978-0078023866 Chapter 9 Lecture Note Part 2

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Social Businesses on the Horizon?

The concept of a “social business” has been promoted by Dr. Muhammad Yunus, an economist

and winner of the 2006 Nobel Peace Prize. The concept occupies a unique place on the continuum

that runs from for-profit businesses to not-for-profit organizations. A social business is distinguished

from a for-profit business in that it is formed to further a specific positive social objective, rather than

primarily seeking profit maximization for its owners. Profits are applied to the furtherance of its stated

social objective; regular reporting would include both financial reporting and identification of concrete

progress toward its social goals. A social business is distinct from a nonprofit enterprise in at least two

key respects: it is intended to be an economically self-sustaining enterprise, which means it must

adhere to commercially reasonable business practices, and its start-up capital is to be returned to its

founding investors, although without interest.

IV. Circumstances Favoring a Specific Business Form

One consideration in the selection of an appropriate form is the total capital needed by the enterprise.

With only fairly recent exceptions, the only form of business that has met with success in these markets is

the C corporation.

Venture capitalists will usually insist that the venture have limited liability, as would be true with a

corporation or an LLC. Similarly franchisors normally demand that franchisees operate their franchises in

a business form with limited liability. The key advantages to the franchisee are a proven product or

service, turn-key implementation, and access to support.

With the development of such business forms as LLCs, LLPs, and S corporations, under most

circumstances the disadvantages of the general partnership form are so severe that a person is usually

well advised to avoid it.

The Rise of the Distorporation

Even as “regular” corporations continue to dominate the public capital markets, a new trend is under way.

Noncorporate business forms, such as real estate investment trusts (REITs), regulated investment

companies (RICs), and master limited partnerships (MLPs) are increasingly attracting capital. As of 2012,

these entities (sometimes described as “distorporations”) represented 9 percent of all listed companies

but absorbed 28 percent of all new equity. Among the advantages, management is left firmly in control,

double-taxation is avoided, and all investors enjoy limited liability. On the downside, because these

entities generally must distribute all of their earnings annually, they are unable to fund growth internally.

Many believe distorporations will continue to erode corporate primacy in the securities markets.

Part Two: Corporate Governance in Public Corporations

Public corporations have thousands of shareholders. To ensure the corporation is acting to further their

interests, the shareholders elect a board of directors. Public corporation boards generally have both

inside and outside directors. Inside directors are senior executives. Outside directors are not employed by

the company.

Enron called the world’s attention to extraordinary failings in corporate governance, but its demise was

not an isolated event. The 2008 financial crisis made clear the ongoing corporate governance problems.

I. The Management Pyramid

Corporations have centralized management. At the apex of the management pyramid is the board of

directors. Immediately below is the CEO. In the next layer are the vice presidents and other top officers

and executives. This classic management pyramid further expands through layers of middle

management, finally coming to the base comprised of rank-and-file employees.

The federal legislation passed in the wake of Enron, the Sarbanes–Oxley Act of 2002 (SOX), attempted to

address some of these governance issues. SOX gives the audit committee direct responsibility for hiring

the outside auditing firm and setting its compensation. It further prohibits that firm from also rendering

most types of consulting services to audit clients. Even after SOX, there are still serious concerns about

who truly sits at the top of the pyramid.

II. The Shareholder Rights Movement

Although shareholders own the corporation, control rests with the board. Shareholders do not select the

candidates for board positions; a committee of the existing board does.

Management annually solicits proxies from its shareholders. A proxy is written permission to vote a

shareholder’s stock on an issue such as the election of directors. State law gives shareholders the right of

access to shareholder lists maintained by the company, but often a shareholder will have to sue, at a

substantial cost in time and money, to force the corporation to comply.

Most shareholders who disagree with management’s decisions simply sell their shares and invest

elsewhere. From society’s and the shareholders’ points of view, the management of publicly held

corporations proceeds largely unchecked, unless securities law violations are involved.

In recent years various proposals to give shareholders more input have been gaining ground, largely

through the efforts of institutional investors and independent activists. Institutional investors, such as

pension funds and mutual funds, have significant influence in the capital markets.

A. Majority Rules

One shareholder reform that has gained significant ground involves the number of votes required to

elect a director. In most cases where management has agreed to a majority vote rule, it has not

agreed to reject automatically a candidate who has commanded only a plurality, but only to review

whether or not to seat such a candidate.

B. Broker Voting

Many individual shareholders do not hold their shares but leave them on account with their broker.

Past practice was that, unless the account owner specifically directed otherwise, the broker could vote

the shares, which typically occurred in a promanagement fashion. That practice has been reversed by

the Dodd-Frank Act, which prohibits broker voting unless specific instructions are received from the

shareholder. The likely consequence is that fewer shares will be voted, shifting even greater influence

to the large institutional shareholders who do vote.

C. Proxy Access

Though it is possible for dissatisfied shareholders to wage a proxy fight, it is usually not feasible to do

so. A cost-effective solution would be to require management to include shareholder nominees on the

company’s ballot sent to shareholders in advance of the annual meeting. Although state law does not

give shareholders that right, a corporation’s bylaws could. In August 2010, after a change in both the

administration and the composition of the SEC, the commission issued a new rule permitting

shareholder groups (owning at least 3 percent of a company’s stock for at least three years) to submit

nominees for inclusion in the company’s ballot, with the caveat that no more than 25 percent of the

board can be elected in this fashion.

II. Executive Compensation

In the late 1970s CEOs earned 30 to 40 times the income of average workers; by 2007, CEOs of large

public corporations earned 344 times the income of average workers. The Dodd–Frank Act now

requires that the ratio be disclosed annually. It also requires disclosure of the relationship between

executive compensation and the financial performance of the company, giving consideration to both

stock price and dividends. Dodd Frank also includes a say on pay provision requiring companies to put

a separate, but nonbinding, resolution before the shareholders to approve the compensation paid to

senior executives.

Practicing Ethics: Excessive Executive Compensation?

An interesting shareholder derivative case alleging a violation of the duty of care arose out of CEO

Michael Eisner’s hiring, and subsequent firing, of Michael Ovitz from his position as president of Walt

Disney Co. The suit alleged that Eisner and the Disney board had violated their duty of care by hiring

Ovitz (who had no previous experience as an executive of a public company in the entertainment

industry), as well as when Ovitz was granted a no-fault termination. The consequence of invoking the

no-fault clause in Ovitz’s employment contract was that, after barely one year of employment, Ovitz

received more than $38 million in cash, as well as 3 million stock options. Notably, the maximum

salary Ovitz could have earned actually working was $11 million annually.

Since 2007, as a result of a change in SEC disclosure rules, shareholders have been receiving more

information on executive compensation packages. According to one source, executive severance

packages typically “include a payment of three times salary and bonus, immediate vesting of options

and restricted stock awards, and, in many cases, payment of taxes owed… [D]ozens of executives

could have payouts of $100 million or more.”

Part Three—Regulation of the Securities Markets

I. Introduction

To amass the capital needed to pursue sizeable business opportunities, particularly global opportunities, a

large number of investors must be convinced to entrust their wealth to third parties. History shows that

this trust has often been misplaced, with vast sums lost in companies with incompetent or corrupt

management. As a result the federal government has undertaken to promote the reliability of the U.S.

securities markets through regulation. Significant additional regulation has followed the corporate failures

of the Enron era and the great recession of 2008 regulation.

II. Initial Public Offerings

When a corporation wants to sell a new security through the public capital markets (whether debt or

equity), if the corporation (issuer) and any of the persons to whom the security is offered for sale

(offerees) are domiciled in different states (interstate offering), federal law governs the sale. If the

corporation and all offerees are domiciled in the same state (intrastate offering), state law (considered

later) applies. If a company has not previously offered equity securities to the public, the offering is

referred to as an initial public offering (IPO) or, more colloquially, going public. In this context, the term

security embraces both the instruments commonly understood to be securities, like stocks and bonds, as

well as a much broader class called investment contracts.

Legal Briefcase: SEC v. W. J. Howey Co. 328 U.S. 293. (1946)

1933 Act

The federal law governing initial securities offerings is the Securities Act of 1933 (1933 Act), which

is administered by the Securities and Exchange Commission (SEC). The 1933 Act does not

guarantee the economic merits of any investment opportunity. Rather, it seeks (1) to ensure full

disclosure of all material facts about the investment opportunity to offerees (potential investors)

before they invest and (2) to eliminate fraudulent conduct in the markets.

To promote full disclosure the 1933 Act forbids any interstate offering of a new security until a

registration statement has been filed with and approved by the SEC. The registration statement has

two parts: the prospectus and the supplemental information. The prospectus is the major

component and is delivered to offerees to satisfy the requirement for preinvestment disclosure.

There are three main sections in a prospectus. One contains general information about the

company: the industry in which it operates, the quality of its products and services and of its

management, its business plan, and so on. Another section contains a risk assessment of the

business model, local operating conditions (such as political instability), and the like.

The third portion of the prospectus is the audited financial statements. A corporation’s ability to

make a profit is shown on its income statement, one of the three audited financial statements. The

income statement shows the company’s revenue and expenses on an annual basis. Since the

income statement focuses only on economic income, a statement of cash flows reconciling the

beginning and ending cash balances is also presented.The third financial statement, the balance

sheet, presents the company’s assets, liabilities, and equity.

To give comfort to investors that management has prepared these statements properly and

honestly, independent certified public accountants (CPAs) are engaged to audit them. Audits must

be performed in accordance with generally accepted auditing standards (GAAS). The objective of

the investigation is to determine whether the financial statements are not materially misleading, in

accordance with generally accepted accounting principles (GAAP).

The supplemental information portion (the second part) of the registration statement, which is not

distributed to offerees, describes such matters as how much it is costing to “float” the offering and

what major contracts exist with unions, suppliers, or customers.

During the prefiling period (before the registration statement has been filed with the SEC), no

solicitation or sales are permitted. During the waiting period (after the registration statement has

been filed, but before it has been approved by the SEC no sales are permitted but a limited amount

of solicitation is allowed. Specifically, a tombstone ad (so called because of its shape) may be

published in forums like The Wall Street Journal to make the market aware of the upcoming

issuance. In addition, a red herring prospectus (name taken from the prominent red ink cautionary

statement required on its first page) may be distributed. Once the SEC approves the registration

statement, the posteffective period begins.

Some companies do shelf registrations that allow them to issue securities in portions over a

two-year period under a single registration statement. Typically not wanting to sell the securities

themselves, issuers employ one of two kinds of underwriters. A best-efforts underwriter acts as the

issuer’s sales agent, does not take title to the securities, and earns its profit from sales

commissions. A firm-commitment underwriter purchases the securities at a discount, intending to

profit by reselling them.

Private Placement General Solicitation Ban Lifted

In July 2013 the SEC reversed an 80-year-old prohibition on the general solicitation of unregistered

securities. Advocates assert that the new rule promotes the ability of start-ups and small

businesses to raise capital without going through the onerous registration process. Critics counter

that allowing speculative start-ups and high-risk hedge funds to solicit investments through mass

marketing will undermine the integrity of the market.

Practicing Ethics: Credit Rating Agencies—Another Cause for Concern?

Corporations may use the securities markets to obtain debt capital by selling corporate bonds.

Bonds are “securities” and thus are governed by the federal securities laws. Most of the revenues

of these agencies come from the fees paid by issuers seeking to have their debt rated. These facts

raise potential conflicts of interest for the agencies—on the one hand they are in business to

produce credible, independent evaluations of issuers and bonds, but on the other hand they have

to compete with other agencies for issuers’ business.

According to the Financial Crisis Inquiry Report, “Failures in credit rating and securitization

transformed bad mortgages into toxic financial assets.” So far the government has accomplished

nothing in terms of new regulation. Nonetheless, the agencies are facing a federal suit for fraud and

have become the subject of several lawsuits, including one for over $1 billion, all related to their

top-tier ratings of various mortgage-backed securities and other credit derivatives.

A. Exemptions

Exempt securities and exempt transactions do not require registration with the SEC. The most

common exempt securities are those issued by governments, charities, educational institutions, and

financial institutions such as banks and insurance companies.

Five long-standing categories of exempt transactions were created at least in part as an

accommodation to small issuers, such as private and closely held businesses, to lessen the financial

burdens of raising capital. Thus, small issuers are more likely to rely on one of the regulatory

exemptions created by the SEC. Rules 504 (which exempts transactions with an aggregate offering

amount of $1 million or less) and 505 (which exempts certain transactions with an aggregate offering

amount of up to $5 million) are little used. The workforce is Rule S06, for which there is no amount

limitation, but which can involve only accredited investors and up to 35 sophisticated investors.

Note that even when exemptions apply to registration under the 1933 Act, the act’s sweeping antifraud

provisions still apply.

Retail Securities Crowdfunding Emerges

Securities crowdfunding is the use of the Internet to raise capital, with each contributor investing a

comparatively small amount.

Retail Securities crowdfunding was authorized by the 2012 JOBS Act through a new registration

exemption. Companies will be allowed to raise up to $1 million annually by selling stock via the

Internet using “intermediaries” (SEC-regulated third parties, which will manage the process). Audited

financial statements are required if the amount to be raised exceeds $500,000. Nonetheless, the

disclosure requirements are substantially less than those applicable to conventional initial public

offerings (IPOs).

The retail securities crowdfunding rules are controversial. Many are concerned about hucksters

defrauding the naïve and financially unsophisticated investor. The SEC has not yet finalized the rules

that will allow retail securities crowdfunding to begin.

III. The Secondary Securities Markets

Once a security is issued, it can be sold repeatedly. Such sales may be accomplished on a physical

exchange, such as the New York Stock Exchange (NYSE), or on an over-the-counter market, where

trades occur electronically over a computer network linking dealers across the nation. An example is

NASDAQ, the National Association of Securities Dealers Automatic Quotation system.

The federal law that governs these trades is the Securities Exchange Act of 1934 (1934 Act), which also

created the SEC. Its purposes are the same as those of its 1933 counterpart: (1) to ensure full disclosure

of all material information so the market can make informed investment decisions and (2) to prevent

fraudulent conduct in the markets.

To promote full disclosure, the SEC requires registered corporations to file a variety of reports. Annually,

each must file a Form 10-K, which includes information very similar to that found in a 1933 Act registration

statement, including audited financial statements. To increase the timeliness of information disclosures,

the SEC requires additional reports, such as the quarterly Form 10-Q and Form 8-K. [To retrieve filings for

specific corporations, see http://www.sec.gov/edgar.shtml]

Not only are certain disclosures mandated, but all corporate communications are subject to regulatory

standards. The SEC’s Regulation FD requires companies to disseminate material information in a way

that rapidly reaches the general public and gives no one an advantage.

Under the 1934 Act, the SEC has the power to suspend trading in any security “when it serves the public

interest and will protect investors.” Typically, the market price of a security is devastated by a suspension,

which provides a strong incentive for corporations to avoid misconduct.

A. Brokers and Online Trading

When individuals want to buy or sell securities listed on an exchange, they may do so through an

intermediary—a broker. Occasionally, a broker has faced charges of churning—repeatedly and

unnecessarily engaging in trades to generate commissions. One impact of the Internet was the

bypassing of full-service securities brokers through online trading. Day traders rarely hold any security

more than a few hours, earning profits by exploiting volatility, not inherent value.

IV. Violating Federal Securities Laws

The consequences for noncompliance with the securities laws are potentially staggering, including

damages and civil and criminal penalties. Some of the provisions most commonly violated by corporations

and their directors and executives are discussed below.

A. False or Misleading Statements in Required Filings—1933 Act

Perhaps the greatest deterrent to misconduct in the securities laws is the civil liability that can be

imposed on wrongdoers by harmed investors. The 1933 Act’s Section 11 establishes this liability with

respect to false or misleading registration statements.

Virtually anyone with a significant role in preparing the the registration statement can be sued (the

issuer, its directors, its underwriters, and its accountants and other experts). The liability can be vast—

essentially all damages sustained by investors while the misleading registration statements were

outstanding. No proof of plaintiff reliance on the content of the registration statement is required.

The principle defense against a Section 11 claim is due diligence. Every defendant, other than the

issuer, can raise this defense. The defendant must show that, based on a reasonable investigation, he

or she reasonably believed the registration statement was not misleading. The due diligence standard

for experts (like accountants and lawyers) is much higher. Their inquiries must rise to the standards

expected of professionals, not merely of prudent businesspersons.

Legal Briefcase: Escott v. BarChris Construction Corporation F. Supp. 643 (S.D.N.Y. 1968)

B. False or Misleading Statements in Required Filings—1934 Act

Section 18 of the 1934 Act, relating to false or misleading statements in any filing required to maintain

the registration of a security, is similar to the 1933 Act’s Section 11. Unlike the 1933 Act’s Section 11

where reliance by the plaintiff on the false or misleading statements is presumed, under the 1934 Act’s

Section 18 plaintiff must prove that he or she relied on the statements.

C. Fraud

Under the 1933 Act’s Section 17(a) and the 1934 Act’s Section 10(b) and its related Rule 10b-5, it is

illegal, in connection with the sale or purchase of any security, to employ any scheme or to engage in

any practice that defrauds another person participating in the financial markets.These provisions

intentionally cast a “broad net” and can reach such Ponzi schemes as the one run by Bernard Madoff,

who in 2009 was sentenced to 150 years in prison for perpetrating a $50 billion fraud.

Fraudulent acts can be committed by corporate wrongdoers as well. Bringing forward direct evidence

of reliance on fraudulent statements can be difficult, so the fraud-on-the-market theory has evolved.

Legal Briefcase: Basic Inc. v. Levinson et al. 485 U.S. 224 (1988)

D. Insider Trading

Classical illegal insider trading occurs when an “insider” breaches a fiduciary duty to shareholders by

buying or selling a security while in possession of material, nonpublic information about the security.

An insider is often a director, officer, or an employee of an issuer, but could also be someone who only

temporarily has a confidential relationship with an issuer, such as an attorney, accountant, or

consultant. The prohibition against trading on undisclosed inside information is based on Section 10(b)

of the 1934 Act, which prohibits the use of any manipulative or deceptive device in connection with the

purchase or sale of securities.

Legal Briefcase: SEC v. Texas Gulf Sulphur Co. 401 F.2d 833 (2d Cir. 1968)

Tippees

In some cases, the tipper (the insider or an “upstream” tippee) intends to improperly convey the

inside information to a third party and hopes to derive personal benefit therefrom. In such a case

both tipper and tippee are fully liable. In other cases, the tippee is deemed to “misappropriate” the

inside information from the inadvertent tipper, knowing that it was confidential.

Legal Briefcase: United States v. O’Hagan 521 U.S. 642 (1997)

E. Short-Swing Profits

An insider trading case requires proof that the insider had material inside information and traded to

exploit it. A short-swing profit case conclusively presumes that the insider had such information and did

unlawfully trade on it any time the insider engages in any purchase and sale, or sale and purchase, of

an equity security issued by the insider’s corporation if both transactions occur within a six-month

period.

V. Securities Law Enforcement Actions

Most of the securities laws violations just discussed can be enforced against the violators by harmed

private parties seeking damages and by the government seeking civil and/or criminal penalties. The SEC

brings civil enforcement actions; the Justice Department brings criminal enforcement actions. In fact, all

three types of suits can be brought against the same defendant for the same violation

A. Private Enforcement

In civil damage cases harmed plaintiffs typically join together in a class-action lawsuit. As a

consequence of the savings and loan debacle of the 1980s, major accounting firms paid out over $1.6

billion in class-action damages. Responding to these payouts, accounting firms and others began

intense lobbying to curtail such suits. After filing a complaint, it was argued, plaintiffs could proceed to

discovery and undertake “fishing expeditions” until sufficient facts were accumulated to motivate

defendants to settle rather than endure litigation.

Some evidence of long-standing systemic abuse by plaintiffs’ lawyers was revealed in September

2007 when William Lerach, a former partner of the law firm of Milberg Weiss, pleaded guilty to

conspiracy. The allegations were that he and other lawyers in the firm had paid illegal kickbacks to

individuals to serve as named plaintiffs in securities actions. This often allowed the firm to be the first

to file suit, which in turn resulted in Milberg Weiss more frequently representing the lead plaintiff in

many class action cases. On April 2, 2008, Melvyn Weiss was the senior securities law partner at

Milberg Weiss, pleaded guilty to similar charges pursuant to a plea bargain. He was sentenced to 30

months in prison and fined $10 million.

In December 1995, Congress enacted the Private Securities Litigation Reform Act (1995 act). The Act

eliminates joint and several liability for accountants and underwriters whose deep pockets have

historically attracted plaintiffs’ lawyers. No fraudulent conduct can be presumed from the simple fact

that a security’s price dropped precipitously. Plaintiffs in their complaints must state with particularity

both the facts that constitute the alleged violation, as well as facts evidencing defendant’s intention “to

deceive, manipulate, or defraud.” In early 2008, the Supreme Court reduced the exposure of some

noncorporate defendants to claims of aiding and abetting securities fraud. [For more on securities

class-action lawsuits, see http://securities.stanford.edu]

B. Government Enforcement

The government can bring suits for aiding and abetting securities fraud against third parties. The

Dodd-Frank Act expanded the government’s reach in such cases to any third party who, knowingly or

recklessly, substantially assists the primary wrongdoer.

Whereas private parties sue to recover damages suffered from the wrongdoing, the SEC enforces the

law by imposing civil penalties up to $750,000 for individuals and $15 million for corporations, as well

as forcing defendants to give up ill-gotten gains, called disgorgement. The SEC may impose a penalty

of up to 300 percent of the profit gained or loss avoided by insider trading. In addition to imposing

monetary penalties, the SEC can issue cease-and-desist orders, obtain injunctions against persons

committing securities fraud, and prohibit violators in the future from serving as officers or of publicly

traded companies.

In contrast, the Department of Justice seeks criminal sanctions for willful (knowing and deliberate)

violations of the 1933 and 1934 Acts, including fines of up to $25 million and imprisonment for up to 20

years.

VI. Other Regulatory Oversight

A. Tender Offers

Where mergers or direct acquisitions fail, a tender offer (also called a takeover) can be attempted.

Alternatively, the person seeking to acquire control can mount a proxy fight. In a tender offer, the

offeror announces that it wishes to acquire a specific number of shares (often the number needed to

gain control). It identifies where stockholders who want to participate must tender (that is, deliver) their

shares. It also specifies the opening bid price.

When faced with a tender offer, the target corporation’s management realizes that a successful offer

will likely result in its dismissal since the offeror will want to put its own management in place. Often

the target’s management will not be eager to leave. It will resist, which accounts for the term hostile

takeover.

Management can resist in various ways. It could launch its own tender offer (go private). Or it could

start using corporate cash to buy back shares in the market, driving up the price to discourage the

tender offeror. Another resistance tactic is greenmail, in which the target’s management uses

corporate cash to buy back the tender offeror’s current stake, with a significant premium to “go away.”

Management sometimes puts takeover defenses in place by arranging “disasters” if a tender offer is

attempted. Two notorious tactics are the crown jewel and poison pill defenses. In general, the crown

jewel defense involves the target company selling off its most attractive assets (its crown jewels).

Poison pill tactics take a variety of forms but one notable strategy gives current shareholders a tender

offer-triggered right to buy additional stock at a discount, thus diluting the hostile bidder’s shares.

If all else fails, the target’s officers may find comfort in the golden parachutes (severance pay

packages) they may have negotiated to protect themselves in the event of a takeover.

VII. State Securities Regulation

After the enactment of the 1933 Act, the United States operated under a dual regulatory environment for

securities. Both the state and federal governments were entitled to regulate the issuance of new

securities and their subsequent purchases and sales. Eventually the lack of regulatory uniformity among

the states led Congress in 1996 to enact the National Securities Markets Improvement, preempting state

registration requirements for securities traded on national markets. Then in 1998, Congress mandated

that securities fraud claims related to national market securities be litigated only in federal court under

federal law. State securities regulations, known as blue sky laws are now only a shadow of their former

significance and are primarily applicable to solely intrastate offerings.

VIII. International Securities Regulation

Critics claim the United States is losing its place as the world’s leading financial center, citing such

evidence as the percentage of large IPOs being listed outside of the United States. Aggressive regulation

in America is often blamed for driving those IPOs abroad.

American securities regulation is the world’s strongest, but whether that will continue to be true and

whether it is responsible for the growth in foreign securities markets is not clear. Other factors

undoubtedly contribute to the shift, such as the natural maturation of international markets, the speed of

overall economic growth elsewhere in the world, and the concomitant rise in wealth, especially in Europe

and Asia. Foreign securities with dual listings in the United States and elsewhere appear to enjoy an

advantage in the price they command. Finally, as the securities markets in other countries mature,

national regulation seems to be increasing in ways that model U.S. policies.

Nothing equivalent to the SEC exists in Europe. In 2010, the EU finance ministers endorsed the creation

of a supervisory structure for European securities markets, the European Securities and Markets Authority

(ESMA). [For more on ESMA, see www.esma.europa.eu; for more on international securities regulation

generally, see www.iosco.org/about]