Blurred Boundaries
John Briggs, an antitrust attorney with the law firm Axinn, Veltrop & Harkrider LLP, called the case a one-off enforcement effort against ValueAct that does not necessarily signal a broader crackdown or a change in legal interpretation.
But Briggs agreed that the case highlights the blurring boundaries between activist and traditional fund managers. A ValueAct win could further cloud the issue, while a government victory could prompt major investors to dial back pressure on companies.
A managing director at a large asset manager, speaking on condition of anonymity, said that he and his colleagues routinely discuss business improvement and executive compensation with company executives, believing such topics do not cross legal lines.
The ValueAct case could change that interpretation, the manager said.
The lawsuit could take months or years to resolve. Any resulting limits on fund managers could clash with a separate effort led by the U.S. Securities and Exchange Commission in the early 1990s encouraging more dialog between investors and public corporations.
"The idea was that you want to free up those conversations, since more conversations allow more accountability," said University of Delaware finance professor Charles Elson, who follows corporate governance. "Anything that pushes things in a different direction is problematic."