Monday, January 15, 2018

William Morris Endeavor and the Wahlberg/Williams Pay Disparity: A Role for Agency Law in Equality and Justice?

“Injustice anywhere is a threat to justice everywhere.”

Martin Luther King, Jr., Letter from Birmingham Jail, Alabama, 16 April 1963, in Atlantic Monthly August 1963

I had wanted to post a tribute to Dr. King here early on Monday.  However, after posting the Emory conference announcement, I moved on to other work, and that work filled up the available time in the day.  So, this late post including the quote above will have to suffice.

As I read meaningful quotes from Dr. King on social media and elsewhere all day on Monday, I found myself thinking of examples of inequality and injustice.  Many are compelling; many are meaningful.  Some are current events; and some of those involve business law questions.

For a number of days now (since before MLK Day) we have been showered with news stories relating to the compensation disparity between Mark Wahlberg and Michelle Williams for reshooting scenes from All the Money in the World in the wake of Kevin Spacey's replacement in the film resulting from allegations of sexual misconduct.  (See here, among other places.)  Most folks who follow Hollywood business issues know that gender discrimination is common.  My sister, a visual effects producer (her current movie is Downsizing, which I enjoyed and recommend), has suffered the effects.

But I found myself focusing on the role of William Morris Endeavor Entertainment LLC (WME), the talent agency that represented both Wahlberg and Williams.  Talent agents are regulated by guilds and unions as well as under California law (as represented here).  But they also have fiduciary duties.  Why did Wahlberg's contract not include a reshoot covenant (giving him the leverage to negotiate an outsized reshoot fee) while Williams's contract did?  Did WME fail to act in a manner consistent with any applicable duty of care--or maybe loyalty--as an experienced agent representing both actors--with knowledge of an overall gender pay gap?  Of course, there are many other possible explanations for the difference, and we are not privy to the terms of the two actors' talent contracts with WME (including any enforceable private ordering around agency law rules or confidentiality or privacy clauses).  But the related questions seem worth asking.  

Specifically, we might ask whether there is a question of WME's care, competence, or diligence under Section 8.08 of the Restatement (Third) of Agency.  And, among other things, Section 8.11 of the Restatement (Third) of Agency imposes a duty of candor on agents that may be applicable here.  And were there differences in the benefits that WME got out of each agreement that may have affected the firm's ability to act loyally for the principal's benefit under Section 8.01 of the Restatement (Third) of Agency?  We may never know.

Intermediation likely cannot cure the evils of inequality and injustice.  But where intermediaries are agents or otherwise owe fiduciary duties to their clients, those fiduciary duties may cause--or at least incentivize--the intermediaries to use their experience and knowledge to correct gender, racial, and other inequities where they exist.  This is something I will continue to ponder.

January 15, 2018 in Agency, Current Affairs, Joan Heminway | Permalink | Comments (2)

2018 Emory Transactional Law & Skills Conference - Call for Papers

Sixth Biennial Conference:
To Teach is to Learn Twice: Fostering Excellence in Transactional Law and Skills Education

June 1-2, 2018 • Atlanta

Emory’s Center for Transactional Law and Practice is delighted to announce its sixth biennial conference on the teaching of transactional law and skills.  The conference, entitled “To Teach is to Learn Twice:  Fostering Excellence in Transactional Law and Skills Education,” will be held at Emory Law, beginning at 1:00 p.m. on Friday, June 1, 2018, and ending at 3:45 p.m. on Saturday, June 2, 2018. 

Four New and Different Things about the Conference: 

  • Presentation of the inaugural Tina L. Stark Award for Excellence in the Teaching of Transactional Law and Skills.  Note:  For information about how to nominate yourself or someone else for this award, please visit http://bit.ly/2C1HdMW.
  • New 45-minute “Try-This” time slots for individual presenters to demonstrate in-class activities.   
  • Reduced registration fee for new transactional law and skills educators.
  • Reduced registration fee for adjunct professors.  

CALL FOR PROPOSALS

We are accepting proposals immediately, but in no event later than 5 p.m. on Monday, February 16, 2018. 

We welcome you to present on any aspect of transactional law and skills education as long as you view it through the lens of our theme.  We expect to receive proposals about theories, programs, curricula, courses, approaches, methods, and specific assignments or exercises that foster excellence in transactional law and skills education.  In other words, what works best (excellence in teaching) to achieve particular student outcomes (excellence in learning)?  If it’s true that “to teach is to learn twice,” what wisdom can you impart to others who may want to replicate or imitate what you are doing?  How have you made yourself a better teacher?  And how have you assured that you are achieving the best student outcomes?  

Try-This Sessions.  Each Friday afternoon “Try-This Session” will be 45-minutes long and will feature one classroom activity and one individual presenter.  

Panels.  Each Saturday session will be approximately 90 minutes long and feature a panel presenting two or more topics grouped together for synergy. 

Please submit the proposal form electronically via the Emory Law website at http://bit.ly/2BTD7pr before 5 p.m. on February 16, 2018. 

PUBLICATION OF SELECTED MATERIALS

As in prior years, some of the conference proceedings as well as the materials distributed by the speakers will be published in Transactions:  The Tennessee Journal of Business Law, a publication of the Clayton Center for Entrepreneurial Law of The University of Tennessee, a co-sponsor of the conference.

CONFERENCE REGISTRATION

Both attendees and presenters must register for the Conference and pay the appropriate registration fee:  $220 (general); $200 (adjunct professor); or $185 (new teacher).  Note: A new teacher is someone in their first three years of teaching.

The registration fee includes a pre-conference lunch beginning at 11:30 a.m., snacks, and a reception on June 1, and breakfast, lunch, and snacks on June 2. We are planning an optional dinner for attendees and presenters on Friday evening, June 1, at an additional cost of $50 per person. 

Registration is now open for the Conference and the optional Friday night dinner at our Emory Law website at http://bit.ly/2BpTQVc.

TRAVEL ARRANGEMENTS AND HOTEL ACCOMMODATIONS

Attendees and presenters are responsible for their own travel arrangements and hotel accommodations. Special hotel rates for conference participants are available at the Emory Conference Center Hotel, less than one mile from the conference site at Emory Law. Subject to availability, rates are $149 per night. Free shuttle transportation will be provided between the Emory Conference Center Hotel and Emory Law.

To make a reservation at the special conference rate, call the Emory Conference Center Hotel at 800.933.6679 and mention “The Emory Law Transactional Conference.” Note: The hotel’s special conference rate expires at the end of the day on May 18, 2018.  If you encounter any technical difficulties in submitting your proposal or in registering online, please contact Kelli Pittman, Program Coordinator, at kelli.pittman@emory.edu or 404.727.3382. 

We look forward to seeing you in June!

Sue Payne, Executive Director

Katherine Koops, Assistant Director

Kelli Pittman, Program Coordinator

January 15, 2018 in Call for Papers, Conferences, Joan Heminway, Teaching | Permalink | Comments (0)

Tuesday, January 9, 2018

Back to Reality and (Mostly) Staying the Course on Shareholder Proposals

The new semester is upon us, and AALS (as it tends to) ran right into the new semester.  Joan Heminway provided a nice overview of some of her activities, including her recognition as an outstanding mentor by the Section on Business Associations, and it was a pleasure to see her recognized for her tireless and consistent efforts to make all of us better.  Congratulations, Joan, and thank you! 

I, too, had a busy conference, with most of it condensed to Friday and Saturday. (As a side note, it was pretty great to run along the water in 55-65 degree weather. As much as I love New York and appreciate San Francisco and DC, I'd be quite content with AALS moving between San Diego and New Orleans.)  I spoke on a panel with my co-bloggers, as Joan noted, about shareholder proposals, and I spoke on a panel about the green economy and sustainability, which was also fun.  It's nice when I am able to spend some time with a focus on my two main areas of research. 

As to our panel on shareholder proposals, I thought I'd share a few of my thoughts.  First, as I have explained in the past, I am not anti-activist investor, even though I often think their proposals are wrong headed. I think shareholder (and hedge fund) activist can add value, even when they are wrong, as long as directors continue to exercise their judgment and lead the firm appropriately.   

Second, although I tend to have a bias for staying the course and leaving many laws and regulations alone, I am open to some changes for shareholder proposals. The value of the current system (especially one that has been in place for some time) is that everyone knows the rules, which means there is some level of efficiency for all the players.  

That said, the threshold for shareholder proposals has been in places since the 1950s.  The Financial Choice Act looks to move the proxy threshold from $2,000 and one-year holdings to a 1%/three-year hurdle.  That is a pretty big move. Updating the $2,000 threshold from 1960 would mean raising the threshold to around $16,000, so a move to what can be millions may be too much.  But $16,000 (basically updating for inflation), would make some sense to me, too.  Anyway, just a few simple thoughts to start the year. Hope your classes are starting well.  

January 9, 2018 in Corporations, Financial Markets, Joan Heminway, Joshua P. Fershee, Securities Regulation, Shareholders | Permalink | Comments (2)

Monday, January 8, 2018

AALS 2018 Wrap-Up

AALS2018(SHProposalPanel)

Last week, I had the privilege of attending and participating in the 2018 annual meeting of the Association of American Law Schools (#aals2018).  I saw many of you there.  It was a full four days for me.  The conference concluded on Saturday with the program captured in the photo above--four of us BLPB co-bloggers (Stefan, me, Josh, and Ann) jawing about shareholder proposals--as among ourselves and with our engaged audience members (who provided excellent questions and insights).  Thanks to Stefan for organizing the session and inspiring our work with his article, The Inclusive Capitalism Shareholder Proposal.  I learned a lot in preparing for and participating in this part of the program.

Earlier that day, BLPB co-blogger Anne Tucker and I co-moderated (really, Anne did the lion's share of the work) a discussion group entitled "A New Era for Business Regulation?" on current and future regulatory and de-regulatory initiatives.  In some part, this session stemmed from posts that Anne and I wrote for the BLPB here, here, and here.  I earlier posted a call for participation in this session.  The conversation was wide-ranging and fascinating.  I took notes for two essays I am writing this year.  A photo is included below.  Regrettably, it does not capture everyone.  But you get the idea . . . .

  AALS2018(Regulation)
In between, I had the honor of introducing Tamar Frankel, this year's recipient of the Ruth Bader Ginsburg Lifetime Achievement Award, at the Section for Women in Legal Education luncheon.  Unfortunately, the Boston storm activity conspired to keep Tamar at home.  But she did deliver remarks by video.  A photo (props to Hari Osofsky for getting this shot--I hope she doesn't mind me using it here) of Tamar's video remarks is included below.

Tamar(Video-HariO)

Tamar has been a great mentor to me and so many others.  She plans to continue writing after her retirement at the end of the semester.  I plan to post more on her at a later time.

On Friday, I was recognized by the Section on Business Associations for my mentoring activities.  On Thursday, I had the opportunity to comment (with Jeff Schwartz) on Summer Kim's draft paper on South Korean private equity fund regulation.  And on Wednesday, I started the conference with a discussion group entitled "What is Fraud Anyway?," co-moderated by John Anderson and David Kwok.  My short paper for that discussion group focused on the importance of remembering the requirement of manipulative or deceptive conduct if/as we continue to regulate securities fraud in major part under Section 10(b) of, and Rule 10b-5 under, the Securities Exchange Act of 1934, as amended.

That summary does not, of course, include the sessions at which I was merely in the audience.  Many of the business law sessions were on Friday and Saturday.  They were all quite good.  But I already am likely overstaying my welcome for the day.  Stay tuned here for any BLPB-reated sessions for next year's conference.  And in between, there's Law and Society, National Business Law Scholars, and SEALS, all of which will have robust business law programs.

Good luck in starting the new semester.  Some of you, I know, are already back in the classroom.  I will be Wednesday morning.  I know it will be a busy 14 weeks of teaching!

January 8, 2018 in Ann Lipton, Anne Tucker, Conferences, Corporate Governance, Joan Heminway, Joshua P. Fershee, Securities Regulation, Shareholders, Stefan J. Padfield | Permalink | Comments (0)

Monday, January 1, 2018

Happy New Year!

I am laboring with what I hope is the tail end of the fourth cold I have had since the end of October--two in December alone.  Ugh.  So, I am afraid that my new year's day spirit is somewhat dulled by all the cold medicine.  (I get on a plane for San Diego tomorrow morning, so getting all the head congestion out of the way today is a primary goal!)

Nevertheless, since New Year's Day is commonly associated with resolutions, I thought I would offer one in the spirit of the BLPB.   It's not your typical new year's resolution.  But my co-bloggers and most of our readers will no doubt find it oddly familiar . . . .  Here goes.  (Oh, and happy new year!)

*          *          *

CONSENT OF SOLE NEW YEAR'S DAY BLPB BLOGGER

Monday, January 1, 2018

-------------

WHEREAS, our weblog is blessed by some of the best blog editors known to man (and woman and others); and

WHEREAS, our weblog has garnered over 1,045,000 page views; and

WHERAS, our readers are amazing, patient folks with interesting and diverse ideas, thoughts, and perspectives; and 

WHEREAS, all of the foregoing makes the undersigned very, very happy; now, therefore, it is

RESOLVED, that 2018 be the best year ever for the Business Law Prof Blog and bring health and happiness to bloggers and readers alike.

 

       /s/ Joan MacLeod Heminway         
      Joan MacLeod Heminway
      Sole New Year's Day BLPB Blogger

January 1, 2018 in Joan Heminway | Permalink | Comments (2)

Monday, December 25, 2017

Christmas Cheer for All!?

Christmas2017(MorningBeverage)

Merry Christmas to all celebrating today.  I am enjoying a white Christmas in Pittsburgh, Pennsylvania with my dad and my brother and his husband, joined later today by my son and his fiancée (who had to work the night shift last night--she's a hospital nurse).  For the first time in many, many years--I think since before I was married in 1985--I am separated from my husband this Christmas.  He is back in Tennessee with my daughter, who celebrated her 26th birthday yesterday.  Their work schedules didn't accommodate holiday travel this year.  My daughter, in particular, worked yesterday and will work again tomorrow.  The working world is a different place now during the holidays than it was when I was a child.

As I sit here with a blood orange mimosa on Christmas morning, that observation set me to thinking about blue laws and Christmas.  (Ann and I are thinking along similar lines this week, it seems . . . .)  A lot of folks save their shopping--including shopping for alcohol--until somewhat the last minute.  This year, Christmas is on a Monday, meaning that Christmas Eve--a prime shopping day--was on a Sunday.  I wondered whether any blue laws prevented stores from being open or alcohol from being sold yesterday (or today, for that matter) . . . .

Back in 2006, when Christmas also was on a Monday, National Public Radio's All Things Considered covered this story from a South Carolina perspective.  Tennessee law, TCA § 57-3-406(e) (2016), provides as follows:

No retailer shall sell or give away any alcoholic beverage between eleven o'clock p.m. (11:00 p.m.) on Saturday and eight o'clock a.m. (8:00 a.m.) on Monday of each week. No retail store shall sell, give away or otherwise dispense alcoholic beverages except between the hours of eight o'clock a.m. (8:00 a.m.) and eleven o'clock p.m. (11:00 p.m.) on Monday through Saturday. The store may not be open to the general public except during regular business hours. Likewise, all retail liquor stores shall be closed for business on Thanksgiving Day and Christmas Day.

So, folks in Tennessee could not buy drinking alcohol yesterday from any store but can buy spirits today (absent applicable local ordinances to the contrary) from a retail store that is not a liquor store (if I am reading that correctly).

Massachusetts, my immediate former home state, has many exceptions to its blue laws, including allowing certain retail establishments to be open on Sundays, provided that rank-and-file (non-executive, non-administrative over a certain pay grade) retail employees are paid time-and-a-half if the business employs more than seven people.  See MGL c. 136, § 6(50).  This exception does not apply to any state-defined legal holiday (and to Christmas, when it is on a Sunday), but the exception does apply to the day following Christmas when Christmas occurs on a Sunday.  The exception for alcohol sales is more detailed and includes:

The retail sale of alcoholic beverages not to be drunk on the premises on Sundays by retail establishments licensed under section 15 of chapter 138; provided, however, that notwithstanding this chapter, a municipality may prohibit the retail sale of alcoholic beverages on Sundays by licensees under section 15 by vote of the city council or board of selectmen; provided further, that there shall be no such sales prior to the hour of 10:00 a.m. or on Christmas Day if Christmas occurs on a Sunday; and provided further, that establishments operating under this clause which employ more than 7 persons shall compensate all employees for work performed on a Sunday at a rate of not less than one and one-half of the employee's regular rate. No employee shall be required to work on a Sunday and refusal to work on a Sunday shall not be grounds for discrimination, dismissal, discharge, deduction of hours or any other penalty.

MGL c. 136, § 6(52).  Massachusetts apparently delegates significant control to municipalities on the alcohol issue.  The general Massachusetts blue law proscriptions are contained in MGL c. 136, § 5:

Whoever on Sunday keeps open his shop, warehouse, factory or other place of business, or sells foodstuffs, goods, wares, merchandise or real estate, or does any manner of labor, business or work, except works of necessity and charity, shall be punished by a fine of not less than twenty dollars nor more than one hundred dollars for a first offense, and a fine of not less than fifty dollars nor more than two hundred dollars for each subsequent offense, and each unlawful act or sale shall constitute a separate offense.

Even where retail establishments may be open, states may regulate work on Christmas--and on other holidays, too--designated as legal holidays by the state.  I grew up with a system of federal and state holidays that serve this purpose.  But The Legal Genealogist tells us that Christmas has not been a government-designated holiday from work for very long.  The Tennessee list for 2017 can be found here.  The Massachusetts legal holiday list is here.

Anyway, lest I bore you with my holiday blue law musings, I will close now by wishing you a happy continuing holiday season from here in Pittsburgh. Enjoy time with and memories of family and friends.  From my house to yours, this brings wishes for a lovely holiday week.  Enjoy.

December 25, 2017 in Employment Law, Family, Food and Drink, Joan Heminway, Religion | Permalink | Comments (4)

Wednesday, December 20, 2017

European Academy of Management - Sharing Economy - Call for Participation

Our colleagues and friends at the Burgundy School of Business have informed me about an opportunity to participate in the European Academy of Management (EURAM) conference to be held in Reykjavik, Iceland from June 20-23.  (Note: these dates overlap with the 2018 National Business Law Scholars Conference.)  The Strategic Interest Group on Entrepreneurship (GIS 03) for the EURAM conference has established a sub-track on the "Sharing Economy" at the EURAM 2018 meeting. Djamchid Assadi of the Burgundy School of Business is coordinating this part of the program.

Djamchid is looking for both paper submissions and reviewers for the Sharing Economy sub-track.  Paper submissions are due by January 10 (2:00 pm Belgium time) and applications to serve as a reviewer are due December 31.  (Paper presenters are required to review at least two papers at the conference.)  Information about the conference can be found here.  The reviewer application form is available here.

Please contact Djamchid at Djamchid.Assadi@bsb-education.com if you are interested in submitting a paper.  He can tell you how to designate the paper for GIS 03.  Apparently, in GIS 03, you can declare your interest in the "The Sharing Economy" subtract.  Please feel free to use my name in any communications with Djamchid.

December 20, 2017 in Call for Papers, Conferences, Entrepreneurship, Joan Heminway | Permalink | Comments (0)

Monday, December 18, 2017

Food, Glorious Food: Meal Delivery Kits

HelloFreshBoxClosed

As I earlier noted, I have planned to write on meal delivery kits.  What is a meal delivery kit, you ask?  It is a delivered-to-your-door box of ingredients and recipes for meals.  All of the ingredients (except pantry essentials) needed to produce the meals shown and described in the recipe cards are included in the box.  All the recipient has to do is follow the recipe instructions and produce the meals.  Reviews of meal kits that describe additional features can be found here (July 2017), here (October 2016), here (May 2016), and here (May 2015).

My husband ordered us our first meal kit (from Blue Apron) last year as an anniversary present to me.  The idea (which has worked exceedingly well) was that we would be able to more easily prepare meals together, since I often design meals on the fly and cook based on what I sense is needed.  It's pretty hard to assign tasks consistently and continuously using my natural method of meal preparation.  The meal kits solved this problem neatly.  So, having found success with Blue Apron, we decided to try a few other brands.  Specifically, we also have ordered meal kits from Plated and Hello Fresh.  In a later post, I plan to offer a review of the kits themselves.  For today, I simply want to describe the services and the market.

It's been a healthy market from a financing and financial point of view. Accordingly to a TechCrunch article published back in April, "U.S. meal kit delivery startups have raised more than $650 million in venture capital . . . ."  The same article reported that "[m]eal kit companies sold between $1 billion and $1.5 billion in 2016, according to industry estimates from MarketResearch and others."  Yet, Blue Apron's initial public offering ("IPO") was not as successful as all had hoped.  An August 2017 CNBC report noted that the Blue Apron IPO priced on June 29, 2017 after decreasing the expected offering price range significantly (from $15-$17 per share to $10-$11 per share).

Legal claims brought against and by meal kit delivery firms so far seem to be typical of those in any business, based on published reports.  For example, a BuzzFeed News October 2016 article reported on workplace safety and other worker-related issues at Blue Apron.  A brief search on Westlaw relating to the three services we have used revealed a run-of-the-mill wrongful termination action (Hello Fresh), a case involving defamation and interference with business relations (Blue Apron), and a racial discrimination, harassment, and related retaliatory wrongful termination claim (Plated).  In addition, Blue Apron participated in a successful arbitration in the World Intellectual Property Association over the right to the domain name <blue apron.reviews>.

Notably absent?  Customer actions relating to advertising or the food or recipes included in the meal delivery kits.  It may be that these are just not publicly reported or available.  Or it may be that these types of problems are resolved amiably without the need of judicial or alternative dispute resolution processes.

There are, however, a fair number of Better Business Bureau complaints.  This would seem to come with the territory.  For the record (and what it may be worth), Plated fares best in Better Business Bureau ratings.  Hello Fresh comes in close behind, with Blue Apron coming in a distant third.

Have you tried these meal services?  What are your impressions of the business model and the service?  Are they just a passing fad, or will they survive the test of time?  I am interested in your thoughts. 

December 18, 2017 in Food and Drink, Joan Heminway | Permalink | Comments (0)

Monday, December 11, 2017

Law and Entrepreneurship - Association Call for Papers - Near-Term Deadline!

The twelfth annual meeting of the Law and Entrepreneurship Association (LEA) will occur on February 9, 2018 at the University of Alabama School of Law

The LEA is a group of legal scholars interested in the topic of entrepreneurship—broadly construed. Scholars include those who write about corporate law and finance, securities, intellectual property, labor and employment law, tax, and other fields related to entrepreneurship and innovation policy.

Our annual conference is an intimate gathering where each participant is expected to read and actively engage with all of the pieces under discussion. We call for papers and proposals relating to the general topic of entrepreneurship and the law.

Proposals should be comprehensive enough to allow the LEA board to evaluate the aims and likely content of papers they propose. Papers may be accepted for publication but must not be published prior to the meeting. Works in progress, even those at a relatively early stage, are welcome. Junior scholars and those considering entering the legal academy are especially encouraged to participate.

To submit a presentation, email Professor Mirit Eyal-Cohen at meyalcohen@law.ua.edu with a proposal or paper by December 31, 2017. Please title the email “LEA Submission – {Name}.”

For additional information, please email Professor Mirit Eyal-Cohen at meyalcohen@law.ua.edu.

December 11, 2017 in Conferences, Entrepreneurship, Joan Heminway | Permalink | Comments (0)

Johnny Hallyday - French Rock 'n' Roll, Death, and Taxes . . . .

While I was in France last week touring and attending an academic conference, a French music legend died and was mourned.  Johnny Hallyday, the King of French rock 'n' roll (known widely as the "French Elvis"), died earlier this month at the age of 74 after a battle with lung cancer.  I learned of this in a circuitous way--because one of his songs, Quelque Choses de Tennessee (Something of Tennessee), was playing on the radio in a hotel shuttle van and caught my attention (for obvious reasons, although the song refers to Tennessee Williams, not the state, as it turns out).  Also, I happened to be in Paris the day of his funeral, when many roads (including the Avenue des Champs-Élysées) were blocked off for the related activities.

Curiosity about the song and the singer led me to the Internet.  My Internet searching revealed Hallyday as the singer and described an interesting life.  This guy loved the United States--not only adopting rock 'n' roll, but also writing lyrics about this country based on his U.S. travels.  Perhaps most famous is Mon Amérique à Moi (My America and Me), which includes the following lyrics near and dear to my heart (sung in French, of course):

My America is modest and quiet
She says to me, "Good morning!" with a big smile
Serves hot coffee, vanilla apples
Invites me to spend Christmas in Tennessee
And to go horseback riding in West Virginia . . . .

Cool.  Honestly, I am amazed that I hadn't heard of this guy before.  I am sorry that he left this world before I knew of his music.  But I am glad to have found it.

My research also revealed that Johnny Hallyday had business-related law issues--specifically French wealth tax law issues.  Of course, show business--like other businesses--generates income and, therefore, income taxes.  An article on Hallyday's death in Variety, for example, notes that "he struggled for a long time to reimburse 100 million francs in back taxes."  A CATO Institute article (quoting from a book coauthored by the author of the article) offers a bit more information:

Hallyday created a media sensation when he fled to Switzerland in 2006 to avoid the tax. He has said that he will come back to France if Sarkozy “reforms the wealth tax and inheritance law.” Hallyday stated: “I’m sick of paying, that’s all … I believe that after all the work I have done over nearly 50 years, my family should be able to live in some serenity. But 70 percent of everything I earn goes to taxes.”

Interestingly, in addition to his time in Switzerland, Hallyday resided for many of his last years in Los Angeles for tax reasons.

So, here's to Johnny Hallyday, a fan of U.S. culture who brought that culture to the French populace.  May he rest in peace, free of illness, pain, and French wealth taxes.  And may his music be a lasting memory and legacy.  Check it out, if you are unfamiliar with it.  It has some Elvis, some Johnny Cash, and something else in it.

December 11, 2017 in Current Affairs, Joan Heminway, Music | Permalink | Comments (0)

Tuesday, December 5, 2017

Waterhouse Wilson in DePaul Law Review: Cooperatives: The First Social Enterprise

The DePaul Law Review recently posted the article, Cooperatives: The First Social Enterprise, written by my friend and colleague Elaine Waterhouse Wilson (West Virginia Univ. College of Law). I recommend checking it out. Here is an overview: 

As the cooperative and social enterprise movements merge, it is necessary to examine the legal and tax structures governing the entities to see if they help or hinder growth. If the ultimate decision is to support the growth of cooperatives as social enterprise, then those legal and tax structures that might impede this progress need to be re-examined.

This Article considers some of the issues that may impede the charitable sector in supporting the growth of the cooperative business model as a potential solution to issues of income inequality. To do so, the Article first defines a “cooperative.” Part II examines the definition of a cooperative from three different viewpoints: cooperative as social movement, cooperative as economic arrangement, and cooperative as legal construct. From these definitions, it is possible to identify those elements inherent in the cooperative model that might qualify as a tax-exempt purpose under the Internal Revenue Code (the Code) §501(c)(3). Part III reviews the definition of “charitable” for § 501(c)(3) purposes, specifically in the context of economic development and the support of workers. This Part demonstrates that many of the values inherent in the cooperative model are, in fact, charitable as that term is understood for federal tax purposes.

If a cooperative has charitable elements, however, then it should be possible for the charitable sector to support the cooperative move- ment. Part IV analyzes the possibilities and limitations of direct support by the charitable sector, including mission-related investing by charities and program-related investing by private foundations. In this regard, the cooperative can be viewed in many respects as an ex- isting analog to the new social enterprise forms, such as the benefit corporation or the L3C. Finally, Part V provides recommendations for changing both federal and state law to further support the cooperatibe movement in the charitable sector.

 

December 5, 2017 in CSR, Family Business, Joan Heminway, Joshua P. Fershee, LLCs | Permalink | Comments (1)

Monday, November 27, 2017

Immigrants Need Legal Representation, But . . . .

Friend-of-the-BLPB Ben Edwards penned a nifty op ed that was published yesterday (Sunday, November 26) in The Wall Street Journal.  (Sorry.  It's behind a firewall, available only to subscribers.)  It covers a subject near and dear to my heart and does so in a novel way.  Specifically, in the WSJ piece (entitled "Immigrants Need Better Protection—From Their Lawyers") Ben deftly describes the extremely low quality representation that immigrants receive in the United States, notes the market's inability to self-correct to remedy the situation, shares his view that "the best solution--a right to immigration counsel similar to the right to a criminal defense lawyer--" is unlikely to attract and sustain the necessary legislative support, and proposes a novel second-best solution to the problem.

In a forthcoming article in the Washington and Lee Law Review, I argue that requiring disclosure of immigration lawyers’ track records could improve the market for representation. It almost certainly would drive some of the worst out of business. Who wouldn’t shop around after discovering a lawyer ranked in the bottom 10% by client outcomes? Although no lawyer should be expected to win them all, immigrants should get nervous if their lawyer always loses.

Ben uses the concept of a prospectus as his template reference point for the disclosure concept he describes in the article--unsurprising, perhaps, given his professional practice experience as a business litigator and the fact that his academic endeavors leverage that practice experience.  The title of the article is: The Professional Prospectus: A Call for Effective Professional Disclosure.  

I became aware of the many problems that immigrants have in securing adequate legal representation back in 1990.  Susan Akram (now Director of the International Human Rights Clinic at the Boston University School of Law, but then the Executive Director of the Political Asylum/Immigration Representation (PAIR) Project in Boston) came to the Skadden, Arps office in Boston, where I then was an Associate, and informed us about the particular difficulties in securing representation for asylees, whose chances of success in proving and prevailing in their asylum applications was almost nil without representation and relatively high with pro bono representation.  I left the room knowing I needed to help.  

The situation then described continues to exist today.  Ben notes in the WSJ op ed that

the best immigration lawyers may struggle to make a living because their corner-cutting competitors depress the price of services. That’s part of why many talented practitioners choose to abandon immigration law. This has led to a shortage of representation. One 2015 study found that only 37% of people in removal proceedings have lawyers.

He also relates that "[p]ro bono lawyers—who handle less than 10% of cases—win about 90% of the asylum claims they file."

Over the years, working with the PAIR Project, I was proud to represent or assist in representing refugees from Somalia, Zaire (now the Democratic Republic of the Congo), Haiti, Burma (now Myanmar), and Ethiopia.  My Somali client married a U.S. citizen, became a permanent legal resident, and later became a U.S. citizen.  The daughter of the Zairean couple I worked with--who was separated from her parents in the journey to the U.S. but eventually reunited with them here with my assistance (and Senator Ted Kennedy's help) is a nurse.  There are other stories, of course, as well.  Although I have lost track of many of the clients and their families over time, the pride in helping them has not diminished.

Ben's professional prospectus idea has merit in the immigration lawyering context.  In my view, it is unlikely, alone, to completely solve the problem, and it may have trouble getting traction in the communities that would be responsible for its promotion and implementation.  But it is a step in the right direction in ensuring that immigrants get meaningful representation in navigating our complex legal waters, which currently are populated by too many sharks.

November 27, 2017 in Human Rights, Joan Heminway, Lawyering | Permalink | Comments (6)

Monday, November 20, 2017

Resales of Crowdfunded Equity: A Market to Watch

The Oklahoma Law Review recently published an article I wrote for a symposium the law review sponsored last year at The University of Oklahoma College of Law.  The symposium, “Confronting New Market Realities: Implications for Stockholder Rights to Vote, Sell, and Sue,” featured a variety of presentations from some really exciting teacher-scholars, some of which resulted in formal published pieces.  The index for the related volume of the Oklahoma Law Review can be found here.  I commend these articles to you.

The abstract for my article, "Selling Crowdfunded Equity: A New Frontier," follows.

This article briefly offers information and observations about federal securities law transfer restrictions imposed on holders of equity securities purchased in offerings that are exempt from federal registration under the CROWDFUND Act, Title III of the JOBS Act. The article first generally describes crowdfunding and the federal securities regulation regime governing offerings conducted through equity crowdfunding — most typically, the offer and sale of shares of common or preferred stock in a corporation over the Internet — in a transaction exempt from federal registration under the CROWDFUND Act and the related rules adopted by the U.S. Securities and Exchange Commission. This regime includes restrictions on transferring securities acquired through equity crowdfunding. The article then offers selected comments on both (1) ways in which the transfer restrictions imposed on stock acquired in equity crowdfunding transactions may affect or relate to shareholder financial and governance rights and (2) the regulatory and transactional environments in which those shareholder rights exist and may be important.

Ultimately, the long-term potential for suitable resale markets for crowdfunded equity — whether under the CROWDFUND Act or otherwise — is likely to be important to the generation of capital for small business firms (and especially start-ups and early-stage ventures). In that context, three important areas of reference will be shareholder exit rights, public offering regulation, and responsiveness to the uncertainty, information asymmetry, and agency costs inherent in this important capital-raising context. Only after a period of experience with resales under the CROWDFUND Act will we be able to judge whether the resale restrictions under that legislation are appropriate and optimally crafted.

Those familiar with the literature in the area will note from the abstract that I employ Ron Gilson's model from "Engineering a Venture Capital Market: Lessons from the American Experience" (55 Stan. L. Rev. 1067 (2003)) in my analysis.

I know others are also working in and around this space.  I welcome their comments on the essay and related issues here and in other forums.  I also know that we all will "learn as we go" as the still-new CROWDFUND Act experiment continues.  Securities sold in the early days of effectiveness of the CROWDFUND Act (which became effective May 16, 2016) are just now broadly eligible for resale.  Stay tuned for those lessons learned from the school of "real life."

November 20, 2017 in Conferences, Corporate Finance, Joan Heminway, Securities Regulation, Web/Tech | Permalink | Comments (0)

Saturday, November 18, 2017

How 'Bout Them Lady Vols?

Quietly, just over two months ago, we got our Lady Vols back.  As you may recall, back in 2014, The University of Tennessee, Knoxville decided to consolidate its athletic branding behind the ubiquitous orange "Power T." The women's basketball team was exempted from the brand consolidation and retained the Lady Vol name and old-school logo in honor of our beloved departed coach, Pat Head Summitt. (See here.)

Many can be credited with the revival of the Lady Vols brand (and I do consider it to be an accomplishment), although perhaps these five heroic women are owed the largest debt of gratitude for the achievement.  I guess my earlier envisioned dreams of profiting from the abandonment of the trademarked Lady Vols logo will not soon be realized . . . .

There are lingering lessons in this affair for businesses and their management--and universities (as well as their athletic departments) are, among other things, businesses.  Knoxville's former Mayor weighed in with comments on the matter in a recent local news column, advising "you need to be sensitive to what the customer likes." He concludes (bracketed text added by me):

People will speculate for a long time on how UT let itself get caught up in this unfortunate situation for three years. It did not have to happen. It can be a valuable lesson, if once leaders realize a mistake has been made, postponing a resolution does not improve it. Better to make amends and move on.

Hopefully, DiPietro [the university's President] has learned from this that it is better to get ahead of a volatile issue than to be consumed by it. Currie [the university's new Director of Athletics] and Davenport [the campus's new Chancellor] solved it for him. They have won considerable good will for themselves and the university.

From Coca-Cola and its disastrous New Coke introduction (mentioned in the article) to Google Glass (which may have better applications, for the moment, than the general consumer market), businesses and their management have learned these lessons over and over.  Listen to the customer, and if you make a miscalculation, admit it and move on.

As law schools and law instructors continue to innovate to serve students, our universities (for those who are part of one), and the profession (among other constituencies), we may be able to learn a lesson or two from some of the broader experimentation in the business world in the introduction of new products and services.  Change for the sake of change or for the sake of branding simplicity, without an understanding of the relevant constituents, certainly is a risky proposition.  I hope that we can be thoughtful and consider all affected interests as we innovate.  And I also hope that when we fail in our change efforts (and some of us will fail) we can cut our losses and re-appraoch change with new knowledge and renewed energy to succeed. 

Getting back to those Lady Vols, our women's basketball team is now 2-0 with convincing wins over ETSU and James Madison.  The next game is Monday against Wichita State, followed by a Thanksgiving evening match against Marquette.  Go Lady Vols!

November 18, 2017 in Intellectual Property, Joan Heminway, Law School, Management, Sports | Permalink | Comments (3)

Monday, November 6, 2017

2017 American Bar Association LLC Institute

I had the privilege of being invited again this year to present at the 2017 LLC Institute, an annual program produced by the LLC, Partnership and Unincorporated Entities Committee of the American Bar Association's Business Law Section.  As part of a panel discussion on LLC fiduciary duties (with friend-of-the-BLPB Mohsen Manesh and others), I sang a few bars of Rocky Top (!) and talked about the fiduciary duty waiver issue that we faced in Tennessee in revamping our limited partnership law this past year.  But that was far from the highlight of the program!  

Luckily, friend-of-the-BLPB Tom Rutledge--a leader in (and former chair of) the LLC, Partnership and Unincorporated Entities Committee--has captured the essence of the two-day event in blog posts here and here.  He notes in sum:

Over the last two days we have . . . , by means exceptional panels, considered and informed the participants on the broadest range of issues materially important to our shared area of interest and practice.  That is the mission of the LLC Institute, and hopefully it has again delivered on its objective.  The materials are posted and available for anyone, and in a few weeks the audio recordings will as well be posted.  While we recommend them to you, if you did not attend you missed out on the opportunity to ask questions as the programs were in progress and perhaps even more importantly the opportunity to meet new and liaison with old friends.  Those relationships are one of the great values of our Committee, the means by which we lean on and assist one another. 

This is so true.  The relationships--built through banter between and among panelists and audience members before, during, between, and after the sessions are what make this event special.  Of course, the subject matter also is phenomenally interesting.  

Co-blogger Josh Fershee also presented at the Institute this year.  Other BLPB readers and friends who attended (some of whom also presented) included:

  • Suffolk Law's Carter Bishop (who moderated and led our panel);
  • Colorado's infamous consummate practitioners and thought-leaders Bill Callison (who gave an amazing luncheon talk on Thursday regarding his work in establishing a model entity law statute for use in developing countries*) and Bob Keatinge;
  • Glommer and BYU Law Associate Dean Christine Hurt; and
  • Baylor Law's Beth Miller (a/k/a the walking, talking guru of Texas business associations law and Queen of LLC caselaw--who, it was announced, will soon have a Committee content award named after her).

I am sure that I am missing someone . . . .  Needless to say, a good time was had by all.  And let me know if you'd like to be part of the program next year.  I know that the folks who organize the event like to have new presenters come every year, to keep the banter going.  I am happy to pass your name along.

_____

*Specifically, as noted in his firm biography: "He is the American Bar Association's delegate to the United Nations Commission on International Trade Law Working Group I (Micro, Small and Medium Enterprises), which is focusing on law reforms enabling adoption of simplified business entity structures by micro-, small- and medium-sized businesses in developing countries. He serves on the UNCITRAL Secretariat's expert group in this process."

November 6, 2017 in Conferences, Joan Heminway, LLCs | Permalink | Comments (2)

Tuesday, October 31, 2017

Ave Maria Law - Business Law Faculty Opening

AveMariaLaw

Ave Maria School of Law seeks applicants for a tenure-track position to begin in the 2018-2019 academic year. The school's greatest curricular needs are business law subjects such as Contracts, Business Organizations, and Uniform Commercial Code courses. Applicants must have a Juris Doctorate or equivalent degree and a strong academic record. Duties will include teaching, scholarship, and service to the law school.

Ave Maria offers students a distinctive legal education marked by the integration of the Catholic faith and the law. Students are trained to reflect critically on the law and to understand that all areas of legal practice serve the common good. The law school emphasizes the importance of faith and community among its faculty, staff, and students, and seeks applicants attracted by, and supportive of, its mission. 

 Ave Maria has an increasingly diverse student body and desires to provide students with faculty role models and mentors of shared background and experience. As such, we particularly encourage applications from women and members of underrepresented groups within the profession.

Ave Maria is located in Naples, Florida along the coast of the Gulf of Mexico. Naples has been recognized for its healthy lifestyle and excellent quality of life, and is known for its cultural activities and institutions as well as for its many and varied natural attractions.

 Applicants should send a cover letter and resume to Professor Mollie Murphy, Chair, Faculty Appointments Committee, at mmurphy@avemarialaw.edu, and to Melissa Gamba, Chief Human Resources Officer at mgamba@avemarialaw.edu.

October 31, 2017 in Joan Heminway, Jobs | Permalink | Comments (0)

Monday, October 30, 2017

Leidos - Trick, Not Treat?

The title of this post is hyperbole on some level.  But with Halloween being tomorrow, I couldn't resist the temptation to use a festive greeting to introduce today's post.  And there is a bit of a method to my titling madness . . . .

I admit that I do feel a bit tricked by the removal of the Leidos, Inc. v. Indiana Public Retirement System case (about which co-blogger Ann Lipton and I each have written--Ann most recently here and I most recently here) from the U.S. Supreme Court's calendar.  It was original scheduled to be heard a week from today.  Apparently, based on the related filings with the Court, the parties are documenting a settlement of the case.  Kevin LaCroix offers a nice summary here.  How cunning and skillful!  Just when I thought resolution of important duty-to-disclose issues in Section 10(b)/Rule 10b-5 litigation was at hand . . . .

Indeed, I had hoped for a treat.  What pleasure it would have given me to see this matter resolved consistent with my understanding of the law!  The issue before the Court in Leidos is somewhat personal for me (in a professional sense) for a simple reason--a reason consistent with the amicus brief I co-authored on the case.  I share that reason briefly here to further illuminate my interest in the case.

In my 15 years of practice before law teaching, I often advised public company issuers on mandatory disclosure documents--periodic filings and offering documents, most commonly.  I also counseled investment banks serving as public offering underwriters, placement agents for private securities offerings, and financial advisors in transactions.  Even in those days, I was a bit of a rule-head (self-labeled)--a technically engaged legal advisor who tried to stick to the law and regulations, determine their meaning, and implement them consistent with their meaning in practice.  I drove colleagues to distraction and boredom, on occasion, with my explanations of the appropriate interpretation of various rules, including specifically mandatory disclosure rules.  (This may be why I love the work of the Sustainability Accounting Standards Board, which is looking at mandatory disclosure rules in context.)  I teach my students from that same nerdy vantage point.

In advising issuers and others on mandatory disclosure (and in training junior lawyers in the firm), I always noted that facial compliance with the specific line-item disclosure requirements for a Securities and Exchange Commission ("SEC") form is not enough.  I advised that two additional legal constraints also govern the appropriate content of the public disclosures required to be made in those forms--constraints that required them to inquire about (among other things) missing information.  

  • First, I noted the existence of the general misstatements and omissions disclosure (gap-filler) rules under the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended (as applicable in the circumstances)--Rule 408 under the 1933 Act and Rule 12b-20 under the 1934 Act.  Each of these rules provides for the disclosure of "such further material information, if any, as may be necessary to make the required statements, in the light of the circumstances under which they are made not misleading" in addition to the information expressly required to be included in the relevant disclosure document under applicable line-item disclosure rules.  
  • Second, I noted that anti-fraud law--and, in particular, Section 10(b) of, and Rule 10b-5 under, the 1934 Act--provides an even more comprehensive basis for interrogating the contents of disclosure that facially complies with line-item mandatory disclosure rules.  The overall message?  No one wants a fraud suit, and if they get one, they should be able to get out of it fast!  If a business and its principals were to be sued under Section 10(b) and Rule 10b-5, I wanted to ensure that the relevant disclosures were accurate and complete in all material respects.

Thus, the existence of the line-item and gap-filling disclosure rules--and the potential for fraud liability based on failed compliance with them--are, taken together, important motivators to the best possible disclosure.  In my business lawyering, I believe I used these regulatory principles to my clients' advantage.  I would hate to see lawyers lose the important leverage that potential fraud liability gives them in fostering accurate and complete disclosures, fully compliant with law.  Hence, my position on the Leidos litigation--that mandatory disclosure rules do give rise to a duty to disclose that may form the basis for a securities fraud claim under Section 10(b) and Rule 10b-5.  (The ultimate success of any such claim would be, of course, based on the satisfaction of the other elements of a Section 10(b)/Rule 10b-5 claim.)

So, no treat for me--at least not just yet.  But perhaps this post will forestall any real trickery--the trickery involved with avoiding securities fraud liability for misleading omissions to state material information expressly required to be stated under line-item mandatory disclosure rules.  For me, that is what is at stake in Leidos and in disclosure lawyering generally.  Let's see what transpires from here.

October 30, 2017 in Ann Lipton, Joan Heminway, Lawyering, Securities Regulation | Permalink | Comments (0)

Monday, October 23, 2017

Notre Dame Law Seeks Director for New Palo Alto Innovation Clinic

NotreDamerLawLogo
 
 
University of Notre Dame: The Law School
Director, California Innovation Intensive

Location: Palo Alto, California


Notre Dame Law School invites applications to serve as the inaugural full-time Director of the Law School’s new California Innovation Clinic.  The Clinic will provide transactional services and related advice to individuals or entities in the Bay Area seeking to start or expand their own ventures.  The Clinic will operate out of the Notre Dame California center in Palo Alto, California.

The Clinic will provide students, under the supervision of the Clinic Director, opportunities to serve the transactional needs of early-stage startup ventures. The services offered by the Clinic will depend in significant part on the background and skills of the Clinic Director, but we anticipate that the Clinic will assist clients with some or all of the following: entity formation, founder agreements, non-disclosure agreements, ownership agreements, licensing and/or freedom to operate agreements, and privacy and data security policies. Specific client matters will be determined by the Clinic Director, although decisions about the overall direction of the Clinic’s work will be made in consultation with the Dean and other law school faculty members.

The Director will be a full-time staff attorney or non-tenure track faculty member, with responsibility for all aspects of the Innovation Clinic, including client development, client representation, law student supervision, and classroom instruction. The Innovation Clinic will be one of six clinics at the Law School.

Responsibilities of the Director will include

  • Developing a consistent and appropriate base of clients for the clinic;
  • Designing and implementing the Clinic infrastructure including a curriculum, a case management system, and relationships with partner organizations;
  • Providing transactional services to Clinic clients;
  • Supervising up to 8-10 law students per semester, and approximately
    1-2 law students each summer, in direct client representation;
  • Providing law students with instruction in substantive and procedural law necessary to effectively represent Clinic clients;
  • Providing law students with training in core lawyering skills necessary to carry out client representation, including interviewing and counseling, fact investigation, negotiation, drafting corporate  agreements, and oral advocacy;
  • Developing and teaching a companion course covering the range of legal issues that arise at different stages of a startup venture’s development;
  • Collaborating with clinical and other faculty at the Law School;
  • Collaborating with leaders of other entrepreneurship-related activities within the broader University, including the IDEA Center;
  • Attending conferences and interacting with faculty at other institutions; and
  • Assisting in the development of additional financial resources for the Clinic.
QUALIFICATIONS

The ideal candidate will have the following qualifications:

  • A Juris Doctor degree from an ABA-accredited law school and at least 8-10 years of practice experience relevant to the representation of startup ventures in transactional matters;
  • Excellent supervisory and communication skills;
  • A commitment to instructing and supervising law students;
  • Ability to work in a self-directed and entrepreneurial environment;
  • An academic record that demonstrates the capacity to be an active participant in the Law School’s academic community and in the national clinical-education community; and
  • A license to practice law in the State of California.

Term and Compensation: The position is full-time with a salary commensurate with experience, plus benefits, which include medical, dental, and retirement.  The initial contract will be for a two-year term beginning July 1, 2018, or as soon as possible.  

APPLICATION INSTRUCTIONS

Application Process and DeadlineApplicants should submit a cover letter and a Curriculum Vitae.

The Search Committee will begin reviewing applications immediately.  The position will remain open until filled. 

For more information contact Professor Mark McKenna at 574-631-9258 or markmckenna@nd.edu.

October 23, 2017 in Clinical Education, Entrepreneurship, Joan Heminway, Jobs, Teaching | Permalink | Comments (0)

Monday, October 16, 2017

Blockchain-Based Token Sales, Initial Coin Offerings, and the Democratization of Public Capital Markets. Oh, My!

My UT Law colleague Jonathan Rohr has coauthored (with Aaron Wright) an important piece of scholarship on an of-the-moment topic--financial instrument offerings using distributed ledger technology.  Even more fun?  He and his co-author are interested in aspects of this topic at its intersection with the regulation of securities offerings.  Totally cool.

Here is the extended abstract.  I cannot wait to dig into this one.  Can you?  As of the time I authored this post, the article already had almost 700 downloads . . . .  Join the crowd!

+++++

Blockchain-Based Token Sales, Initial Coin Offerings, and the Democratization of Public Capital Markets

Jonathan Rohr & Aaron Wright

Best known for their role in the creation of cryptocurrencies like bitcoin, blockchains are revolutionizing the way tech entrepreneurs are financing their business enterprises. In 2017 alone, over $2.2 billion has been raised through the sale of blockchain-based digital tokens in what some are calling initial coin offerings or “ICOs,” with some sales lasting mere seconds. In a token sale, organizers of a project sell digital tokens to members of the public to finance the development of future technology. An active secondary market for tokens has emerged, with tokens being bought and sold on cryptocurrency exchanges scattered across the globe, with often wild price fluctuations.

The recent explosion of token sales could mark the beginning of a broader shift in public capital markets—one similar to the shift in media distribution that started several decades ago. Blockchains drastically reduce the cost of exchanging value and enable anyone to transmit digitized assets around the globe in a highly trusted manner, stoking dreams of truly global capital markets that leverage the power of a blockchain and the Internet to facilitate capital formation.

The spectacular growth of tokens sales has caused some to argue that these sales simply serve as new tools for hucksters and unscrupulous charlatans to fleece consumers, raising the attention of regulators across the globe. A more careful analysis, however, reveals that blockchain-based tokens represent a wide variety of assets that take a variety of forms. Some are obvious investment vehicles and entitle their holders to economic rights like a share of any profits generated by the project. Others carry with them the right to use and govern the technology that is being developed with funds generated by the token sale and may represent the beginning of a new way to build and fund powerful technological platforms.

Lacking homogeneity, the status of tokens under U.S. securities laws is anything but clear. The test under which security status is assessed—the Howey test—has uncertain application to blockchain-based tokens, particularly those that entitle the holder to use a particular technological service, because they also present the possibility of making a profit by selling the token on a secondary market. Although the SEC recently issued a Report of Investigation in which it found that one type of token qualified as a security, confusion surrounds the boundaries between the types of tokens that will be deemed securities and those that will not.

Blockchain-based tokens exhibit disparate features and have characteristics that make current registration exemptions a poor fit for token sales. In addition to including requirements that do not fit squarely with blockchain-based systems, the transfer restrictions that apply to the most popular exemptions would have the perverse effect of restricting the ability of U.S. consumers to access a new generation of digital technology. The result is an uncertain regulatory environment in which token sellers do not have a sensible path to compliance.

In this Article, we argue that the SEC and Congress should provide token sellers and the exchanges that facilitate token sales with additional certainty. Specifically, we propose that the SEC provide guidance on how it will apply the Howey test to digital tokens, particularly those that mix aspects of consumption and use with the potential for a profit. We also propose that lawmakers adopt both a compliance-driven safe harbor for online exchanges that list tokens with a reasonable belief that the public sale of such tokens is not a violation of Section 5 as well as an exemption to the Section 5 registration requirement that has been tailored to digital tokens.

October 16, 2017 in Corporate Finance, Current Affairs, Entrepreneurship, Joan Heminway, Research/Scholarhip, Securities Regulation, Web/Tech | Permalink | Comments (0)

Monday, October 9, 2017

Call for Papers: 2018 National Business Law Scholars Conference

National Business Law Scholars Conference
Thursday & Friday, June 21-22, 2018

Call for Papers

The National Business Law Scholars Conference (NBLSC) will be held on Thursday and Friday, June 21-22, 2018, at the University of Georgia School of Law in Athens, Georgia.  A vibrant college town, Athens is readily accessible from the Atlanta airport by vans that depart hourly. Information about transportation, hotels, and other conference-related matters can be found on the conference website.

This is the ninth meeting of the NBLSC, an annual conference that draws legal scholars from across the United States and around the world.  We welcome all scholarly submissions relating to business law. Junior scholars and those considering entering the legal academy are especially encouraged to participate. If you are thinking about entering the academy and would like to receive informal mentoring and learn more about job market dynamics, please let us know when you make your submission.

To submit a presentation, email Professor Eric C. Chaffee at eric.chaffee@utoledo.edu with an abstract or paper by February 16, 2018.  Please title the email “NBLSC Submission – {Your Name}.”  If you would like to attend, but not present, email Professor Chaffee with an email entitled “NBLSC Attendance.”  Please specify in your email whether you are willing to serve as a panel moderator.  We will respond to submissions with notifications of acceptance shortly after the submission deadline. We anticipate circulating the conference schedule in May.

Keynote Speakers:

Paul G. Mahoney
David and Mary Harrison Distinguished Professor of Law
University of Virginia School of Law

Cindy A. Schipani
Merwin H. Waterman Collegiate Professor of Business Administration
Professor of Business Law
University of Michigan Ross School of Business

Featured Panels:

The Criminal Side of Business in 2018

Miriam Baer, Professor of Law, Brooklyn Law School
José A. Cabranes, U.S. Circuit Judge, U.S. Court of Appeals for the Second Circuit
Peter J. Henning, Professor of Law, Wayne State University School of Law
Kate Stith, Lafayette S. Foster Professor of Law, Yale Law School
Larry D. Thompson, John A. Sibley Professor in Corporate and Business Law, University of Georgia School of Law

A Wild Decade in Finance: 2008-18

William W. Bratton, Nicholas F. Gallicchio Professor of Law, University of Pennsylvania Law School
Giles T. Cohen, Attorney, Securities & Exchange Commission
Lisa M. Fairfax, Leroy Sorenson Merrifield Research Professor of Law, George Washington University Law School
James Park, Professor of Law, UCLA School of Law
Roberta Romano, Sterling Professor of Law, Yale Law School
Veronica Root, Associate Professor of Law, Notre Dame Law School

Conference Organizers:

Anthony J. Casey (The University of Chicago Law School)
Eric C. Chaffee (The University of Toledo College of Law)
Steven Davidoff Solomon (University of California, Berkeley School of Law)
Joan MacLeod Heminway (The University of Tennessee College of Law)
Kristin N. Johnson (Seton Hall University School of Law)
Elizabeth Pollman (Loyola Law School, Los Angeles)
Margaret V. Sachs (University of Georgia School of Law)
Jeff Schwartz (University of Utah S.J. Quinney College of Law)

October 9, 2017 in Call for Papers, Conferences, Joan Heminway | Permalink | Comments (0)