Securities and Exchange Commission

Tyler Tysdal is an expert when it comes to matters of investment and he has spent his entire career working in a number of roles within this industry. From fund manager to investor, Tyler knows his way around his world very well and that is why we are very lucky that he has made the time to speak with us to answer the investment queries which you have been sending us. Today we are going to focus on venture capital and private equity, two very similar investment vehicles but two strategies which also differ greatly from one another, and here is how.

Key Differences
Whilst both of these investment strategies involve a pooled fund which invests in a business, the details around each of them do differ a lot. The key difference between the two methods is that venture capital will look to invest in a young business such as a start up, and private equity is about investing in a business which is well established.

Investment Stage
As you can imagine the stage of investment between these two strategies is the key difference and in the case of venture capital this investment will be made very early on in the life of a business. The idea behind venture capital is that an investment group will look to significantly invest in this company and use their experience of business to impact opportunities for the young company. In the case of private equity this investment will usually come when a business is seeking additional funds or if it is struggling. In such a situation a private equity group will invest heavily and seek to place a member on the board, selling back the investment once the company is on a better footing.

Industries
Another key difference between these two investment vehicles is the type of industry which they will look to invest in. For venture capital funds they will seek out young businesses which are operating in rapidly growing industries such as tech, pharma or energy. For private equity funds they will invest in any industry as long as the investment makes sense financially.

Level of Ownership
When venture capital funds put their money into young businesses they will aim to try and get a large stake in return, often up to 49% which allows the owners to stay on as majority shareholders. In the case of private equity they will look for a far more sizable stake as well as expect a board position. This will usually have clauses within the contract which indicate a temporary arrangement.

The risk levels of these two strategies also differs greatly, in the case of venture capital there is of course a much higher risk to the investment given that the young business has not yet managed to prove itself.

As you can see there are clear similarities between these two investment vehicles, but the details separate them and this is where the differences lie.

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The rapid rise of “alternative” and non-listed asset classes has been one of the most remarkable phenomena in the institutional investment space since the start of the Great Recession 7 years ago. This trend is contributing to a profound transformation of the financial ecosystem as a whole. 
This unprecedented change is occurring against the backdrop of a growing disaffection for actively managed public equity, long the investment category of choice for institutional asset owners.

Tyler Tysdal details the 3 different types of private equity funds. Venture Capital

Venture capital falls under the umbrella of private equity but it is usually discussed as being a separate form of investment. VC funds look to buy low stakes in new businesses such as a start-up and then seek to use financial backing and experience to impact opportunities and help the business to reach its goals. Usually, the state of investment will be early and the business types will be those that are in rapid growth industries. This is a relatively high-risk strategy with a simple goal, invest, grow and then sell the valuable stake and share profits amongst investors.

Leveraged Buyouts

This is the most common private equity vehicle which you are likely to see and leveraged buyouts are seen as a lower risk strategy. PE funds will look to take full control of a struggling company, using the pool of funds which it has along with borrowed money. Once they have control they will look to strip assets, restructure the management team, streamline the employee structure and find ways and opportunities that it can use to increase the value of the business. Once this is completed and the value rises, the PE fund will then look to sell the business in its entirety, repay any money which has been borrowed and then share out the profits amongst its investors. There is no restriction on which types of industries these funds will invest in, as long as the due diligence suggests that the business is worthwhile and can be turned around quickly.

Growth Equity

Growth equity sits somewhere between later-stage venture capital investment and leveraged buyout, and it involves a fund offering financial support for a business, which is looking for growth, for a sizable but not controlling stake in the business. This growth may be organic or it could be done using mergers and acquisitions. The growth equity fund will look at this as a short term investment and once growth is achieved it will sell off the stake and spread the profits amongst its investors.

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Crowdfunding has proven to be one of the best strategies for individuals and businesses to raise funds for ideas and efforts, following the daily embracement of the concept by global netizens. As a practice for raising funds for projects and initiatives, it has been recognized as an "alternative finance 1 ". Nevertheless, the connection between the various stakeholders in internet-mediated crowdsourcing often calls for the determination of liability for negligent acts of stakeholders involved, bearing in mind, the circumstances of the fundraising whether equity-based, rewardbased, or donation, as the case may be. Identification of the type of crowdfunding further illuminates the degree of "information asymmetries." Who then bears the duty to exercise due diligence on his part? Which of the stakeholders bear the liability for the investors' loss arising from negligence? These are among other questions to be addressed in this essay.

The private placement market is an important source of long-term funds for US corporations. Nonetheless, it has received relatively little attention in the financial press or the academic literature, partly because of the nature of the instrument itself. In particular, a private ...

This Chapter, which will appear in The Cambridge Handbook of Investor Protection, ed. Arthur Laby (Cambridge University Press, 2021), argues that there is a strong case for imposing gatekeeping duties on lawyers and reviews the growing body of empirical studies in the accounting and finance journals that partially illumine whether lawyers will act in ways that ultimately inhibit managerial malfeasance and benefit public investors. This Chapter briefly describes the traditional gatekeeping theory, the key elements of a gatekeeper enforcement strategy, and the principal attributes commonly ascribed to gatekeepers. It explains why the designation of lawyers as gatekeepers has been so controversial and argues that the case for imposing gatekeeping obligations on both outside and in-house lawyers is strong in light of the economies of scope that can be exploited from adding gatekeeping to the tasks that lawyers already perform for their clients. It then specifically addresses the potential efficacy of in-house lawyers as gatekeepers.
On the issue of whether lawyers make effective gatekeepers, this Chapter finds that the empirical evidence is both complex and mixed, but that the weight of the evidence generally supports that general counsel are effective (albeit conflicted) gatekeepers, who appear willing to police material illegalities but who also tolerate a good deal of aggressive and perhaps unethical conduct. The more limited evidence about outside lawyers suggests that they may be less likely to press their client representatives to comply with the law, opting instead to perform their strictly advisory role as neutral risk-assessors. Nonetheless, their involvement in disclosure matters appears to generate some salutary, longer term effects, demonstrating perhaps a net benefit to public investors.
Finally, this Chapter reviews the findings of one study, which highlighted the promising gatekeeping potential of board members with legal backgrounds. It raises the possibility that appointing lawyers to the board may offer the best strategy for promoting compliance within the firm and deterring corporate malfeasance. It calls for further research to be conducted on the efficacy of these understudied legal gatekeepers.

“Moody’s Credit Ratings and The Subprime Mortgage Meltdown” reviews the 2008 financial crisis and the impact to homeowners by investment firms, lenders and other market and nonmarket stakeholders.  Moody’s CEO, Raymond McDaniel, created an environment within the organization that put greater value on increasing market share, improving shareholders return on investment and being primarily driven by bottom-line results.  Moody’s business model started changing in 1975 as a result of the Securities and Exchange Commission (SEC) designating Moody’s, S&P and Fitch as Nationally Recognized Statistical Rating Organizations (NRSRO’s), giving each organization a quasi-regulatory role.  As a result, Moody’s and the other two organizations started charging bond issuers to rate their products.  This created a conflict of interest for Moody’s and the other two rating agencies; bond issuers started to shop for the best ratings from the three agencies.  The rating agencies, in turn, failed to meet their obligation to provide independent, objective ratings on the financial instruments they were paid to rate (Lawrence & Weber, 2011, pp. 454-456). 
    This failure to provide independent, objective ratings was evidently clear during the housing bubble that occurred during the past decade.  Structured finance products like residential mortgage-backed securities (RMBS) became very popular as they appeared to supersede poor returns in the markets and the Federal Reserve Bank’s low interest rate policies.  The RMBS’ were highly sought after because of their higher than normal returns. These instruments consisted of bundled home loans purchased by investment banks, then the creation of a pool of home loans that appeared to be bond equity.  The problem with RMBS’ was that there was little transparency and they required sophisticated systems to securitize (Lawrence & Weber, 2011, pp. 456-462).
    The popularity of the RMBS’, public policy that promoted home ownership, and home financing products that allowed for questionable loans created an atmosphere that lacked oversight.  Moody’s showed little restraint in this environment and jumped right into the housing bubble market.  In the five years, leading up to 2006, structured finance instruments drove almost 40% of their revenues, and resulted in leading operating margin performance amongst companies in the S&P 500 for five straight years (Lawrence & Weber, 2011, p. 456).  Because of Moody’s financial success, CEO Raymond McDaniel, enjoyed a salary of $7.4 million.  Under his leadership, the organization was primarily applying the ownership theory versus the stakeholder theory (Lawrence & Weber, 2011, p. 6).  Moody’s may not have broken the law, but they clearly did not reflect the ethics and leadership the public needed from them during the period leading up to the financial crisis.

Researchers have severally studied the impact of monetary policy on stock market activities (returns and prices). However, following the practice of communicating current and future direction of monetary policy by most central banks, the attention of scholars has shifted to studying the effect of these communications. This paper adopts a different approach by applying the paired sample t-test to evaluate the effect of the MPC pronouncement on stock market prices in Nigeria. The analysis showed that only the stock prices of banks, insurance, and other financial institutions respond to the MPC communications. The results further indicate that stock prices of most quoted firms inch up immediately after the MPC meetings. These findings are relevant to the policymakers based on the need for more information on the future leanings of policy thrust in Nigeria.

The capital market of Bangladesh is passing through a period of extreme volatility, uncertainty and grave crisis. This paper provides a brief review of the problems that characterise the capital market in Bangladesh; carries out a critical review of the initiatives taken till December 2011 to rescue the market and examines the implications of such measures for the market (if

The capital market of Bangladesh is passing through a period of extreme volatility, uncertainty and grave crisis. This paper provides a brief review of the problems that characterise the capital market in Bangladesh; carries out a critical review of the initiatives taken till December 2011 to rescue the market and examines the implications of such measures for the market (if

The paper will follow the structure of the question, first briefly setting the
conceptual context of financialisation and comparing the competing
definitions of financialisation and its dynamics. Part II will consider the
size of the financial sector relative to the real economy. Part III will look
at the influence of the financial sector over agenda-setting and outcomes
of economic policies in the US. Part IV will deal with transfers of income
away from the real into financial sector and its impact on employment and
thus wages. Concluding remarks will only propose areas for further
research for financial regulators as well as offer a philosophical critique.
Thus the paper is only a diagnostic report which only sets a road-map for
further exploration within this broad, multi-disciplinary theme.

The U.S. insider trading enforcement regime has been mired in controversy since the SEC introduced it in 1961. Some have argued that the SEC should not regulate insider trading because it improves market performance. Others have argued that the SEC must vigorously regulate insider trading because it is unfair and undermines market confidence. Arguments on both sides of this debate, however, rest on empirical claims that are rarely backed by data. The resulting impasse has left lawmakers and jurists without a clear sense of what conduct they should proscribe and why. This, in turn, has placed market participants in a state of confusion that has been exaggerated by insider trading's being a common law offense, never having been defined by statute or rule. But after sixty years, Congress appears poised to act. With reform proposals pending, reliable empirical evidence of public attitudes concerning insider trading has never been more needed. This Article presents the results of the first large-scale national survey of public attitudes regarding insider trading since 1986, and the first comprehensive, census-representative study ever conducted on the subject. It offers valuable data to inform claims regarding public perceptions of, inter alia, the fairness of different forms of insider trading, its pervasiveness, and the public's willingness to participate in markets where insider trading is common.

We study the effects of the creation of the Securities and Exchange Commission (SEC) on corporate governance. Established in 1934, the SEC effectively applied the listing standards of the NYSE to all regional stock exchanges in the U.S. We therefore examine the impact of the SEC by comparing non-NYSE listing firms before and after the landmark legislation was adopted, using the NYSE as a control group. Our estimates reveal that there was a 30% reduction in board independence, i.e., the creation of the SEC caused boards to become significantly less independent. We find no corresponding effects on firm valuations. Our evidence is consistent with a "substitution of governance mechanisms" hypothesis, i.e., firms endogenously trade off market-based (board) governance and government-sponsored (SEC) governance. This evidence has implications for corporate governance regulation around the world.

SUMÁRIO:
1. Introdução;
2. Definição da expressão “corrupção empresarial”;
3. A Pre-Watergate Morality;
4. A Post-Watergate Morality e a promulgação do FCPA;
5. A estratégia adotada pelos EUA ante os desafios trazidos pela promulgação do FCPA;
6. A exportação norte-americana da Post-Watergate Morality: uma “cruzada moralista” (ou, mais precisamente: neoliberal e neoimperialista) em busca do level playing field e a criação de um sistema normativo transnacional de combate à corrupção empresarial;
7. A Post-Watergate Morality transnacional e a promulgação da Lei n. 12.846/2013;
8. Do Watergate à Lava Jato: considerações finais sobre a construção de um quadro normativo anticorrupção moldado especificamente à responsabilização das pessoas jurídicas infratoras e à implementação de programas de integridade; Referências Bibliográficas.

RESUMO:
Este trabalho busca, mediante o resultado de profunda pesquisa factual, normativa, doutrinária e jornalística, realizar uma incursão histórica – e crítica – sobre a origem, os desafios, as principais motivações e a evolução do arcabouço normativo internacional e transnacional de combate à corrupção empresarial, de modo a contextualizar e apresentar as bases e as premissas necessárias para a compreensão da Lei 12.846/2013 e, consequentemente, para a compreensão sobre o estímulo normativo brasileiro à adoção, pelas empresas atuantes em seu território, de políticas de integridade corporativa (sistemas de gestão de compliance).

PALAVRAS-CHAVE: corrupção empresarial; FCPA; Watergate; level playing field; compliance.



SUMMARY:
1. Introduction;
2. Definition of the term “corporate corruption”;
3. Pre-Watergate Morality;
4. Post-Watergate Morality and the promulgation of the FCPA;
5. The strategy adopted by the US in response to the challenges posed by the FCPA promulgation;
6. The US’s Post-Watergate Morality export: a “moralistic crusade” (or, more precisely, neoliberal and neoimperialist) seeking the level playing field and the creation of a transnational normative system to combat corporate corruption;
7. Post-Watergate Transnational Morality and the promulgation of Brazilian Corporate Anticorruption Legislation;
8. From Watergate to Carwash Operation: final considerations on the construction of an anticorruption regulatory framework specifically tailored to the liability of infringing legal entities and the implementation of compliance programs; Bibliographic references.

ABSTRACT:
This paper seeks, through the result of a deep factual, normative, doctrinal and journalistic research, to make a historical - and critical - incursion into the origin, challenges, main motivations and evolution of the international and transnational normative framework for combating corporate corruption, in order to contextualize and present the bases and premises necessary for the understanding of Brazilian Corporate Anticorruption Legislation and, consequently, for the understanding of the Brazilian normative stimulus for the adoption, by companies operating in its territory, of corporate integrity policies (systems of compliance management).

KEYWORDS: corporate corruption; FCPA; Watergate; level playing field; compliance.

Recent speculation and rumors about the health of senior corporate executives of public companies (most notably Steve Jobs of Apple Inc.) and the advanced age of many leaders in the corporate community prompt a consideration of when, if at all, there must be public disclosure of the ill health of a person whose involvement in a corporation is perceived as vital to the continued financial success or independence of that company. This Article addresses the application of various disclosure requirements under the Securities Exchange Act of 1934 to facts regarding the health of a corporate "luminary." An adverse development in the health of a luminary that has, or may have, an adverse material impact on the company may not trigger an immediate disclosure obligation. There are, however, numerous situations where ill health with an adverse material corporate impact may have to be disclosed. In order to avoid uncertainty in this area – since there are competing views on the appli...

Recent speculation and rumors about the health of senior corporate executives of public companies (most notably Steve Jobs of Apple Inc.) and the advanced age of many leaders in the corporate community prompt a consideration of when, if at all, there must be public disclosure of the ill health of a person whose involvement in a corporation is perceived as vital to the continued financial success or independence of that company. This Article addresses the application of various disclosure requirements under the Securities Exchange Act of 1934 to facts regarding the health of a corporate "luminary." An adverse development in the health of a luminary that has, or may have, an adverse material impact on the company may not trigger an immediate disclosure obligation. There are, however, numerous situations where ill health with an adverse material corporate impact may have to be disclosed. In order to avoid uncertainty in this area – since there are competing views on the appli...

This paper examines the effect of two Securities and Exchange Commission regulatory interventions related to disclosure of non-GAAP financial measures. There are three main results. First, the probability of disclosure of non-GAAP earnings declines in 2003, but the probability of disclosure of other non-GAAP financial measures has an accelerated decline after the first intervention. Second, all else equal, after Regulation G, investors have a positive market reaction to the disclosure of non-GAAP earnings. Finally, investors react to the adjustments made by I/B/E/S financial analysts as they do to the GAAP surprise, but they do not react to the additional adjustments made by firms.

On 30 January 2009, the Securities and Exchange Commission (SEC) released Rule 33–9002. This rule phased in the required use of XBRL. The accuracy of mapping financial statement line items to the US GAAP taxonomy and the tagging of the financial statement facts are of fundamental importance to the accuracy of the XBRL instance document. Currently, there is no requirement for separate assurance on XBRL filings. However, given the significance of the information made available, firms may find it desirable to obtain attestation services. This case provides students with an agreed-upon procedures engagement plan based upon SOP 09–1 ‘Performing Agreed-Upon Procedures Engagements that Address the Completeness, Accuracy or Consistency of XBRL Tagged Data’ released by the Auditing Standards Board in 2009. Students assume the role of an engagement manager and complete an agreed-upon procedures engagement for the quarterly financial statements of Adios! Airways Inc. The case is of general application to an international setting.

We study the problem of authenticating the content and creation time of documents generated by an organization and retained in archival storage. Recent regulations (e.g., the Sarbanes-Oxley act and the Securities and Exchange Commission rule) mandate secure retention of important business records for several years. We provide a mechanism to authenticate bulk repositories of archived documents. In our approach, a space efficient local data structure encapsulates a full document repository in a short (e.g., 32-byte) digest. Periodically registered with a trusted party, these commitments enable compact proofs of both document creation time and content integrity. The data structure, an append-only persistent authenticated dictionary, allows for efficient proofs of existence and non-existence, improving on state-of-the-art techniques. We confirm through an experimental evaluation with the Enron email corpus its feasibility in practice.

This paper explores SEC disclosure and data tagging, addressing the need for tagging not only in the proxy process, but also in connection with other data collected by the Commission. It calls for the SEC to adopt clear policies in the area that will "empower regulators, investors, academics, and other market participants and observers by dramatically increasing the use of interactive data."