Wednesday, June 22, 2016
Today is the rare day where I feel like a professor. Dressed in jeans and drinking coffee in my office, I have been reading Colin Mayer's book Firm Commitment in advance of the Berle VIII Symposium in Seattle next week (you can also see Haskell's post & Joan's post about Berle). That's not a typo, my agenda for the day is reading. And not for a paper or to prep for class, I am just reading a book--cover to cover. I can hardly contain my joy at this.
I have been struck by the elegantly simple idea that corporations' true benefit is to advance (and therefore) balance commitment and control. I have long viewed the corporate binary as between accountability and control. Under my framework the two are necessary to balance and contribute to the checks and balances within the corporate power puzzle of making the managers, who control the corporation, accountable to the shareholders. Colin Mayer posits that the one directional accountability of the corporation to shareholders without reciprocity of commitment from the shareholders to the corporation is a corrosive element in corporate design.
"The most significant source of failure is the therefore that we have created a system of shareholder value driven companies who detrimental effects regulation is supposed to but fails to correct, and in response we week greater regulation as the only instrument that we believe can address the problem. We are therefore entering a cycle of the pursuit of ever-narrower shareholder interests moderated by steadily more intrusive but ineffective regulation."
In developing the notions of commitment and control, I have found the following passages particularly thought-provoking:
"The financial structure of the corporation is of critical importance...The commitment of owners derives from the capital that is employed in the corporation. What is held within it is fundamentally different from what remains outside as the private property of its owners. What is distributed to owners as dividends is no longer available as protection against adverse financial conditions and what is provided in the form of debt from banks and bondholders as against equity form shareholders is secure only as long as the corporation has the means with which to service it."
"While incentives and control are centre stage in conventional economics, commitment is not. Enhancing choice, competition, and liquidity is the economist's prescription for improving social welfare, and legal contracts, competition policy and regulation are their basic toolkit for achieving it. Eliminate restrictions on consumers' freedom to choose, firms' ability to compete, and financial markets' provision of liquidity and we can all move closer to economic nirvana. Of course, economics recognizes the problems of time inconsistency in us doing today what yesterday we promised we would not conceive of doing today; of reputations in us continuing to do today what we promised to do yesterday for fear of not being able to do it tomorrow, and of capital and collateral in making it expensive for us to deviate from what we said yesterday we would do today and tomorrow. But these are anomalies. Economics does not recognize the fundamental role of commitment in all aspects of our commercial as well as our social lives and the way in which institutions contribute to the creation and preservation of commitment. It does not appreciate the full manner in which choice, competition and liquidity undermine commitment or the fact that institutions are not simply mechanisms for reducing costs of transaction, but on the contrary means to establish and enhance commitment at the expense of choice, competition, and liquidity. Commitment is the subject of soft sentimental sociologists, not of realistic rational economists. The sociologists' are the words of Shakespeare's 'Love all, trust few. Do wrong to none', the economists' those of Lenin: 'Trust is good, control is better.'"
Monday, June 20, 2016
Having helped a few Tennessee bar applicants get straight on their knowledge of agency, unincorporated business associations, and personal property law last Friday at my BARBRI lecture (such a nice group present at the taping to keep me company!), it's now time for me to wrap up my June Scholarship and Teaching Tour with a twofer--a week of travel to two of my favorite U.S. cities: Chicago, for the National Business Law Scholars Conference and Seattle for Berle VIII. At both events, I will present my draft paper (still in process today, unfortunately) on publicly held benefit corporations, Corporate Purpose and Litigation Risk in Publicly Held U.S. Benefit Corporations. Here's the bird's-eye view from the introduction:
Benefit corporations—corporations organized for the express purpose of realizing both financial wealth for shareholders and articulated social or environmental benefits—have taken the United States by storm. With Maryland passing the first benefit corporation statute in 2010, legislative growth of the form has been rapid. Currently, 31 states have passed benefit corporation statutes.
The proliferation of benefit corporation statutes and B Corp certifications can largely be attributed to the active promotional work of B Lab Company, a nonprofit corporation organized in 2006 under Pennsylvania law that supports social enterprise (“B Lab”). B Lab works with individuals and interest groups to generate attention to social enterprise generally and awareness of and support for the benefit corporation form and B Corp certification (a social enterprise seal of approval, of sorts) specifically. B Lab also supplies model benefit corporation legislation, social enterprise standards that may meet the requirements of benefit corporation statutes in various states, and other services to social enterprises.
Benefit corporation statutes have not, by and large, been the entity law Field of Dreams. Despite the legislative popularity of the benefit corporation form, there have not been as many benefit corporation incorporations as one might expect. In the first four years of benefit corporation authority, for example, Maryland reported the existence of fewer than 40 benefit corporations in total. Tennessee’s benefit corporation statute came into effect in January 2016, and as of May 2, 2016, Secretary of State filings evidence the organization of 26 for-profit benefit corporations. However, a review of these filings suggests that well more than half were erroneously organized as benefit corporations. Colorado, another recent adopter of the benefit corporation, does appear to have a large number of filings (90 in total as of June 12, 2016 based on the list of Colorado benefit corporations on the B Lab website). However, as with Tennessee, a number of these listed corporations appear to be erroneously classified. These anecdotal offerings indicate that published lists of benefit corporations—even those constructed from state filings—over-count the number of benefit corporations significantly.
Research for this article identified no publicly held U.S. benefit corporations. For these purposes (and as referenced throughout this article), the term “publicly held” in reference to a corporation is defined to mean a corporation (a) with a class of equity securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (“1934 Act”), or (b) otherwise required to file periodic reports with the Securities and Exchange Commission under Section 13 of the 1934 Act. Yet, benefit corporations may be subsidiaries of publicly held corporations (as Ben & Jerry's Homemade Inc., New Chapter Inc., and Plum, PBC have demonstrated), and corporations certified as B Corps have begun to enter the ranks of publicly held corporations (perhaps Etsy, Inc. being the most well known to date). It likely is only a matter of time before we will see the advent of publicly held U.S. benefit corporations.
With the likely prospect of publicly held U.S. benefit corporations in mind, this article engages in a thought experiment. Specifically, this article views the publicly held U.S. benefit corporation from the perspective of litigation risk. It first situates, in Part I, the U.S. benefit corporation in its structural and governance context as an incorporated business association. Corporate purpose and the attendant managerial authority and fiduciary duties are the key points of reference. Then, in Part II, the article seeks to identify the unique litigation risks associated with publicly held corporations with the structural and governance attributes of a benefit corporation. These include both state and federal causes of action. The reflections in Part III draw conclusions from the synthesis of the observations made in Parts I and II. The closing thoughts in Part III are intended to be of use to policy makers, academic observers, and advisers of corporations, among others.
As Haskell mentioned in an earlier post, he and Anne and I will be together at the Berle VIII event. What a great way to end my June tour--with my friends and colleagues from the Business Law Prof Blog! I look forward to it.
Thursday, June 16, 2016
8th Annual Berle Symposium - Benefit Corporations and the Firm Commitment Universe - June 27-28, 2016 - Seattle, WA
Three Business Law Prof Blog editors (myself included) are presenting at the upcoming Berle Symposium on June 27-28 in Seattle.
Colin Mayer (Oxford) is the keynote speaker, and I look forward to hearing him present again. I blogged on his book Firm Commitment after I heard him speak at Vanderbilt a few of years ago. The presenters also include former Chancellor Bill Chandler of the Delaware Court of Chancery. Given that Chancellor Chandler's eBay v. Newmark decision is heavily cited in the benefit corporation debates, it will be quite valuable to have him among the contributors. The author of the Model Benefit Corporation Legislation, Bill Clark, will also be presenting; I have been at a number of conferences with Bill Clark and always appreciate his thoughts from the front lines. Finally, the list is packed with professors I know and admire, or have read their work and am looking forward to meeting.
More information about the conference is available here.
June 16, 2016 in Anne Tucker, Business Associations, Conferences, Corporate Governance, Corporations, CSR, Delaware, Financial Markets, Haskell Murray, Joan Heminway, Law School, Social Enterprise | Permalink | Comments (0)
Wednesday, June 15, 2016
Starting 2 weeks ago at Law & Society, I began participating in a series of conversations that can be boiled down to this: Artificial Intelligence and the Law. Even the ABA is on to this story, which means it has reached a peak saturation point. Exciting, scary, confusing, skeptical and a variety of other reactions have been thrown into the conversations across the legal studies gamut from algorithms in parole & criminal sentencing to its use to generate social credit scores (thank you Nizan Packin for opening my eyes to this application). In another LSA shout out, I want to highlight to forthcoming scholarship of Ben Edwards at Barry College where he criticizes the conflicts of interest in investment advise channels. One possible work around he explores is relying on robo-advisors: In the few years since I have looked at digital investment advise, the field has changed, matured, grown! So much so that FINRA has issued a report on digital investment advise, and is unsurprisingly skeptical of the technology application that poses a significant threat to its members (new release synopsis available here). For the uninitiated, check out this run down of popular robo-advisors and Forbes article. Skepticism about the sustainability of low-fee model can be found here; and optimism about its ability to change the world can be found here.
A robo-advisor (robo-adviser) is an online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners. Robo-advisors (or robo-advisers) use the same software as traditional advisors, but usually only offer portfolio management and do not get involved in more personal aspects of wealth management, such as taxes and retirement or estate planning.
Thursday, June 9, 2016
Keep reading only if you have 3 minutes that you don't care about being productive or relating to business law, at least not directly.
The Federal Election Committee issued a proposed draft of an advisory opinion on a question brought by Huckabee for President, Inc.--the committee responsible for the 2016 presidential campaign of former Arkansas Governor Mike Huckabee. The Committee wanted to know if it can use part of a legal defense fund to pay a settlement. The FEC says yes. This isn't an election law blog, so I won't go into the details. The litigation arose over the campaign's use of the song "Eye of the Tiger". The FEC, feeling quite cheeky writes the following:
The complaint, seeking injunctive relief and monetary damages, alleged that 21 the Committee had violated federal copyright law by playing the song “Eye of the Tiger” at a campaign event on September 8, 2015. The Committee, rising up to the challenge of its rival, incurred attorneys’ fees and other expenses in defending itself in that litigation. After briefly relishing the thrill of the fight, the parties settled the lawsuit for an undisclosed amount.
Has the political circus of the 2016 election warped the sense of decorum at the FEC or should we all want to be friends with the lawyers there? I can't decide. But I do know that you should (a) click on the link to the song, and (b) jam away in your office for the next 4 minutes.
You are welcome.
Wednesday, June 8, 2016
If you've been slamming away on a writing deadline then perhaps you've missed the opportunity (like me) to dive into the recent Chancery Court of Delaware Dell appraisal rights opinion (downloadable here). Have no fear, your summary is here.
Vice Chancellor Laster valued Dell’s common stock at $17.62 per share, reflecting a 28% premium above the $13.75 merger price that was paid to Dell shareholders in October 2014 in a going private transaction lead by company-founder Michael Dell. Dell's going private transaction was opposed by Carl Icahn and this juicy, contentious transaction has its own required reading list. When conceding defeat, Carl Icahn sent the following letter to Dell Shareholders:
New York, New York, September 9, 2013
Dear Fellow Dell Inc. Stockholders:
I continue to believe that the price being paid by Michael Dell/Silver Lake to purchase our company greatly undervalues it, among other things, because:
1. Dell is paying a price approximately 70% below its ten-year high of $42.38; and
2. The bid freezes stockholders out of any possibility of realizing Dell’s great potential.
Fast forward nearly 3 years later and it seems Vice Chancellor Laster agrees. VC Laster reached his undervaluation decision despite no finding of significant fault with the company’s directors' conduct or a competing bidder. Instead, VC Laster focused on the fall in the company’s stock price, and a failure to determine the intrinsic value of Dell before negotiating the buyout. The business press and law blogs have exploded with articles, a few of which are highlighted below:
- For a good summary of the ruling see this succinct Delaware Chancery Court blog post and Andrew Ross Sorkin's NY Times article.
- For a good discussion of how appraisal remedies were applied in Dell, see Steven Davidoff Solomon's NY Times article here.
- For a discussion of the increase in shareholder appraisal actions and contributing factors (arbitrage) and the future of appraisal rights, see this ABA article.
Wednesday, June 1, 2016
Readers attending Law & Society in New Orleans at the end of the week should make a note of the following corporate and securities law panels taking place on Friday, June 3rd and Saturday, June 4th.
FRIDAY, JUNE 3
2:45 PM - 4:30 PM
1146—Panel Session—Financial Market Regulation
Room: Salon C, NOLA Marriott
4:45 PM - 6:30 PM
1147—Panel Session—Rulemaking, National and International
Room: Salon C, NOLA Marriott
SATURDAY, JUNE 4
8:15 AM - 10:00 AM
1150—Panel Session—Investors, Consumers, and the Public Interest
Room: Salon C, NOLA Marriott
2:45 PM - 4:30 PM
1152—Panel Session—Corporate Governance and Value
Room: Salon C, NOLA Marriott
2:45 PM - 4:30 PM
2895—Roundtable—Corporate Diversity: Comparative and Critical Perspectives
Room: Galerie 5, NOLA Marriott
4:45 PM - 6:30 PM
1154—Panel Session—Addressing Agency Costs and Corporate Wrongdoing
Room: Salon C, NOLA Marriott
*updated June 1st at 4:20 to include 2 additional panels submitted by a reader (Shlomit Azgad-Tromer)
Thursday June 2nd : Power Business and Legal Practice, 12:45- 2:30 PM
Friday June 3rd : Stakeholders and the Corporation, 4:45-6:30 PM
Wednesday, May 25, 2016
Last week the SEC announced insider trading charges against former-Dean Foods Company board member Thomas C. Davis and professional sports gambler, William “Billy” Walters of Las Vegas. Involved in the case is professional golfer, Phil Mickelson, named as a relief defendant in the case. Davis owed money to Walters and began passing along confidential information first about Dean Foods, and later about Darden Restaurants. Walters passed along his insider knowledge of Dean Foods to Mickelson, who also owed Walters money.
For those unfamiliar,
"the SEC may seek disgorgement from “nominal” or “relief” defendants who are not themselves accused of wrongdoing in a securities enforcement action where those persons or entities (1) have received ill-gotten funds, and (2) do not have a legitimate claim to those funds." S.E.C. v. DCI Telecommunications, Inc., 122 F. Supp. 2d 495, 502 (S.D.N.Y. 2000).
The SEC issued a statement on Friday detailing the alleged wrong doing by all parties and announcing that "Mickelson will repay the money he made from his trading in Dean Foods because he should not be allowed to profit from Walters’s illegal conduct.”
As most insider trading cases are, the facts are fascinating. This would make a great exam hypo, and I am flagging it for my casebook section on insider trading.
Tuesday, May 17, 2016
Breaking academic news:
Elsevier, a world-leading provider of scientific, technical and medical information products and services, announced today the acquisition of the Social Science Research Network (SSRN)....SSRN will be further developed alongside Mendeley, a London-based free reference manager and scholarly collaboration network owned by Elsevier....
Elsevier provides web-based, digital solutions - among themScienceDirect, Scopus, Elsevier Research Intelligence and ClinicalKey - and publishes over 2,500 journals, including The Lancet and Cell, and more than 33,000 book titles, including a number of iconic reference works. Elsevier is part of RELX Group, a world-leading provider of information and analytics for professional and business customers across industries. http://www.elsevier.com
What does this change mean for publishing authors and researchers? Content will remain free to post and download. Elsevier acquired Mendeley in 2013 creating controversy over Mendeley's continued "trustworthiness" as a part of a for-profit enterprise. Since the acquisition, Mendeley doubled its subscribers from 2.5 to 5 million. Elsevier's interest in SSRN, a profitable site for over 13 years, is primarily in its potential for generating user data and analytics. Integrating SSRN and Mendeley services is predicted to strengthen
"connections between SSRN author pages and Mendeley professional profiles, and workflow connections that allow Mendeley collaborative groups to submit papers for distribution and perhaps eventually review and publication. There will also be other opportunities to strengthen SSRN for its authors, with plans to link preprints on SSRN with Scopus, bringing analytics about article “performance” to SSRN authors, and to bring improved links between working papers and preprints with their eventual published versions."
Would it be too much to hope for a cosmetic overhaul of the website too?
The acquisition raises some interesting questions for those in academics whose scholarly productivity, national reputation and other outputs are increasingly measured with data points provided from sites like SSRN. Changes to the substance of the website may change how those metrics are generated and what they mean. The creation of new metrics available to authors (and schools) may provide for more reportable data points for our annual faculty reports with the questions remaining how useful are those metrics and what do they tell us about the value of ideas?
Tuesday, May 10, 2016
At the 2017 AALS annual meeting, January 3-7 in San Francisco, the AALS Sections on Agency, Partnerships LLCs, and Unincorporated Associations & Nonprofit and Philanthropy Law will hold a joint session on LLCs, New Charitable Forms, and the Rise of Philanthrocapitalism.
In December 2015, Facebook founder Mark Zuckerberg and his wife, Dr. Priscilla Chan, pledged their personal fortune—then valued at $45 billion—to the Chan-Zuckerberg Initiative (CZI), a philanthropic effort aimed at “advancing human potential and promoting equality.” But instead of organizing CZI using a traditional charitable structure, the couple organized CZI as a for-profit Delaware LLC. CZI is perhaps the most notable example, but not the only example, of Silicon Valley billionaires exploiting the LLC form to advance philanthropic efforts. But are LLCs and other for-profit business structures compatible with philanthropy? What are the tax, governance, and other policy implications of this new tool of philanthrocapitalism? What happens when LLCs, rather than traditional charitable forms, are used for “philanthropic” purposes?
From the heart of Silicon Valley, the AALS Section on Agency, Partnerships LLCs, and Unincorporated Associations and Section on Nonprofit and Philanthropy Law will host a joint program tackling these timely issues. In addition to featuring invited speakers, we seek speakers (and papers) selected from this call.
Any full-time faculty of an AALS member or fee-paid school who has written an unpublished paper, is working on a paper, or who is interested in writing a paper in this area is invited to submit a 1- or 2-page proposal by June 1, 2016. The Executive Committees of the Sections will review all submissions and select two papers by July 1, 2016. If selected, a very polished draft must be submitted by November 30, 2016. All submissions and inquiries should be directed to the Chairs of the Sections at the email addresses below:
University of Oregon School of Law
Garry W. Jenkins
Associate Dean for Academic Affairs
John C. Elam/Vorys Sater Professor of Law
Moritz College of Law,State University
Friday, May 6, 2016
With this post I warmly welcome John Linarelli to the Business Law Professor Blog as a guest blogger for the month of May. Professor Linarelli, Chair in Commercial Law at Durham Law School, has crossed the Atlantic and different disciplines throughout his career. His research engages with issues of inequality, specifically focusing on economic and commercial issues. Recent scholarly publications include his forthcoming co-authored book, to be published with Oxford University Press, Beyond Global Capitalism: Reclaiming the Future of International Law and his 2015 article Concept and Contract in the Future of International Law, 67 Rut. U. L. Rev. 61. Interested readers can view Professor Linarelli’s full academic bio and his SSRN page for more information. Look for new BLPB content from Professor Linarelli later this month.
Understanding that American academics and practicing lawyers may be unfamiliar with Durham University, Professor Linarelli provided us with an overview. He writes a helpful introduction and provides a charming view into some different academic traditions:
Durham Law School usually ranks as one of the top 5 law schools in the UK. In the UK-wide Research Excellence Framework (REF) exercise in 2014, of which all university participate, we ranked third. Our students are incredible and a good number go off to the big City of London law firms upon completion of their practice qualifications. Lord Justice Hughes on the UK Supreme Court is an alum. We also run several LLM programmes, including in Corporate Law, International Trade and Commercial Law, European Trade and Commercial Law, and International Law and Governance.
Wednesday, May 4, 2016
Last week, Hamdi Ulukaya, founder and CEO of Chobani, announced a 10% company stock grant to all company employees. Chobani joined the ranks of high profile stock grants including Whole Foods, Starbucks, Apple and Twitter. Stock grants, while more common in tech industries, are a part of hybrid corporate law-employment law conversation on shared ownership. Employee ownership in companies can occur in several different forms such as ERISA-governed benefit plans where the company stock issued or bought as a part of a retirement saving plan. Alternatively, a stock grant may be structured as a bonus plan, a standard compensation, or a vesting employee benefit eligible after threshold years and types of service. All of these plans fall under the rubric of shared ownership. In 2015, the National Center for Employee Benefits estimated that over 9000 companies participated in some form of shared ownership.
In a similar vein, actors in the hit (and record-breaking with 16 Tony Nominations) musical Hamilton have entered into a profit-sharing agreement with producers. The deal is different for these actors, but the sentiment is the same in sharing profits, aligning interests, and promoting employee loyalty.
Shared ownership plans, especially the ERISA-governed ones can have specific tax and financing benefits for companies. Creating a shared ownership plan, however is often focused on creating certain firm-specific benefits such as recruiting and retaining talent, and improving firm performance by aligning interests between employees and the company. The recruitment and retention aspect can be especially valuable to start-up firms that struggle to compete with mature firms on salary and reputation. Empirical studies have found improved workplace performance, on average, for firms with shared capitalism plans, with positive effects observed most strongly when combined with policies such as low supervision, decision-making participation, and competitive pay.
I note these stories with particular interest for several reasons. The first is that I am routinely embarrassed by how little play I give employees in my corporation class . I seem all too happy to ignore this very important piece of the corporate power puzzle, engine for the machine, etc., etc. Second, I have been looking at shared ownership in the context of a recent research project, so look for more on that topic in a separate post once the project progresses. Third, my sense is that social enterprise movement will bring with it greater demands for shared ownership as a means to address social factors such as retirement security, employee autonomy and wage inequality. Look for more of these stories in the headlines and an emphasis on it in scholarship.
Tuesday, May 3, 2016
Submissions: manuscripts or abstracts must be submitted electronically to Professor Michelle Harner, Chair-Elect of the Section on Business Associations, at email@example.com August 24, 2016.
The AALS Section on Business Associations and the AALS Section on Comparative Law are pleased to announce a Call for Papers for a joint program to be held on January 5, 2017, at the AALS 2017 Annual Meeting in San Francisco. The topic of the program is “Business Law in the Global Gig Economy: Legal Theory, Doctrine, and Innovations in the Context of Startups, Scaleups, and Unicorns.”
Startups and entrepreneurs have long played an important role in the U.S. economy. From Henry Ford to Mark Zuckerberg, entrepreneurs have revolutionized the ways in which their customers receive products and services. As Phil Libin, CEO of Evernote, has explained, “There’s lots of bad reasons to start a company. But there’s only one good, legitimate reason, and I think you know what it is: it’s to change the world.”
That philosophy continues today as entrepreneurs disrupt markets and challenge business and legal norms. Traditional notions of the firm, fiduciary duties, contractual bargains, and optimal capital structures may not aptly fit entrepreneurial approaches. Indeed, entrepreneurs’ business models, financing needs, and operational objectives require lawyers and scholars to rethink governance, capital structures, and regulatory schemes that may limit or impede further innovation, both nationally and transnationally.
Wednesday, April 27, 2016
The shimmering mirage of summer has cast its spell on me, which means I am laboring under the delusion that I will have so much more time to do the thinking, learning, and writing that I want to be doing. My work is increasingly dependent upon statistical evaluations that others do, and occasionally involves my own work in the area. Several years ago I attended an empirical workshop for law professors at USC (something like this) taught by Lee Epstein and Andrew Martin that was an instrumental introduction and my only formal foundation in the area. I have the bug and want to learn more! But I don't know the best way to go about it-- piecemeal or full immersion--or even what all is available. I compiled my research below and share the list for interested readers. Comments encouraged by anyone who wants to share their experience with a listed option, general advice, or add to this meager list.
Empirical Skills Resources:
Introduction/Immersion Workshops like:
- George Mason’s empirical workshop
- Duke/Northwestern’s causal inference workshop
- SELS pre-conference empirical training
- Estimate--Michigan State’s summer econometrics workshop
- ICPSR summer offerings –
Free electronic courses:
Recomended text books/books
Epstein/Martin Introduction to Empirical Research
Enroll in a course at your university (audit or pursue another degree) such as basic statistics or an Econometrics course.
Friday, April 22, 2016
The Fulbright Scholar Program offers teaching, research or combined teaching and research awards in over 125 countries for the 2017-2018 academic year. Opportunities are available for college and university faculty and administrators, as well as for legal professionals and independent scholars.
This year, the Fulbright Scholar Program is offering over 90 awards in the field of Law. Exciting opportunities are available in many countries, including but not limited to:
- Brazil: Fulbright Distinguished Chair in International Relations
- Canada: Research Chairs in Governance
- Ghana: Law
- Japan: Study of the United StatesPublish
- Jordan: Public Policy and International Relations
- Kazakhstan: All Disciplines (Law is a preferred discipline)
- Macedonia: Rule of Law, Judiciary Reform and Civil Society
- Norway: International Courts and Tribunals
- Russia: Distinguished Chair in Sustainable Development
- Sweden: Fulbright-Lund University Chair in Public International Law
We recently hosted a webinar on Fulbright opportunities in law. Staff provided an overview of awards open to academics and professionals, and a 2015-16 Fulbright alumnus spoke about his experiences and answered questions. Please follow this link to listen to the recording.
For further awards in the field of Law, please visit our new Opportunities in Law webpage. There you will find award highlights and examples of successful projects in the discipline.
For eligibility factors, detailed application guidelines and review criteria, please follow this link. Interested scholars may also wish to join My Fulbright, a resource center for applicants interested in the program.
Applicants must be U.S. citizens and the current competition will close on August 1, 2016.
Wednesday, April 20, 2016
As a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the US Commodity Futures Trading Commission (CFTC) promulgated rules to regulate the swaps marketplace, securities trades that were previously unregulated and a contributing factor in the 2008 financial crisis. The CFTC oversees the commodity derivatives markets in the USA and has dramatically increased regulations and enforcement as a result of Dodd-Frank. As of January 2016, the CFTC finalized Dodd-Frank Rules exemptive orders and guidance actions. Commodity derivatives market participants, whether acting as a commercial hedger, speculator, trading venue, intermediary or adviser, face increased regulatory requirements including:
- Swap Dealer Regulation such as De Minimis Exceptions, new capital and margin requirements to lower risk in the system, heightened business conduct standards to lower risk and promote market integrity, and increase record-keeping and reporting requirements so that regulators can police the markets.
- Derivative Transparency and Pricing such as regulating exchanges of standardized derivatives to increase competition, information and arbitrage on price.
- Establishing Derivative Clearinghouses for standardized derivatives to regulate and lower counter party risks
The full list of CFTC Dodd Frank rulemaking areas is available here. In conjunction with the new regulations, the CFTC has stepped up enforcement actions according to a 2015 CFTC enforcement report detailing 69 enforcement actions for the year. Through these enforcement actions, the CFTC collected $2.8 billion in fines (outpacing SEC collections of $2 billion with a much larger agency budget and enforcement docket).
Wednesday, April 13, 2016
SEC Concept Release on Financial Disclosures in form S-K: Risk, Reporting Frequency and Sustainability
Today (April 13, 2016), the SEC made public a much anticipated concept release regarding financial disclosures in form S-K. The release seeks public comment on "modernizing certain business and financial disclosure requirements in Regulation S-K." The comment period is open for the next 90 days.
The release is 341 pages, so needless to say, I haven't gotten through the document. In it's entirety at least. By my initial count there are over 35 substantive issues in the release and many more technical/procedures ones. I've highlighted 3 issues that are relevant to prior BLPB discussions: Risk, Reporting Frequency and Sustainability.
Risk management and risk reporting in item 503(c) and 305 are addressed starting on page 146.
"[W]e consider whether requiring additional disclosure of management’s approach to risk and risk management and consolidating risk-related disclosure would, on balance, be beneficial to investors and registrants. We also seek to better understand how our disclosure requirements could be updated to enhance investors’ ability to evaluate a registrant’s risk exposures. We are especially interested in feedback on how we can improve the content and readability of the risk factors included in a filing as well as the potential advantages and disadvantages of different approaches to risk-related disclosure."
Reporting frequency as a component of the investor time horizons (aka short/long term investment) are discussed on page 280. The Commission questioned the frequency of financial reporting noting the adoption of semi-annual reporting in 1955 and quarterly reporting in 1970. Summarizing the current debate on quarterly reporting, the Commission states:
"The value of quarterly financial reporting has been the subject of debate. Opponents of quarterly reporting argue that frequent financial reporting may lead management to focus on short-term results to meet or beat earnings targets rather than on long-term strategies. Consequently, some have argued that quarterly reports should be discontinued or made voluntary in the United States.
Wednesday, April 6, 2016
I have heard the hype that April is financial literacy month, but I don't know what that means other than it is a slogan and a headline. It has a hashtag (#FLM2016), but no consensus definition other than merely understanding how money works. PBS, the President, the National Council of Financial Educators, Wikipedi and even someone self-titled "RichDad" all weigh in on the definition. This is unhelpful even by law school standards where we teach vague definitions like reasonable and negligent.
A basic internet search also reveals that there aren't widely adopted standards to demonstrate that a person has achieved financial literacy, and perhaps most strikingly there aren't comprehensive, free resources from a government agency or reputable third parties (i.e., companies not selling credit management services) to assist interested folks in acquiring the requisite financial information. There are resources available for children like this learning module hosted by the Federal Reserve Bank: Ella Saves! These introductory materials serve the goal of educating the next generation of financial consumers against the perils of credit and the need for saving. But what resources are available for the current generation of financial consumers-- those faced with student debt, who had access to large home mortgage loans, who have access to multiple credit cards with large balances and high fees, who are likely tasked with not only saving but investing their savings for retirement through a defined contribution plan? There are a variety of individual tools, articles and books available but if you are a novice and don't yet know what you need to know, this is both an overwhelming and an inefficient approach to acquiring the knowledge you need.
For example, through further research I found the Institute for Financial Literacy, a 2002 501(c)(3) focusing on adult financial education. Thank you Financial Literacy! They publish five standards (note that there is no consensus that these are the right benchmarks for financial literacy) and benchmarks, as well as provide some supporting materials for each one. A main resource they offer though is a listing of other state, federal and nonprofit websites where you can go and research what you don't know. Brilliant if you know where to start and what you need to find, unhelpful if not.
My frustration stems from the belief/observation that this information matters; individual and national financial stability depend upon it. Why is it so hard to know gauge whether or not I have it and what I need to do to gain it?
Wednesday, March 30, 2016
CALL FOR PAPERS
2016 Financial Stability Conference
“Innovation, Market Structure, and Financial Stability”
The Federal Reserve Bank of Cleveland and the Office of Financial Research invite the submission of research and policy-oriented papers for the 2016 Financial Stability Conference to be held December 1-2, 2016, in Washington, D.C. The objectives of this conference are to highlight research and advance the dialogue on financial market dynamics that affect financial stability, and to disseminate recent advances in systemic risk measurement and forecasting tools that assist in macroprudential policy development and implementation.
PAPER SUBMISSION PROCEDURE
The deadline for submissions is July 31, 2016. Please send completed papers to:firstname.lastname@example.org Notification of acceptance will be provided by September 30, 2016. Travel and accommodation expenses will be covered for one presenter for each accepted paper.
A pdf version of this call for papers is available here
Tuesday, March 22, 2016
Legal commentators and the media have been abuzz with news of President Obama's nomination of Judge Merrick Garland to the Supreme Court. If there was ever reason to be abuzz, in the world of legal news, this is it. Try to find a summary of Judge Garland's record in dealing with business law issues, however, and you are met with a silent, dark internet. Aside from mentions of Judge Garland having taught anti-trust at Harvard there is little discussion of his business jurisprudence. The D.C. Circuit court hears an administratively heavy caseload, but Judge Garland has been on the bench for nearly 20 years! I set out to uncover his business law barometer. My initial searches produced 19 opinions that he authored on business law matters, which are mostly securities cases but also include a piercing the corporate veil and contracts claims among others. While I am no online search wizard and am positive that I have missed some relevant cases, this is what I produced after such wide-net casting as "business law", "corporations", "partnership", "board of directors", "shareholders" etc. You get the idea, I ran several undeniably broad searches. The initial case list is provided below, and was generated (along with annotations) through WestLaw. Please comment if you have relevant cases to add. I may add commentary on the cases in a future post if there is interest... (and time).
Securities Law Cases
- Horning v. S.E.C., 570 F.3d 337 (D.C. Cir. 2009)
SECURITIES REGULATION - Brokers and Dealers. Mid-trial correction of sanction the SEC sought did not deprive broker-dealer firm’s former director of due process.
- Graham v. S.E.C., 222 F.3d 994 (D.C. Cir. 2000)
SECURITIES REGULATION - Fraud. Registered representative aided and abetted customer’s fraud.
- Katz v. S.E.C., 647 F.3d 1156 (D.C. Cir. 2011)
SECURITIES REGULATION - Brokers and Dealers. Former registered representation made unsuitable investment recommendations for her customers.