Schulte Roth & Zabel partners Ele Klein, Michael Swartz and Adriana Schwartz and associate Brandon Gold authored the “USA: Trends and Developments” chapter in the Chambers Global Practice Guide: Shareholders’ Rights & Shareholder Activism 2022, which provides an update on shareholder activism within the United States.

Shareholders of public companies must navigate a complex landscape that includes both government regulation and the by-laws of the companies whose shares they hold. Two recent opinions from the Delaware Chancery Court underscore the importance for shareholders of careful timetable management and adherence to advance notice by-laws when making nominations. In addition, rules proposed by the U.S. Securities and Exchange Commission (SEC) concerning the reporting of beneficial ownership have the potential to introduce considerable compliance challenges and impede communication between shareholders. And both developments underscore the ease with which shareholders can “foot fault”, whether with regard to company by-laws or SEC regulations.

In a recent article for Private Funds CFO by Jennifer Banzaca, Schulte Roth & Zabel partner Allison Scher Bernbach discussed Rule 206(4)-5 under the Investment Advisers Act of 1940, also known as the pay-to-play rule. The rule prohibits political contributions from investment managers to government officials and candidates who could potentially influence decisions about hiring public funds advisers. 

Allison explains, “[t]he rule aims to prevent agreements where someone donates to a government official expecting that person, in their position of power, to award the person’s firm a contract to manage money. Yet, there is no intent or causation requirement in the rule, meaning there is no requirement that a political contribution be given with intent to or actually influences an investment decision.”

Read the article here.