Top 10 Topics for Directors in 2020: Elections and Impeachment

Jan 13, 2020

Reading Time : 5 min

By: G. Hunter Bates, Alex Monié

President Trump and Democrats in the U.S. Congress have continued to lock horns during the ongoing impeachment inquiry, with a vote on the two articles of impeachment passing on party lines in the U.S. House of Representatives on December 18, 2019. Speaker of the House Nancy Pelosi (D-CA) is currently holding onto the articles of impeachment while Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer attempt to negotiate the initial process and procedure for the U.S. Senate trial. Ultimately, Speaker Pelosi and Leader Schumer are demanding that certain documents and witnesses be included as part of the Senate trial, while Leader McConnell argues that the Senate should follow the precedent of the Clinton impeachment trial and consider the question of potential witnesses and documents after the initial presentation by House managers and the President’s defense team. The schedule of the Senate remains in limbo until an initial agreement can be reached on the impeachment trial.

Impeachment

Here is a recap of the key events in the impeachment inquiry to date.

On September 24, 2019, Speaker Pelosi announced the House would move forward with a formal impeachment inquiry after a whistleblower complaint regarding a July 25, 2019, phone call between President Trump and Ukraine President Volodymr Zelensky. The whistleblower’s complaint alleged that, during the call, President Trump requested President Zelensky to investigate the Biden family, specifically Joe Biden’s son Hunter’s business dealings with a Ukrainian oil and gas company.

Democrats believe that the evidence shows President Trump attempted to withhold up to $400 million in aid for Ukraine until he received word that the investigation had been launched. On October 31, 2019, the House passed a resolution approving a formal impeachment inquiry and laying out the process for public hearings to begin.

Following Speaker Pelosi’s announcement, the House held a series of public and private hearings featuring a wide range of individuals in the Trump administration who have some knowledge of the administration’s actions on foreign aid to Ukraine. In early November, the relevant House committees released transcripts from the private testimonies. On December 16, 2019, the House Judiciary Committee released their 658- page report detailing its decision to charge President Trump with two articles of impeachment. The report stated that he had abused the power of the office of the president and also obstructed Congress in its investigation of his ongoing relationship with Ukraine, two charges that became the articles of impeachment on the House floor.

On December 18, 2019, the House voted to impeach President Trump on both articles of impeachment. No Republicans voted in favor of the articles, a couple of Democrats voted against each, and Rep. Tulsi Gabbard 1. Election and Impeachment © 2020 Akin Gump Strauss Hauer & Feld LLP Top 10 Topics for Directors in 2020 6 (D-HI), a candidate for the Democratic presidential nomination, voted present.

Once Speaker Pelosi formally sends the articles of impeachment to the Senate, the trial will be presided over by Supreme Court Justice John Roberts with “managers” appointed by the House who will conduct the trial. Two-thirds of the body must vote in favor of impeachment in order to remove the President from office. This number would require Democrats to convince 20 of their Republican colleagues to vote against their own party’s president, which is unlikely.

Presidential Elections

As we approach 2020, all eyes turn towards Iowa and New Hampshire for the first indications on who may emerge as the Democratic frontrunner. Former South Bend, Ind., Mayor Pete Buttigieg surged early on in the Iowa polls, but has slowly lost ground as the primary moves closer. In New Hampshire, Sen. Bernie Sander (I-VT) and former Vice President Joe Biden are polling neck-and-neck, with Sen. Elizabeth Warren (D-MA) polling closely behind.

Looking farther down the road at Nevada and South Carolina, former Vice President Joe Biden leads the pack with strong support from voters in each state. Each candidate seems to attract his or her own unique group of voters, with Sanders and Warren splitting the most progressive. Former New York City Mayor Michael Bloomberg and former Massachusetts Gov. Deval Patrick both have jumped into the presidential race recently with an eye toward the moderate lane of the Democratic Party. Mayor Bloomberg is laying low in the early states and banking his personal war chest on the Super Tuesday states. Wins in the early states, particularly on Super Tuesday (March 3, 2020), will lead to much-needed momentum. All of that being said, the ultimate winner of the nomination may not be decided until the Democratic Party Convention in July 2020.

Back in Washington, D.C., the Senate impeachment trial will have a direct impact on the members of the Senate running for president. Senators Michael Bennet (D-CO), Cory Booker (D-NJ), Amy Klobuchar (D-MN), Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) will have no choice but to act as jurors for the duration of the trial, losing valuable time on the campaign trail. How long the proceedings will last is unknown, but expect at least a two- to four-week process.

Congressional Elections

While much of the attention will be on the office of the commander in chief in 2020, there are still fierce battles being fought for both House and Senate seats in Congress. In the Senate, incumbent Sens. Martha McSally (R-AZ), Cory Gardner (R-CO), Susan Collins (R-ME) and Doug Jones (D-AL) are in tight races that will help to determine control of the Senate in the next Congress. Should Democrats knock off these three incumbents and hold onto the Jones seat in Alabama, the current 53-47 seat split in the Republicans’ favor would be reduced to 50-50, leaving control of the Senate up to the vice president of whichever party’s ticket wins the White House in November. Republicans also face tough races for seats they currently hold in Georgia, Iowa and North Carolina.

All 435 House seats are on the ballot every two years, but the attention will be focused on a much smaller number of races. Democrats currently control the House by a margin of 233-197 seats (with one independent and four vacancies), so Republicans need to flip 21 seats from “D” to “R” to regain the majority. At this point in the election cycle, 18 Democratic seats and six Republican seats are deemed as “tossup or worse” by the Cook Political Report. The Grand Old Party (GOP) would essentially run the table in the battleground districts to have any hope of regaining control of the House. The chances of Republicans retaking control of the House are also decreased by the more than two dozen GOP members who have announced their retirement (or are running for a different office) at the end of this Congress.

Share This Insight

Previous Entries

Deal Diary

June 27, 2024

On June 24, 2024, the U.S. Securities and Exchange Commission (SEC) published five new Form 8-K Compliance and Disclosure Interpretations (C&DIs) expanding the agency’s interpretations of cybersecurity incident disclosures pursuant to Item 1.05 of Form 8-K. In July 2023, the SEC adopted final rules with respect to cybersecurity incidents that generally require public companies to disclose (i) material cybersecurity incidents within four business days after determining the incident was material and (ii) material information regarding their cybersecurity risk management, strategy and governance on an annual basis. We wrote about the final cybersecurity disclosure rules here.

...

Read More

Deal Diary

February 12, 2024

The Securities and Exchange Commission (SEC) recently adopted final rules (available here; also see the fact sheet and press release) representing significant changes to  special purpose acquisition companies (SPACs), shell companies and the disclosure of projections. These rules aim to enhance disclosures, protect investors and align the regulatory framework for SPACs with traditional IPOs. The following summarizes the key aspects of these rules.

...

Read More

Deal Diary

October 4, 2023

On September 20, 2023, the U.S. Securities and Exchange Commission (SEC) issued a final rule amending the so-called “Names Rule” (found here) that is “designed to modernize and enhance” protections under Rule 35d-1 of the Investment Company Act of 1940. The final rule is part of the SEC’s holistic efforts to regulate environmental, social and governance (ESG) matters, and is the SEC’s latest attempt to curb greenwashing in U.S. capital markets. The amendments require registered investment funds that include ESG factors in their names to place 80% of their assets in investments corresponding to those factors, thereby extending to ESG funds the SEC’s long-standing approach of regulating the names of registered funds to ensure they are marketed to investors truthfully. Fund complexes with more than $1 billion in assets will have two years from the final rule’s effective date (60 days after publication in the Federal Register) to comply, while fund complexes with less than $1 billion in assets will be given a compliance period of 30 months.

Chair Gary Gensler said “[t]he Names Rule reflects a basic idea: A fund’s investment portfolio should match a fund’s advertised investment focus. In essence, if a fund’s name suggests an investment focus, the fund in turn needs to invest shareholders’ dollars in a manner consistent with that investment focus. Otherwise, a fund’s portfolio might be inconsistent with what fund investors desired when selecting a fund based upon its name.” The sole dissenting vote against the rule modification, Commissioner Mark Uyeda, said “[w]ith these amendments, the Commission overemphasizes the importance of a fund’s name, as if to suggest that investors and their financial professionals need not look at the prospectus disclosures.” Commissioner Uyeda also expressed concern that fund investors will bear the increased compliance costs associated with the rule change.

...

Read More

Deal Diary

May 31, 2023

As discussed in our prior publication (found here), the Securities and Exchange Commission (SEC) adopted amendments on December 14, 2022, regarding Rule 10b5-1 insider trading plans and related disclosures. On May 25, 2023, the SEC issued three new compliance and disclosure interpretations (C&DIs) relating to the Rule 10b5-1 amendments.

...

Read More

Deal Diary

May 24, 2023

On May 15, 2023, the Eastern District of California ruled that California Assembly Bill No. 979 (“AB 979”) violates the Equal Protection Clause of the U.S. Constitution’s Fourteenth Amendment and 42 U.S.C. § 1981. As enacted, California’s Board Diversity Statute, required public companies with headquarters in the state to include a minimum number of directors from “underrepresented communities” or be subject to fines for violating the statute. AB 979 defines a “director from an underrepresented community” as “an individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender.”

...

Read More

Deal Diary

May 9, 2023

Update: On October 31, 2023, the Fifth Circuit granted the US Chamber of Commerce's petition for review of the SEC's share repurchase disclosure rules, holding that the SEC acted arbitrarily and capriciously in violation of the Administrative Procedure Act. The court directed the SEC to correct the defects within 30 days of the opinion. On December 1, 2023, the SEC informed the Fifth Circuit that it was unable to correct the rule's defects within 30 days of the opinion. On December 19, 2023, the Fifth Circuit vacated the SEC’s share repurchase disclosure rules.

...

Read More

Deal Diary

April 12, 2023

We have released our 2023 ESG Survey which includes a collection of reports reflecting on significant ESG themes and trends from 2022, as well as what we believe to be key developments for 2023.

...

Read More

Deal Diary

February 6, 2023

As companies begin preparing for the 2023 proxy season, we note that Institutional Shareholder Services Inc. (ISS) and Glass Lewis, the leading providers of corporate governance solutions and proxy advisory services, issued updated benchmark policies (proxy voting guidelines), which can be found here and here, respectively. The updated proxy voting guidelines generally focus on board accountability and oversight considerations and address topics such as climate accountability, board diversity, shareholder rights, corporate governance standards, executive compensation and social issues. What follows is a summary of the proxy voting guidelines published by ISS and Glass Lewis for the 2023 proxy season.

...

Read More

© 2024 Akin Gump Strauss Hauer & Feld LLP. All rights reserved. Attorney advertising. This document is distributed for informational use only; it does not constitute legal advice and should not be used as such. Prior results do not guarantee a similar outcome. Akin is the practicing name of Akin Gump LLP, a New York limited liability partnership authorized and regulated by the Solicitors Regulation Authority under number 267321. A list of the partners is available for inspection at Eighth Floor, Ten Bishops Square, London E1 6EG. For more information about Akin Gump LLP, Akin Gump Strauss Hauer & Feld LLP and other associated entities under which the Akin Gump network operates worldwide, please see our Legal Notices page.