the memo said, underscored that “the SEC expects even private companies to embrace and demonstrate sound corporate governance.”

As discussed below, these pronouncements from the SEC raise troublesome questions about what has in the past been viewed as a clear demarcation between the potential liability exposures for private and public companies.
Continue Reading SEC Warning: It Is Watching Private Companies

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Michael W. Peregrine

In the following guest post, Michael W. Peregrine, a partner at the McDermott, Will & Emery law firm, take a look at regulators’ new “gatekeeper” expectations that now face corporate directors. This article is reprinted with permission from Corporate Board Member, First Quarter, 2016. I would like to thank Michael for his willingness to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Michael’s guest post.
Continue Reading Guest Post: Managing Gatekeeper Anxiety

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Dennis Klein

The financial crisis generated a great deal of litigation, much involving the directors and officers of companies affected by the crisis. As the crisis recedes further into the past and as the litigation it generated winds down, it is worth taking a look at what happened to determine what can be learned from the litigation. In the following guest post, Dennis Klein of the Hughes Hubbard & Reed law firm provides an overview of what he views as the takeaways for corporate directors and officers from the financial crisis D&O litigation. A longer version of this article will appear in the April 2016 issue of The Review of Banking and Financial Services. I would like to thank Dennis for his willingness to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to readers of this site. Please contact me directly if you would like to submit a guest post. Here is Dennis’s guest post.
Continue Reading Guest Post: Seven Lessons Learned from D&O Litigation During the Financial Crisis  

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John Reed Stark
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David Fontaine

In this day and age, the members of the boards of directors of most companies understand that cybersecurity issues are both important and should be a board-level priority. But while these issues and responsibilities are now well-recognized, many boards still struggle to translate these issues into action. In the following guest post from John Reed Stark, President, John Reed Stark Consulting LLC, and David R. Fontaine, President, Corporate Risk Holdings[1] take a look at these challenges and propose that in addressing their cybersecurity-related responsibilities boards should draw upon the same governance procedures they have longed used for with respect to financial accounting and reporting. The authors suggest well-advised boards will take this approach in light of the very real, difficult to control and ever increasing enterprise threat that cyber-attack represent for their organizations.
Continue Reading Guest Post: Boards of Directors and Cybersecurity: Applying Lessons Learned From 70 Years of Financial Reporting Oversight

Lebovitch_Mark_300dpiOne of the more significant recent developments in the corporate and securities litigation arena has been the emergence of the debate over fee-shifting bylaws following the Delaware Supreme Court’s May 2014 decision in ATP Tour, Inc. v. Deutscher Tennis Bund. Draft proposed legislation is now being considered by the Delaware legislature that would address

floridaIn prior posts, I have noted the growing phenomenon of companies adopting various types of bylaws as a self-help version of litigation reform. Delaware’s courts have already approved the facially validity of both forum-selection bylaws and of fee-shifting bylaws, although measures pending in Delaware legislature in 2015 could address the fee-shifting bylaw. Other

hbr4The fiduciary duties of members of corporate boards are usually invoked in connection with directors’ potential liability exposures. However, in their January 2015 Harvard Business Review article entitled “Where Boards Fall Short” (here), Dominic Barton, global managing director of McKinsey & Co., and Mark Wiseman, President and CEO of the Canada

spainIn an interesting June 11, 2014 Financial Times article entitled “Spain’s Renewal Must Include Governance Improvements” (here), financial journalist and commentator Tony Barber identifies corporate governance issues that he believes Spanish companies have been slow to address. According to Barber, while there may be historical explanations for many of the long-standing corporate governance

weiAs I have frequently noted on this site (refer, for example, here), cyber security issues increasingly are a board level concern, and indeed, recent shareholder litigation has shown that investors intend to hold board members accountable when data breaches cause problems for their companies.  In the following guest article, which was previously published