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SEC Chairman Cox thinks mark-to-market (FAS 157) is a good system, says the New York Times.
Reuters reports that the JP Morgan / Bear Stearns merger has survived a court challenge.
The Harvard Corporate Governance blog provides the full text of the ABA report on merger agreement terms, aka the "Deal Points" study. As well as the full text of the court's opinion in JP Morgan / Bear Stearns matter.
EDGAR, meet EMMA. Today, the SEC announced that it had adopted new rules designating the electronic filing system at the Municipal Securities Rulemaking Board, called EMMA, the central repository for disclosure about municipal finance transactions. Municipal securities are those issued or guaranteed by a government entity. They are exempt from '33 Act registration under section 3(a)(2).
The offering document in a muni finance deal is called an "official statement" and as any librarian who tried to obtain an official statement can tell you, the existing disclosure system is pretty spotty. Presently, there are four designated municipal finance document repositories. None have everything and not all are internet-accessible.
The rule change is, presumably, motivated by the collapse of the market for auction-rate securities. What, I hear you ask (or was that the wind?), is an auction rate security, and what do they have to do with muni finance?
Auction-rated securities were invented in the late 1980's (Tucson Electric Co., 3/88). They were marketed as an alternative to holding cash because, although they didn't mature for many years, they could, theoretically, be re-sold every few days through a private auction process. Municipalities adopted auction-rate debt as a favorite financing device. In February of 2008 the auction process ground to a halt and the securities became unsaleable. For more on the ARS debacle, read Erik Sirri's testimony here and Martha Coakley's here. If that isn't enough, how about an article from the New York Times?
Allow me to provide a concrete example: in January of 2002, the Dormitory Authority of the State of New York issued $450 million auction-rate bonds on behalf of the Sloan Kettering Memorial Cancer Center. The proceeds were used to redeem older bonds. The bonds come due in 2036, but there is supposed to be a repricing auction every seven days. The last auction before the market collapsed was in April of 2008. All the bonds were for sale and there was one bidder. This bidder offered to buy about $18 million in bonds at 2.1% interest.
I got all this info from one of the designated repositories, DAC Bond.
Today brought yet another legal entanglement for the lawyer also know as Marc Dreier, sole partner of the Olsen-twin-representing firm Dreier LLP. Dreier just made bail in Toronto. He's alleged to have impersonated Michael Padfield, Senior Investment Counsel for the Ontario Teachers Pension Plan, for the purpose of snookering Fortress Investment Group out of $50 million. Dreier will return to New York to face an unrelated SEC complaint alleging he's been selling phony securities.
Dreier continues the tradition, pioneered by Thomas Haythe, of Manhattan lawyers embarrassing themselves in Canada.
Primary Reserve Fund, the giant money market fund that broke the buck earlier this year, has posted a plan of liquidation on its website. Securities Docket notes that part of the plan is to offer holders ninety-eight-and-half cents for each dollar they invested. Holders who accept the offer agree not to sue.
2009 is approaching and we're all getting ready for the merriest time of year: proxy season. There have been a number of developments of note and most center around rule 14a-8. 14a-8 is a mechanism allowing shareholders to get their proposals on the ballot at a company's annual meeting. Since proposals from shareholders generally make management do stuff they don't want to, management tends to fights back by asking the SEC's permission (via no-action letter) to exclude such proposals.
On November 7th, the SEC issued Staff Legal Bulletin 14D providing guidelines under 14a-8 for proposals directing the Board to amend the issuer's charter.
A group of law professors, led by Lucien Bebchuk, is suing Electronic Arts over its exclusion of a proposed resolution creating internal corporate guidelines for 14a-8 proposals. Link here to a post on Harvard Corporate Governance blog for more info and links to the briefs.
Shareholders of Alaska Air Group have proposed that the company amend its charter to limit the company's potential damages in a private lawsuit based on rule 10b-5. This has never been tried, but at least one law professor theorized that it is possible. The courts will decide, I suppose. Click to link to the proposal (via Securities Docket).
SEC Currents has a slightly weirder roundup of shareholder proposals including: Monsanto's proposed loyalty oath and Apple's attempt to avoid an environmental sustainability report.
Finally, the New York Law Journal recently published Charles Nathan's seasonal predictions.
No periods today! The New York Times is reporting that the shareholders of Merrill Lynch and Bank of America have approved the merger of their respective companies. For them that's lookin', the final proxy statement was filed 11/3/08 on form DEFM14A and the S-4 is dated 10/2/08. The NYT article links to the press releases.
Securities Docket has a post today about office shuffling at the SEC. "The SEC has countless things that it needs to accomplish right now but its going to need to do so while living out of boxes." The move is being called the "restacking project." It has its own newsletter.
On Wednesday, the SEC announced that it has voted to adopt new regulations governing the conduct of Nationally Recognized Statistical Rating Organizations. The rules themselves haven't been released yet, but based on the SEC's "Fact Sheet" they have been diluted some since being proposed in June.
More when the rules appear.
The Harvard Corporate Governance Blog has a post from George Bason of Davis Polk about the Treasury's final implementing regulations for the Foreign Investment National Security Act of 2007 (FINSA). FINSA amended what is known as the Exon-Florio process. Exon-Florio, administered by the Treasury's Committee on Foreign Investment in the United States, gives the President power to examine and even stop acquisitions of certain US businesses by foreign entities.
The Corporate Counsel Blog has this post about how recommendations on executive compensation from the recent meeting of the G20 look a lot like provisions of the Emergency Economic Stabilization Act.
Finally, the Business Law Prof Blog has a post about a lawsuit brought by a hedge fund called Greenwich Financial Services seeking to modify an agreement between Countrywide and 11 state Attorneys General. The agreement modified a bunch of mortgages written by Countrywide. The problem, Greenwich argues, is that Countrywide no longer owns the mortgages it agreed to modify (Greenwich Financial Services v. Countrywide Home Loan Inc., Superior Ct. for NY County, 650474/2008). More from the New York Times here.
Now that the 11/14 deadline is well past, it seems like a propitious time to summarize TARP money handed out to smaller banks. The deals, listed below, involve 41 banks and range from $4 million to almost $7 billion. The grand total for all the transactions is about $31 billion. Putting together this list gave me the same feeling that I used to get if I spent too long in ABC Carpet & Home - I started to lose perspective about what constitutes a lot of money. I found myself thinking "Why did Heritage Financial bother if all they got was a lousy 3.6 million bucks?"
See this post for a summary of big-bank TARP transactions, and this Reuters article for TARP scorecard of all transactions as of the date of the deadline.
If you'd like a copy of the list below as a Word doc, email me and I'll send it to you.
1st Financial Services Corp, 11/18, $16
Associated Banc-Corp, 11/21, $525
Ameris Bancorp, 11/21, $52
BB&T Corp, 11/19, $3,100
Banner Corp, 11/24, $124
Boston Private Financial, 11/24, $154
Broadway Financial Corp, 11/19, $9
Capital One Financial Corp, 11/18, $3,550
Cascade Financial, 11/26, $38
Centerstate Banks of Florida, 11/24, $4,200
City National Corp, 11/24, $395
Comerica Inc, 11/19, $2,250
Columbia Banking System Inc, 11/21, $77
First Community Bancshares, 11/24, $41
First Community Corp, 11/25, $11
First Horizon National Corp, 11/17, $866
First Niagara Financial Group, 11/25, $186
First Pactrust Bancorp Inc, 11/21, $19
HF Financial Corp, 11/24, $25
Heritage Commerce Corp, 11/26, $40
Heritage Financial Corp, 11/25, $4
Huntington Bancshares, 11/14, $1,400
KeyCorp, 11/20, $2,500
Marshall & Ilsley Corp, 11/14, $1,700
Northern Trust Corp, 11/17, $1,500
Pacific Capital Bancorp, 11/26, $180
Porter Bancorp, Inc, 11/24, $35
Provident Bankshares, 11/17, $151
Regions Financial Corp, 11/18, $3,500
Severn Bancorp, 11/24, $23
TCF Financial, 11/14, $54
Taylor Capital Group, 11/24, $104
Trustmark Corp, 11/25, $215
UCBH Holdings Inc, 11/20, $298
US Bancorp, 11/14, $6,600
Umpqua Holdings Corp, 11/14, $214
Valley National Bancorp, 11/17, $300
Washington Federal, 11/17, $200
Webster Financial Corp, 11/24, $400
Western Alliance BanCorporation, 11/25, $140
Zions Bancorporation, 11/17, $1,400
