We share the Commission’s concerns about concentration in the proxy advisory market. Yet, we disagree with the following proposed remedies: 1) forcing proxy advisors to share their opinions with managers ahead of time and 2) treating opinions on proxies as proxy solicitations. By increasing the cost of opining on proxy statements such proposals will only discourage new entry into the proxy advisory market and exacerbate the problem of market concentration in this sector.
- Davis Polk & Wardwell LLP, Second Circuit Lowers the Bar for Charging Criminal Insider Trading (Jan. 7, 2020)
The court held that the “personal benefit” test for insider trading established by the Supreme Court in Dirks v. SEC does not apply to wire and securities fraud under Title 18 of the U.S. Code. Additionally, the court held that confidential government information constitutes “property” for the purposes of federal fraud statutes. The ruling will make it easier for the government to prosecute insider trading even when there is no clear benefit to the source who provided the information. (footnote omitted)