And I will raise their bid, by invoking two other familiar maxims: First, power corrupts, and absolute power is at least within view for institutional investors. Second, sunlight is the best disinfectant, electricity the best policeman. … If there are new problems accompanying this shift (as I would contend), the safest, least intrusive reform is disclosure, not direct governmental intervention.
… Their essay announces that institutional investors have power and prefer to act through proactive hedge funds. Frankly, it is hard to call this breaking news, as it has been true for more than a decade. …
To return to the higher level on which they wish to conduct this debate, Professor Gilson and Gordon are predicting the future, identifying proactive hedge funds as the
good guys'' and managements as thebad guys.” They may be correct, but they are likely overgeneralizing. Virtue is not all on one side. … Transparency, as implemented through mandatory disclosure, plays the same protective role in our securities markets, …