Monday, January 19, 2015
Today, unlike most Mondays during the school year, I will not be in the classroom. The University of Tennessee is closed in celebration of the life of Martin Luther King, Jr., our nation's iconic non-violent civil rights leader. Today also is the day that my daughter is in transit back to her college in New York for her last semester as an undergraduate. It seemed only fitting, honoring both occasions, to go out on Friday night with my daughter and my husband to see the movie Selma.
Despite its historical inaccuracies (which have been played out in the public media, e.g., here), the movie is a successful one. Among other things, it spoke to me of the amazing amount that one man can accomplish in a mere 39 years with focus, action, and perseverance. I admittedly felt a bit lazy and ineffectual by comparison.
Selma also reminded me, however, of the near daily opportunities that King had to speak out on matters of public importance. I wondered if there was anything in his teachings that would speak directly to me today. Specifically, I wondered if I could find something he'd said that helped to guide me as a business law professor in the current business law or legal education environment.
Of course, King spoke out against Jim Crow laws, which provided for legal segregation of the races in both businesses and education. But I was looking for something a bit more personal. Then, I found this quotation: "The function of education . . . is to teach one to think intensively and to think critically. . . . Intelligence plus character--that is the goal of true education."
Monday, January 12, 2015
I recently was afforded the opportunity to draft a short article for the William & Mary Journal of Women and the Law that combines my research on crowd theory (from the crowdfunding space) and my research on women and corporate governance. The opportunity arose out of a celebration of the 20th anniversary of the journal, for which I had been a published author in the past. (The journal published my article on women as investors in the context of securities fraud, Female Investors and Securities Fraud: Is the Reasonable Investor a Woman?, back in 2009.)
I just posted the recently released final version of the 20th anniversary article, entitled Women in the Crowd of Corporate Directors: Following, Walking Alone, and Meaningfully Contributing, to the Social Sciences Research Network. My application of crowd theory to the gender composition of corporate boards of directors in this article does not provide significant new insights on the decision making of female corporate directors. However, it does result in the observation that women on corporate boards may foster the establishment of new board structures and policies that have the potential to favorably impact board decision making. The bottom line? More--and more novel--research still is needed on the presence and contribution of women on corporate boards of directors.
My article represents a brief exploration, but I may well continue my work in this general area. Accordingly, I would be interested in knowing about others doing similar or related research. Let me know in the comments or by email message if you would like to alert me to your relevant research and writing.
Friday, January 9, 2015
A few weeks ago, I described to you a really special extracurricular project undertaken by one of my students, Brandon Whiteley, now an alum, this past year. The project? Proposing and securing legislative passage of Invest Tennessee, a Tennessee state securities law exemption for intrastate offerings that incorporates key features of crowdfunding. The legislation became effective on January 1.
In that first post, I described the project and Brandon's observations on the legislative process. This post highlights his description of the influences on the bill that became law. Here they are, with a few slight edits (and hyperlink inserts) from me.
Monday, January 5, 2015
I just left the Association of American Law Schools annual meeting this morning. I came back to a flat tire at the airport, but let's not dwell on that . . . . The conference was a good one, as these zoo-like mega conferences go.
I presented at the conference as part of a panel that focused on teaching courses and topics at the intersection of animals and the law. (Thanks for the plug, Stefan!) Yes, although it is a little known fact, I do teach courses involving animals and the law. Regrettably, it is a somewhat rare thing for me, since I always have to teach these courses as an overload. However, I also am the faculty advisor to our campus chapter of the Student Animal Legal Defense Fund and UT Pro Bono's Animal Law Project (which compiled and annually updates a Tennessee statutory resource used by animal control and other law enforcement officers, as well as other animal-focused professionals, in the State of Tennessee). In addition, I coach our National Animal Law Competitions team. These non-classroom activities give me ample time to teach in different ways . . . .
I will not rehash all of my remarks from the panel presentation here. In fact, I want to make a very limited point in this post. While my calling to legal issues involving non-human animals is rooted in large part in being the "animal mom" of a rescue dog and rescue cat, I also participate in educational efforts in this area because I see it as my professional responsibility as a lawyer--and in particular, as a business lawyer.
Friday, January 2, 2015
To the extent you will be attending the Association of American Law Schools Annual Meeting in DC, here are a couple of panel recommendations that come with the added benefit of meeting a BLPB blogger in person:
1. Keeping it Current: Animal Law Examples Across the Curriculum (01/03/2015, 5:15-6:30 pm)
Moderator: Katherine M. Hessler, Lewis and Clark
Speaker: Susan J. Hankin, Maryland
Speaker: Joan M. Heminway, Tennessee
Speaker: Courtney G. Lee, McGeorge
Speaker: Kristen A. Stilt, Harvard
2. The Role of Corporate Personality Theory in Regulating Corporations (1/5/2015, 2:00-3:00 pm)
Moderator: Stefan Padfield, Akron
Speaker: Margaret Blair, Vanderbilt
Speaker: Elizabeth Pollman, Loyola
Speaker: Lisa Fairfax, George Washington
Speaker: David Yosifon, Santa Clara
PS--For more information on the day-long program of the AALS Section on Socio-Economics on Monday, Jan. 5, as well as the day-long Annual Meeting of the Society of Socio-Economists on Tuesday, Jan. 6, go here.
Monday, December 29, 2014
Grades are in--a few hours late, but in nevertheless. It must be almost time for New Year's Eve, syllabus and first-assignment posting, the AALS conferenece, the first day of classes, . . . and more job searching for our students!
I was reminded in an email from a student this morning that the hunt for summer and permanent law jobs is revving back up again after the holiday doldrums. The student, a 1L mentee seeking summer employment, was asking a few questions about my cover letter post, to which I eaerlier had referred him. I expect to start getting more of these communications from students about their job searches over the next few weeks.
Our brother bloggers over at the Law Skills Prof Blog have already struck while the iron is hot on this issue. Specifically, Lou Sirico posted a quip on dressing for job interviews the other day. The quoted advice? "The interviewer should remember what you said and not what you were wearing."
Hmm. Yeah. I guess so. Well, maybe not.
Certainly, that's the advice I was given by NYU Law's fabulous placement folks in "the day." Then, that meant wearing: a black, navy or midnight blue, or gray skirt suit; a neutral (white, ivory, gray, black) collared shirt or jewel-neck blouse; skin-tone hose; dark, solid-colored, medium-heeled pumps or really lovely flats; and either Barbara Bush pearls (the double strand) or a silk floppy bow tie (like an Hermes twilly, only not as fashion-forward). Bo-ring.
I am proud (but call me lucky) to have gotten my job wearing (to the initial interview) a deep pink--almost fuchsia--silk-blend skirt suit (midi-length skirt, hip-length jacket), with a white collared blouse, neutral hose, black flats, and a patterned (pink, blue, etc.) floppy silk bow tie. (This is where the folks in the UT Law Career Center lose faith that they are sending students to the right place when they refer them to me for career advice!) I was confident and radiant in that suit (although I am not sure I realized that fully at the time), and I am convinced that made a big difference in the reception that I got from people when I wore it. However, it's true that I was interviewed by a woman (a female senior associate in a multicolored silk dress with straight blond hair down to her derrière) and I was seeking employment at an entrepreneurial, individualistic firm--Skadden.
Monday, December 22, 2014
Effective as of January 1. 2015, Tennessee will allow Tennessee corporations to engage in intrastate offerings of securities to Tennessee residents over the internet without registration. The new law, adopted earlier this year, is the direct result of a law-student-led movement. The key student leader was one of my students, and he kept me informed about the effort as it moved along. (I was called upon for advice and commentary from time to time, but the bill is all their work.)
In my experience, this kind of effort--a student-initiated, non-credit, extracurricular engagement in business law reform--is almost unheard of. I was intrigued by the enterprise and impressed by its success. As a result, I asked the student leader, Brandon Whiteley, now an alumnus, to send me some of his perceptions about drafting and proposing the bill and getting it passed.
This is the first in a series of three posts that feature Brandon's observations on the legislative process, the key influences on the bill, and the importance of communication. This post highlights his commentary on the legislative process (which I have edited minimally with his consent). I think you'll agree that his wisdom and humor both shine through in this first installment (as well as the others). His organizational capabilities also are evident throughout.
Monday, December 15, 2014
. . . here's a relatively new Dodge Challenger commercial (part of a series) that you may find amusing. I saw it during Saturday Night Live the other night and just had to go find it on YouTube. It, together with the other commercials in the series, commemorate the Dodge brand's 100-year anniversary. "They believed in more than the assembly line . . . ." Indeed!
You also may enjoy (but may already have read) this engaging and useful essay written by Todd Henderson on the case. The essay provides significant background information about and commentary on the court's opinion. It is a great example of how an informed observer can use the facts of and underlying a transactional business case to help others better understand the law of the case and see broader connections to transactional business law generally. Great stuff.
Monday, December 8, 2014
Many of you may have seen this already, but this past week's news brought with it an update to JPMorgan Chase CEO Jamie Dimon's health situation--positive news on his cancer treatment results, for which we all can be grateful. I posted here about Dimon's earlier public disclosure that he was undergoing treatment for this cancer. Based on publicly available information, I give Dimon my (very unofficial) "Power T for Transparency" cheer for 2014. (The "Power T" is The University of Tennessee's key--and now almost exclusive--branding symbol. See my earlier posts on UT's related branding decisions regarding the Lady Volunteers here and here.)
As many of you know, I have written about securities law and corporate law disclosure issues relating to private facts about key executives (which include questions relating to the physical health of these important corporate officers). I do not plan to rehash all that here. But I will note that I think friend and Glom blogger David Zaring gets it just right in his brief report on the recent Dimon announcement (with one small typo corrected and a hyperlink omitted):
Not to pile on, but there's the slightly unsettling trend of CEOs talking, or not, about their health. Surely material information a real investor would want to know about when deciding whether to buy or sell a stock in these days of the imperial CEO. But deeply unprivate. . . . The stock is up 2% on the day. It will be interesting to see whether this email makes its way into a securities filing.
Love that post. Thanks, David.
Sadly, as I was drafting this post, I learned that Kansas City Chiefs safety and former Tennessee Volunteer football standout Eric Berry has been diagnosed with Hodgkin's lymphoma. This obviously is not a matter of public company business disclosure regulation (given that the Kansas City Chiefs franchise, while incorporated, apparently is privately held). But I know I join many in and outside Vol Country in wishing Eric the same success in his cancer treatment that Dimon appears to have had to date with his.
In the comments to my post last week on teaching fiduciary duty in Business Associations, Steve Diamond asked whether I had blogged about why we changed our four-credit-hour Business Associations course at The University of Tennessee College of Law to a three-credit-hour offering. In response, I suggested I might blog about that this week. So, here we are . . . .
Monday, December 1, 2014
Well, here we are at the end of another semester. I just finished teaching my last class in our new, three-credit-hour, basic Business Associations offering. (Next semester, I take my first shot at teaching a two-credit-hour advanced version of Business Associations. More to come on that at a later date.) The basic Business Associations course is intended to be an introduction to the doctrine and norms of business associations law--it is broad-based and designed to provide a foundation for practice (of whatever kind). I hope I didn't make hash out of everything in cutting back the material covered from the predecessor four-credit-hour version of Business Associations . . . .
I find teaching fiduciary duty in the corporations part of the basic Business Associations course more than a bit humbling. There is a lot there to offer, and one can only cover so much (whether in a three-credit-hour or four-credit-hour course format). Every year, I steel myself for the inevitable questions--in class, on the class website (TWEN), and in the post-term review session (scheduled for today at 5 PM)--about the law of fiduciary duty as it applies to directors. This past weekend, I received a question in that category on the course website. In pertinent part, it read as follows (as edited for fluency in some places):
I am having problems with understanding the duty of loyalty for directors.
First, . . . I don't think I know which transactions are breaches of loyalty. Do they include interested director transactions, competition, officer's compensation, and not acting in good faith? Second, do care, good faith, and loyalty all require that the directors be grossly negligent? I think I am just confused on the standard to determine whether a director has breached the duty of loyalty and/or care.
Monday, November 24, 2014
Happy Thanksgiving you all! With my co-blogger colleagues here on the BLPB writing various Thanksgiving posts on retail-related and other holiday-oriented business law issues (here and here), I find myself in a Thanksgiving-kind-of-mood. I honestly have so much to be thankful for, it's hard to know where to start . . . . But apropos of the business law focus of this blog, I am choosing today to be thankful for my students. They make my job really special.
This semester, I have been teaching Business Associations in a new three-credit-hour format (challenging and stressful, but I have wanted to teach Business Associations in this format for fifteen years) and Corporate Finance (which I teach as a planning and drafting seminar). I have 69 students in Business Associations and ten in Corporate Finance. I have two class meetings left in each course.
The 69 students in Business Associations have been among the most intellectually and doctrinally curious folks to which I have taught this material. I have talked to a lot of them after class about the law and its application in specific contexts. Two stayed after class the other day to discuss statutory interpretation rules with me in the context of some problems I gave them. This large group also includes a number of students who have great senses of humor, offering us some real fun on occasion in class meetings and on the class TWEN site. They are not always as prepared as I would like (and, in fact, some of the students have expressed to me their disappointment in their colleagues' lack of preparedness and participation), but they pick up after each other when one of them leaves a mess in his or her wake (volunteering to be "co-counsel" for a colleague--a concept I introduce in class early in the semester). I enjoy getting up on Monday mornings to teach them at 9:00 am.
Corporate Finance includes a more narrow self-selected group. Almost all of these students have or are actively seeking a job in transactional or advocacy-oriented business law. They handed in their principal planning and drafting projects a bit over a week ago, projects that they spend much of the semester working on. (These substantial written projects are described further in this transcribed presentation.) Now, each student is reviewing and commenting on a project drafted by a fellow student. Both the project and the review are constructed in a circumscribed format that I define. I am excited to read their work on these projects, given the great conversations I have had with a number of them over the course of the semester as they puzzled through financial covenants, indemnification provisions, antidilution adjustments, and the like. Great stuff. I teach this class from 1:00 pm to 2:15 pm two days a week--a time in the day when I generally am most sleepy/least enthusiastic to teach. But these folks ask good questions and seem to genuinely enjoy talking about corporate finance instruments and transactions, making the experience much more worthwhile.
So, I am very thankful for each and all of these 79 students. I may not feel that way after I finish all the grading I have to do, but for now, I am both grateful and content. And I didn't consume a single calorie getting there (which is more than I will be able to say Thursday night . . .). Just looking at the picture at the top of this post makes my stomach feel full and me feel heavier. Ugh.
Saturday, November 22, 2014
CALL FOR PAPERS
Fourth European Research Conference on Microfinance
1-3 June 2015
Geneva School of Economics and Management, University of Geneva
Access to suitable and affordable finance is a precondition for meeting basic human needs in incomes and employment, health, education, work, housing, energy, water and transport. Microfinance – and more broadly, financial inclusion – will continue to be on the research and policy agenda. 2015 will be a special occasion to question received notions about the link between access to finance and welfare. In 2015 the Millennium Development Goals will make place for the Sustainable Development Goals. A broad debate and exchange on micro, macro and policy topics in financial inclusion will advance our knowledge and ultimately improve institutional performance and policy. This applies in particular to issues of financial market organization, but also patterns, diversity and trade-offs in institutional performance, scope for fiscal instruments, impact of technology on efficiency and outreach etc.
The European Research Conference on Microfinance is a unique platform of exchange for academics involved in microfinance research. The three former conferences organized by the Centre for European Research in Microfinance (CERMI) at the Université Libre de Bruxelles in 2009, by the University of Groningen in the Netherlands in 2011 and the University of Agder in Norway in 2013 brought together several hundred researchers, as well as practitioners interested in applied research. The upcoming Fourth Conference is organized by the University of Geneva, in cooperation with the European Microfinance Platform (www.e-mfp.eu) and in association with the University of Zurich and the Graduate Institute of Geneva.
To provide cutting-edge insights into current research work on microfinance and financial inclusion and to enrich the conference agenda we invite papers on the following topics:
- Client-related issues: consumer behavior, client protection, financial education, household-enterprises and entrepreneurship
- Financial products: credit, insurance, deposits, domestic and cross-border payments
- Non-financial services
- Microfinance adjacencies: Millennium Development Goals
- Institutional issues: management, governance, legal form, transformation, growth, mission drift
- Market: monopolies, competition, alliances and cooperation, mergers and acquisitions, crowding-in and crowding-out issues
- Funding: subsidies (smart and other), investments (public and private) in microfinance institutions
- Policy and regulatory issues
- International governance
Papers will be selected for presentation at the conference by the Scientific Committee, based on criteria of academic quality.
Members of the Scientific Committee include, amongst others: Arvind Ashta (Burgundy School of Business), Bernd Balkenhol (U Geneva), Georges Gloukoviezoff (U Bordeaux and U College Dublin), Isabelle Guerin (IRD, Cessma), Begona Gutierrez-Nieto (U Zaragoza), Malcom Harper (Cranfield School of Management), Valentina Hartarska (U Auburn, USA), Marek Hudon and Ariane Szafarz (CERMI and Solvay School of Business Brussels), Susan Johnson (U Bath), Annette Krauss (U Zürich), Marc Labie (CERMI and University of Mons), Roy Mersland (U Agder), Christoph Pausch (European Microfinance Platform Luxembourg), Trond Randoy (U Agder), Daniel Rozas (European Microfinance Platform Luxembourg), Jean Michel Servet (Graduate Institute Geneva) and Adalbert Winkler (Frankfurt School of Finance and Management), Hans Dieter Seibel (U of Cologne).
Authors are invited to submit an abstract of their paper (not exceeding 2 pages) to email@example.com by December 20, 2014.
The full paper needs to be sent in by March 31, 2015.
Tuesday, November 18, 2014
In my post yesterday on intellectual property law and The University of Tennessee's rebranding exercise, I noted my opposition to the abandonment of the Lady Volunteer brand. Some have questioned my stand on this issue as (although not using these words) old fashioned, anti-feminist, etc. Even my husband questioned me on the matter, asking: "How would you have felt if, in playing field hockey at Brown, the team was referred to as the Lady Bears?" Of course, some team names are not meant to "go with" the moniker "Lady," in any event . . . . :>)
Some do see this as a simple issue of shedding the "separate and unequal" status of women's athletics at The University of Tennessee. I can see how an outsider might see things that way. But the merger of the Knoxville men's and women's athletic departments two years ago (I will spare you the details) was accomplished in a way that is seen by some as sweeping inequality under the rug through homogenization that falsely signals equality to the outside world. Suffice it to say, I am not persuaded that the issue is this simple.
Others have contacted me on Facebook and in private communications to point out additional aspects of the rebranding matter that relate to the word "Lady" in the women's athletics branding at The University of Tennessee. On Sunday, Jack McElroy, the editor-in-chief of our local paper (whose son played soccer with my son back in the day) wrote an editorial [ed. note: this link is firewall protected and may only be available to subscribers] on this element of the branding controversy. In the editorial, he traces the history of the word "lady" in reference to women--from a 25-year-old study finding its use demeaning to female athletes to its resurgence as "a comfortable term by which 21st-century women can address themselves" (citing to feminist writer Ann Friedman). Today, I received an email noting this post by Bryan Garner, perhaps most well known to many of us as the editor of Black's Law Dictionary, on the "increasingly problematic" nature of the word "lady." (Hat tip to Bryan Cave partner Scott Killingsworth for that reference.) These writings also do not point to a simple resolution of issues relating to the continued usage or abandonment of the Lady Volunteer moniker or brand.
The branding issue is, in truth, complex, even in our post-Title IX world. Some of the complexities involve legal issues or have legal ramifications (as noted in my post yesterday); some do not. Among other things, branding involves psychological and emotional reactions that are contextual. Business lawyers involved in branding efforts will be of the most use to their clients if they take this complexity and context into account in engaging legal analysis and offering advice. How would you, for example, advise a firm like Airbnb about legal issues relating to its branding challenges? The possibility of legal claims emanating from the non-intellectual property aspects of branding is something I hadn't earlier considered but now see as real. I guess advising business clients on branding involves a lot more than trademark law . . . .
Monday, November 17, 2014
Readers who know me well understand that I am a die-hard fan of The University of Tennessee's athletics teams. As a former college athlete and continuing college sports fan, I embraced the Tennessee Volunteers and Lady Volunteers as if they were my own when I moved to Knoxville in 2000. I first became a Lady Volunteer basketball ticket holder. Then, I donated to the university and got myself in the queue for football tickets. Men's basketball followed once I began service as a member of the campus's athletics board.
A week ago, the campus administration announced that the university would be dropping the Lady Volunteer brand for all sports except women's basketball. The press release is not a model of good communication to the multiple interested constituencies that could be expected to read it. It manages to muddle the rationale for the change (citing to a campus rebranding effort, brand audits, and the campus's new allegiance with Nike), send mixed messages (citing a perceived need for consolidation, but leaving the women's basketball team out of the consolidation), and ignore the value of the Lady Volunteer brand to female athletes not playing on the basketball team (asserting that "[t]he Lady Vol logo . . . has long been the monogram of excellence and a tradition among our loyal basketball fans." (emphasis added))--somewhat denigrating those non-basketball Lady Volunteer athletes and their fans in the process. As my Facebook friends know, I am not happy about this change. I believe that university is effectively (but admittedly not totally) giving the shaft to a valuable brand--a brand that has taken many years to build--one that is distinctive and meaningful because of its association with empowered, successful female athletes in many sports.
Apart from my disagreement with the change, however, I wondered whether legal counsel had--or could or should have had--any involvement in this "brand transition." I suspect so. Among other things, I would expect that best practices would dictate that all press releases receive review from one of the university's lawyers in the General Counsel's office.
This realization led me to consider the possible role of trademark abandonment in the university's decision to keep the Lady Volunteer brand for the women's basketball team. The university concedes in its press release that the Lady Volunteer brand, which includes its trademarked logo (reproduced above) has value--although it limits that contention to women's basketball. Under the Lanham Act, if the university had determined to discontinue use of the Lady Volunteer logo without having an intent to resume its use, the logo would have become available for use by others after three years. By continuing use of the trademark for women's basketball, the university may (in part) be endeavoring to protect the logo from expropriation by an opportunistic entrepreneur.
But maybe I am giving the university and its legal counsel too much credit . . . ?
For another (perhaps more interesting?) take on intellectual property law issues stemming from the university's Power T rebranding campaign, see this post from one of our UT Law alums, Kevin Hartley (who practices at Stites & Harbison in Nashville).
Monday, November 10, 2014
As some of you know, I have been a defender (although perhaps not a staunch one) of student-edited law reviews as a good learning experience for students. I have worked with students in ways that I really have enjoyed over the years. I also have had some lousy experiences. But even I admit that between the overwhelmingly negative blog commentary (to which I now add), including posts here and here by Steve Bradford here on the BLPB, and the experiences I relate here, I am having trouble sustaining my support for student-edited journals . . . .
Received Saturday (edited slightly for publication here):
Please consider submitting your work to the Track "Crowdfunding: a democratic way for financing innovative projects" @ the RnD Management Conference 2015.
The RnD Management Conference 2015 will be held in June 23-26 at Sant’Anna School of Advanced Studies in Pisa.
You can find more information on the Conference Track and on the submission process at the following link: http://www.rnd2015.sssup.it/.
I warmly apologize for cross-posting.
Cristina Rossi Lamastra, PhD
Associate Professor at Politecnico di Milano School of Management
Phone: 0039 0223993972
Fax: 0039 0323992710
Monday, November 3, 2014
On Monday, The University of Tennessee (UT) College of Law hosted Larry Cunningham to talk about his book, Berkshire Beyond Buffett: The Enduring Value of Values, which he previewed with us here on the BLPB a few months ago in a series of posts (here, here, and here). As you may recall, the book focuses on corporate culture and succession planning at Berkshire Hathaway. Joining Larry at the book session was UT College of Law alumnus James L. (Jim) Clayton, Chairman and principal shareholder of Clayton Bank and the founder of Clayton Homes, one of the Berkshire Hathaway subsidiaries featured in the book. The impromptu conversation between Larry and Jim was an incredible part of the event (although Larry's prepared presentation on the book also was great).
As part of the event, Larry and Jim answered a variety of audience questions. Included among them was a question from UT College of Law Dean Doug Blaze on the role of lawyers in management, transactions, and entrepreneurialism. As part of Jim Clayton's response, he noted the value of preventative lawyering--advising businesses to keep them out of trouble. I was so glad, as a business law advisor, to hear him say that!
Following on that, given that (a) Larry's book focuses on the factors influencing succession planning, (b) I am teaching the Disney case to my Business Associations students this week, and (c) the Disney case is about . . . well . . . failed succession and executive compensation, I asked about management compensation in the context of succession planning at Berkshire Hathaway. Both Larry and Jim (whose son Kevin is President and Chief Executive Officer of Clayton Homes) were clear that Warren Buffett is an exacting manager, but that he believes in paying his portfolio company managers well. Of course, the precise nature of the compensation arrangements of those portfolio firm executives (unlike Michael Ovitz's compensation arrangements at issue in the Disney case) are not a matter of public record. But given the markedly different contexts, I assume the arrangements are very different . . . .
As I approach discussing the Disney case once again in the classroom, I am (as always) looking for new angles, new insights to share with the class (in addition to the core fiduciary duty doctrine). One I will share this year is Jim Clayton's advice about preventative lawyering. What could lawyers have done to reduce the likelihood of controversy and litigation? I have some thoughts and will develop others in the next 24 hours. Leave your thoughts here, if you have any . . . .
Monday, October 27, 2014
On Friday, I participated in the 2014 Workshop for Corporate & Securities Litigation sponsored by the University of Richmond School of Law and the University of Illinois College of Law and held on the University of Richmond's campus. Thanks to Jessica Erickson and Verity Winship for hosting an amazing group of scholars presenting impressive, interesting papers. I attended the workshop to test an idea for a paper tentatively entitled: "Policy and International Securities Fraud Actions: A Matter of Investor and (or) Market Protection?"
The paper would address an important issue in U.S. federal securities law: the extraterritorial reach of the general anti-fraud protections in Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 adopted by the U.S. Securities and Exchange Commission under Section 10(b). In a world where securities transactions often cross borders—sometimes in non-transparent ways—securities regulators, issuers, investors, and intermediaries, as well as legal counsel and the judiciary, all need clarity on this matter in order to plan and engage in transactions, advocacy, and dispute resolution. Until four years ago, the rules in this area (fashioned more as a matter of jurisdiction than extraterritorial reach) were clear, but their use often generated unpredictable results.
In Morrison v. Nat’l Austl. Bank Ltd., 130 S. Ct. 2869 (2010), the U.S. Supreme Court held that “Section 10(b) reaches the use of a manipulative or deceptive device or contrivance only in connection with the purchase or sale of a security listed on an American stock exchange, and the purchase or sale of any other security in the United States.” This was a non-obvious analytical result (at least to me) that has generated significant criticism, debate, and discussion. The Court's struggle—and that of those who disagree with the holding or the Court's reasoning or both—has been to determine the purpose(s) of Section 10(b) as a federal securities law liability statute and assess the extraterritorial reach of Section 10(b) in light of that purpose or those purposes. This project extends my earlier work (originally written for and published as part of a French colloquium in 2012) and involves the engagement of a deep analysis of long-standing, albeit imperfectly articulated, federal securities regulation policy in the context of cross-border fraud and misstatement liability.
This will be a big undertaking, if I commit to a comprehensive approach. I got a lot of good feedback on my overall concept for the project--enough that I am rethinking the project in significant ways. One possible idea is to approach the underlying general policy articulation first, as a separate project, before undertaking the formidable task of rationalizing that policy at the intersection of the academic literature on class action litigation, Section 10(b) and Rule 10b-5, and cross-border markets and cross-listings. The two-stage approach has significant appeal to me. I start from the notion that investor protection and the maintenance of market integrity under federal securities regulation both serve the foundational goal of promoting capital formation. But that is contestable . . . .
What are your thoughts regarding the most coherent articulation of the policies underlying Section 10(b) and Rule 10b-5 multinational securities regulation and the appropriateness of the Morrison test for extraterritoriality in light of that articulation?
Monday, October 20, 2014
I typically teach Corporate Finance as a planning and drafting course to 3L law students in the fall semester each academic year. (See my part of this transcription for some details.) This year is no different in that regard. I really like my Corporate Finance class this fall. The students all seem pretty motivated (although not in every class meeting) and are asking relevant "how to" questions in class.
I am in the midst of teaching my unit on convertible, exchangeable, and derivative instruments at the moment. This semester, I am teaching that unit in three 75-minute parts (after teaching one 75-minute class on hybrid instruments). The first part is an introduction to the instruments themselves. What are they and how do they operate? Where are the provisions authorizing them in state corporate law statutes? What do they look like and what are the key components of the operative (conversion, exchange, or exercise) provisions? The second part is a dive into the poison pill as an intriguing example. The third part is a look at common litigation issues affecting parties' rights under these kinds of instruments (focusing on things like the characterization of transactions not expressly provided for in determining the applicability and effect of antidilution adjustment provisions and interactions between conversion and redemption provisions).
I really enjoy teaching this part of the course, but I keep feeling like I am missing something. Do any of you teach planning and drafting in a corporate finance context? Do you focus on these instruments? If so, what topics do you teach and hone in on? I am writing a casebook for use in this kind of course and would love to make it relevant to as many folks as possible. Please respond in the comments here or in an email message. I would appreciate your feedback and guidance.
While you are at it (or even if you're not), I also would be grateful if folks would weigh in on whether hybrid instruments should be taught separately from or together with convertibles, exchangeables, and derivatives. Do you/would you teach convertibles, exchangeables, and derivatives as a type of hybrid instrument? Or would you call an instrument "hybrid" only if it, e.g., combines core elements of debt and equity at the same time? I look forward to reading what you have to say on any of this.