By Marcel Bucsescu and Matthew Waxman
This post originally appeared on LawFare on Sept. 19, 2016.
On September 13, 2016, New York Gov. Andrew Cuomo announced a set of proposed cybersecurity regulations for financial services companies that fall under the jurisdiction of the New York State Department of Financial Services (NYSDFS): Cybersecurity Requirements for Financial Services Companies. This proposed regulation, Cuomo noted, is the first of its kind in the nation and reflects the severe threat of cyber-crime and disruptions to the global financial sector centered in New York.
This sector-specific regulation (which now goes through a public comment and review process) is the latest move in a proliferation of cybersecurity standards that private firms must navigate. Companies are already challenged to draw on appropriate required or voluntary frameworks, from government standards like the National Institute of Standards and Technology (NIST) Cyber Security Framework, to industry standards and other private sector initiatives such as the International Standards Organization 27000 (ISO) or the Payment Card Industry (PCI) Security Standards, and private/public partnerships like North American Electric Reliability Corporation (NERC) Critical Infrastructure Protection standards. The financial services industry, in particular, has seen a proliferation of rules and guidance from regulators like the Security and Exchange Commission (SEC), the Federal Financial Institutions Examination Council (FFIEC) – which informs both the Office of the Comptroller Currency (OCC) and the Federal Reserve Bank’s oversight—and the Commodity Futures Trading Commission (CFTC). Read the rest of this entry »
By Gary Larkin, Research Associate, The Conference Board Governance Center
Over the summer, one of the most interesting pieces of corporate governance literature was the Commonsense Corporate Governance Principles.
The publication was the result of meetings between a group of leading executives of public companies, asset managers, a public pension fund, and a shareholder activist. The principles themselves may not have broken new ground – they addressed such basic issues as director independence, board refreshment and diversity, the need for earnings guidance, and shareholder engagement. But the fact that such a publication was released at a time when some in Congress to roll back Dodd-Frank corporate-governance-related regulations is impressive.
It’s impressive because of who was in the meetings. It’s impressive because the meetings took place without any government or third-party instigation. It’s impressive because it might be the beginning of a new strategy for overseeing corporate governance in the United States. It shows that sometimes industry can lead by example without rules and regulations to tell them how to govern their own companies and boards.
Maybe these principles could be the start of the first true US corporate governance code, something that our brethren in the UK have had for years. Even smaller markets such as South Africa and Singapore have codes that are used to guide corporate governance.
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Prepared Remarks of Douglas K. Chia, Executive Director, Governance Center, The Conference Board, to the Rutgers Center for Corporate Law and Governance 2016-17 Opening Session, Newark, N. J., September 14, 2016
Seeking public company board member
Job Description: Evolving and open-ended
Expectations: Wide-ranging and subject to change
We already talk a lot about the role of the board. We talk about the fiduciary duties and the business judgment rule. There is robust case law in this area. And there are already people much smarter than me who have taken a pretty good stab at defining the role of the board. Being the good lawyer that I am, I sat down and did some serious legal research into this… by doing a bunch of Google searches. Here are some of the things I found:
Here’s something that was written in 1971:
Directors serve as a source of advice and counsel, serve as some sort of discipline, and act in crisis situations
Here’s something that was written in 1992:
Set strategy, corporate policies, overall direction, mission, vision
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The Conference Board Governance Center has been heavily engaged in the current discussion in the marketplace on “long-termism versus short-termism,” most notably with our publication of the report “Is Short-Term Behavior Jeopardizing the Future Prosperity of Business.” At the Governance Center, we believe in presenting differing points of view. The following is a response from lawyers at Wachtell, Lipton, Rosen & Katz to a post on Governance Center Blog by Charles Nathan of Finsbury. Both Wachtell, Lipton, Rosen & Katz and Finsbury are members of the Governance Center.
By Martin Lipton, Andrew R. Brownstein, Partner, Steven A. Rosenblum, Trevor S. Norwitz, Karessa L. Cain, Partner, Sabastian V. Niles, and Sara J. Lewis (Wachtell Lipton Rosen & Katz)
In a recent blog post on The Conference Board Governance Center’s website, “Activists Are Not the Culprit: So Don’t Shoot the Messenger,” Charles Nathan, a senior advisor at global strategic communications firm Finsbury, argues that criticism of short-termism is simultaneously misguided and hopeless. We agree with his ultimate practical advice—that companies have to engage more effectively with their major institutional shareholders to persuade them of the merits of long-term strategies—but he is wrong to dismiss concerns about short-termism and to surrender to its inevitability.
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By Robert B. Lamm, Senior Fellow, Governance Center at The Conference Board
Last year, I led a discussion on board diversity for a group of a dozen or so public company directors. The group was remarkably diverse – a mix of men and women of various races and ethnicities. I wasn’t sure how to get the conversation going, so I decided to lead off with a potentially provocative question: “Do you think that public companies are sincere when they say they believe in board diversity?” There was an awkward silence for a few minutes, but finally one of the attendees – a woman, of course – said “no.”
The good news is that the discussion that followed was robust and passionate and didn’t require much leadership from me. The bad news, of course, is the candid answer that led to the robust and passionate discussion.
Which leads to the title above–when we discuss board diversity and all it implies, are we merely talking the talk or are we walking the walk? Read the rest of this entry »