• The SEC and the Courts' Cooperative Policing of Related Party Transactions

    Author(s):
    Geeyoung Min
    Date:
    2014
    Group(s):
    MSU Law Faculty Repository
    Item Type:
    Article
    Permanent URL:
    https://doi.org/10.17613/mh58-d839
    Abstract:
    A transaction between a corporation and its director or officer (a "related party transaction") presents conflicts of interest that could harm, or alternatively, could also benefit the corporation. To sort beneficial related party transactions from detrimental ones, the current legal regime relies on both ex ante screening and ex post litigation. Disclosure plays an essential role in both stages. Based on a set of hand-collected data on actual disclosures from Fortune top fifty companies, this Article casts doubt on the effectiveness of the current regulation of related party transactions. The ambiguity of the federal securities regulations leaves too much room for manipulation. An approving committee of each company exercises considerable discretion not only over which proposed transactions to approve, but also over which transactions to disclose to its shareholders and what information to include in the disclosures.
    Metadata:
    Published as:
    Journal article    
    Status:
    Published
    Last Updated:
    3 weeks ago
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