Professor James Fanto, an expert on corporate finance and securities law, commented on decisions that have recently come out from U.S. Securities and Exchange Commission.
Regarding a record-breaking $600 million insider trading settlement with hedge fund SAC Capital Advisors, Professor Fanto remarked that the ruling is a continuation of the SEC’s aggressive stance against illegal activity. “In past years the SEC has gone after a lot of funds, so I think it's the continuing message, and a strong message, to the fund industry that they're going to get slammed if they do this,” he said.
Professor Fanto also spoke about the SEC’s decision not to force major financial institutions, such as JPMorgan Chase and Bank of America, to hold shareholder votes over whether the companies have actually become “too big to fail.” Although many employee fund managing groups are disappointed, Professor Fanto explained that the SEC has historically been sympathetic to shareholder proposals like this recent failed one if they are in the public’s interest. “We’ve been in an economic recession that can be traced back to the unraveling of the financial system,” he said. “How is it not a massive social issue? Now it’s coming back. A lot of people in Congress are talking, saying the banks are just too big — and they’ve gotten bigger.”
Read more about the insider trading settlement and the shareholder voter proposal on Law360.