we have some idea about that and here we talked about
registration and in general
I would say protection, securities.
We talk about capital markets for us about
various regulatory guidelines and laws that govern this.
But again, the idea is that you cannot issue securities the
way that may be harmful for the majority of investors.
Now the next thing,
I would add some of that is tender offer regulation,
so this is closer to our topic and here we have to first of all,
recall the Williams Act 1968.
Now, Williams Act basically talks about more information disseminated to the public,
then it talks about the minimum length of the offer so that people cannot be,
cannot be found in a situation when they say, "Well,
we just realize what is going on but it's a day after a fair."
So, there must be some time period over which the people can make a decision.
And basically, it specifically allowed
the targets to sue bidders in case that these bidders they commit something wrong.
Now, all of that must be demanded by two other very strong acts that
deal with potential abuses in this market that
are somewhere in between securities and M & As.
And this is, first of all,
Insider Trading Sanctions Act
that is 1984,
and the key story here is that if you engage
in insider trading and you're indicted you haven't committed that,
then the plaintiffs can sue you for triple damages.
So, that's really very strong and it must be added to
that the famous RICO Act of 1970.
RICO stands for Racketeer Influenced and Corrupt Organizations.
Here, not only winning plaintiffs are entitled for triple damages
but also for assets seizure.
So basically, if you're indicted of having committed the crime under the RICO Act,
you may be really crashed.
The famous case when Michael Milken was sued by plaintiffs,
that happened under the RICO Act.
So, he went to jail and also his company actually faced big damages.
So, that is basically what we know about this and now
its time to say a few final words about,
so we talked about laws.
Now, just other regulatory issues,
again the idea here is as follows.
You must do something in the corners of certain guidelines.
If you fail to do so,
then we go back to the previous pages of a slip chart
and you can be sued on the grounds of some of these acts.
So first of all, we deal with disclosure,
so you have to provide certain information and you cannot afford to lie.
Now, there are clearly some regulatory bodies that watchful that,
then also there is another dimension like I said it's
international both antitrust and other related laws
and there's one more thing that we thought
in much greater detail close to the end of this course.
But now we mentioned that,
this is corporate governance issues.
We will see that,
that is all aimed at protection of
small investors and protection of minority participants.
So, in our jargon of the weakest.
Now, and there are some challenges
to the regulatory environment that are observed right now in recent years.
So these challenges include,
I would put it like fake news because this area is extremely delicate so you can say,
"Well, this company is actual lying to its investors."
Well, you can prove that this is not true,
that takes time and maybe some investors will say,
"Well, we'll wait until that's all clarified and the transaction may fall apart."
And also now, we see
channels like social media and other channels,
information channels, I will put it like this.
So here, again, anyone can say,
can post on his or her face on a page on Facebook say,
"Well, something's going wrong here."
It may be well fake news is probably tough word,
but people might think about that.
They have not yet approved, but they doubt something and that in itself may be actually
very harmful for the potential transaction success and therefore value creation,
oftentimes without any ground.
So basically, I would like to say that the key story in the regulation again is
protection of the weak
and at this angle we have to look at that.
In the remaining two episodes of this first week,
we will talk about some other issues that are close to regulation namely about
some accounting expert aspects and
some tax factors that also influence M & A transactions.