A Private Ordering Solution to Blockholder Disclosure

North Carolina Central Law Review, Vol. 35, 2013, p. 203

69 Pages Posted: 28 Nov 2012 Last revised: 20 Oct 2013

Date Written: January 25, 2013

Abstract

The recent debate over reforming the Securities Exchange Act section 13(d) ten-day filing window demonstrates the importance of balancing the costs and benefits of delayed blockholder disclosure. While hedge fund activism may create shareholder value, short-termism is a very real problem for firms today. Rather than a rigid mandatory rule, the duration of the blockholder disclosure window should be set through a shareholder amendment to the corporate bylaws that empowers shareholders to set an optimal maximum length for each firm. To internalize the social cost of trading on asymmetric information, the SEC should impose a filing fee on blockholders utilizing the delayed disclosure window and use the proceeds to compensate investors who sold shares while a blockholder engaged in a stealth accumulation.

Keywords: securities, disclosure, blockholder, private ordering, ten-day window, 13(d), 13D, short-termism

Suggested Citation

Mitts, Joshua, A Private Ordering Solution to Blockholder Disclosure (January 25, 2013). North Carolina Central Law Review, Vol. 35, 2013, p. 203. Available at SSRN: https://ssrn.com/abstract=2180939 or http://dx.doi.org/10.2139/ssrn.2180939

Joshua Mitts (Contact Author)

Columbia Law School ( email )

435 West 116th Street
New York, NY 10025
United States

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