Monday, August 11, 2014
Ah, yes . . . . The public/private divide . . . . My co-blogger Ann Lipton fairly begged me to write about this topic today, given that she had to miss the discussion session on the subject (entitled "Does The Public/Private Divide In Federal Securities Regulation Make Sense?") convened by me and Michael Guttentag at last week's Southeastern Association of Law Schools (SEALS) annual conference. Arm-twisting aside, however, this is a topic of current interest (and actively engaged scholarship) for me.
The discussion session allowed a bunch of our corporate and securities law colleagues to explore historical, present, and projected future distinctions between public and private offerings and public and private companies/firms. The discussion ranged widely, as did the short papers submitted by the participants. Some topics of conversation were oriented in part toward corporate governance concerns--comments from Lisa Fairfax on linkages to shareholder empowerment and from Jill Fisch on executive compensation in the post-Dodd-Frank public environment come to mind in this regard. Other discussion topics engaged securities regulation more centrally, including by, e.g., questioning the coherence of the rationale underlying the Section 12(g) and 15(d) reporting thresholds (with interesting commentary from Amanda Rose and Usha Rodrigues); offering historical observations about the difference between public offerings and private placements and how that history does, should, and may play out in offering markets (Dale Oesterle and Wulf Kaal); expressing concern about accredited investor status in the wake of the new Rule 506(c) under the Securities Act of 1933, as amended (Jonathan Glater); and analyzing the CROWDFUND Act at the public/private offering and company divides (me).
Different notions of "publicness" and "privateness" were offered up, dissected, and used in the discussion. Many pointed to the formative work of Hillary Sale (The New 'Public' Corporation, Public Governance, and J.P. Morgan: An Anatomy of Corporate Publicness) and Don Langevoort and Bob Thompson (Redrawing the Public-Private Boundaries in Entrepreneurial Capital-Raising and 'Publicness' in Contemporary Securities Regulation after the JOBS Act) as important touchstones. Both sets of papers address issues involving the publicness of firms. The Langevoort and Thompson Redrawing article also addresses public and private offerings of securities on a detailed level.
Yet, not everyone anchored their ideas to these existing works. One participant (Ben Means) provocatively suggested, for example, analyzing public disclosure rules using the bumpy-versus-smooth taxonomy for legal rules described in Adam Kolber's recent California Law Review article. I was not familiar with this piece. I now plan to read it.
Many discussants denied the continued existence or salience of a public/private divide in securities regulation, believing instead that there is a sliding scale or continuum between public and private. Although this argument has more traction after the JOBS Act and the Dodd-Frank Act, evidence of an indistinct line both in finance and entity law predates those legislative initiatives. Some of us were uncomfortable in declaring the death of the public/private divide--or in letting go of the analytical distinction between publicness and privateness because of the role that it serves in scholarship and teaching. The public/private divide has been a heuristic in securities regulation that people find hard to abandon . . . .
My paper, which is founded on the works of Professors Langevoort, Sale, and Thompson, is forthcoming in the University of Cincinnati Law Review. Although the draft is not "ready for Prime Time" yet, I am happy to share it with anyone who may be interested in it. Other papers submitted for the discussion group may or may not be precursors to works in process. But you can contact any discussion group participant (or ask me to contact one or more participants on your behalf) if you want to explore their ideas further.
Although I am not yet fully ready to step back into the classroom to teach next week, I am better prepared for the experience (and for the research and writing I am doing) thanks to the SEALS conference. And now, to finish that syllabus . . . .