ATTORNEY: ROXANNA TALAIE
POMERANTZ MONITOR NOVEMBER/DECEMBER 2018
On October 23, Pomerantz hosted its 2018 Corporate Governance and Securities Litigation Roundtable Event in the Four Seasons Hotel in New York City. The Roundtable Event provides institutional investors from around the globe with the opportunity to discuss topics that affect the value of the funds they represent, and to network with their peers in an informal and educational setting. Presenters are international experts in the fields of corporate governance, securities litigation and asset management. This year, presenters and attendees traveled to the Roundtable from across the United States, the United Kingdom, France, Italy, Belgium, and Israel.
The theme of this year’s Roundtable Event focused on women and minorities who have risen through the ranks and have pioneered the path for change and unity in our communities. Pomerantz Partner Jennifer Pafiti, the event’s organizer, says, “We were excited to present issues of importance to institutional investors through the lens of diversity. Judging by the robust exchange of ideas during the day’s sessions and the feedback we have received, these are matters that resonate globally today.” As a first-year associate with Pomerantz, and as a woman with an ethnically diverse background, creating and participating in this event was a great point of pride and honor in my career. While our community is at the cusp of change, Pomerantz believes it is pivotal to be at the forefront to encourage these discussions to further educate and bring awareness to ourselves and members of our community with the hope of encouraging and fostering a change that will benefit us all.
Counsel to a $400-billion European asset management company presented, “Corporate Governance: What Can the World Learn from the European Model?” This session explored the emerging European corporate governance model, and how it compares to its Anglo-American counterpart. The European Union’s 2017 Shareholder Rights Directive (“SRD”) mandates that institutional investors and asset managers develop and publicly disclose an engagement policy that describes, among other matters, how they integrate shareholder engagement in their investment strategy, and how they monitor investee companies on relevant matters, including ESG: environmental, social, and corporate governance. Of interest to many in the room was the news that the United States receives a relatively low ESG country rating in the EU for the reasons that it pulled out of the Paris Agreement on climate change and maintains the death penalty.
“Gunning for Profit” was another session that focused on ethical investing. Following a number of mass shootings in the United States, CalSTRS made the decision to stop investing in companies that sold assault-style weapons or devices that allow guns to fire more rapidly. The session inspired a lively discussion on whether ethical investing makes financial sense, and provided insight into why CalSTRS, the second-largest pension fund in the U.S., decided to take a stand against the big guns.
The Roundtable Event also discussed the allegations against Harvey Weinstein and how they created a Hollywood movement that has since gained momentum around the globe, turning the focus to workplace culture and corporate governance. Beyond Weinstein’s liability, the conversation has since turned to the institutions that allowed those crimes to become a part of the corporate culture. The panel session, “Corporate Governance in a Post-Weinstein Era” addressed such issues. Among other information shared by panelists, Partner Gustavo Bruckner, who heads Pomerantz’s Corporate Governance litigation team, described the firm’s involvement in current litigation relating to sexual and other harassment in the workplace (see his article in this issue of the Monitor).
Research indicates that companies with board members representing diversity of thought and culture deliver higher returns on equity and better growth overall. In the past five years, many countries have passed legislation mandating diverse board representation or set non-mandatory targets. However, some argue diversity cannot be truly measured and performance cannot be attributed to the makeup of those occupying boardroom seats. The panel “Diversity in the Boardroom: Fashion or Fact?” opened up vibrant debate among panelists and Roundtable attendees as it explored those conflicting ideals, how subconscious bias can affect selection processes, and why diversity in the boardroom should foster an environment in which every shareholder is represented.
In “Unleash the Lawyers: Securities Litigation Policy and Practice,” a panel of lawyers shared their thoughts on the hallmarks of a robust securities litigation policy and what to do to mitigate a fund’s liability in the absence of one.
Jeremy Hill, Group General Counsel for Universities Superannuation Scheme (“USS”), gave an enlightening presentation on USS’s role as lead plaintiff in the Petrobras litigation, in which USS and Pomerantz recently achieved a historic settlement of $3 billion on behalf of defrauded investors with Brazilian oil giant, Petrobras, and its auditors. Armed with candor, facts, and figures, he explained how a conservative British pension fund that had never before served as lead plaintiff found itself leading the highest-profile class action in the United States.
Pomerantz Co-Managing Partner Jeremy Lieberman spoke on, “Will Trump’s SEC Negate Investors’ Ability to Fight Securities Fraud?” With serious indications that the new SEC Chair, Jay Clayton, is considering allowing corporations to use forced arbitration clauses to curtail investors’ rights to bring securities class actions, Jeremy used several examples from Pomerantz’s roster of active and recently settled cases to demonstrate the very real and deleterious effect that forced arbitration would have on investors. He also addressed what institutional investors can do to protect their right to hold companies accountable for securities fraud. Notably, the day after the Roundtable, Jeremy Lieberman and Jennifer Pafiti traveled to Washington D.C. to meet with Chairman Clayton and other key Senate staffers to strenuously argue against forced arbitration clauses and for the crucial function of securities class action litigation as a fundamental principal to hold corporate wrongdoers accountable. [Eds.’ note: See cover story for the update.]
The Pomerantz Monitor will keep our readers posted on the next Corporate Governance and Securities Litigation Roundtable Event, scheduled for 2020 in California.