Monday, June 13, 2016
This post welcomes Doug (Douglas K.) Moll to the Business Law Prof Blog. He'll be posting with us a few times over the next month or so.
Doug is the Beirne, Maynard & Parsons, L.L.P. Law Center Professor of Law at The University of Houston Law Center. He teaches a variety of transactional business law courses: Business Organizations, Doing Deals, Business Torts, Secured Financing, and Sales and Leasing. I have had the pleasure of working with him in other capacities (he is a fellow Tennessee BARBRI instructor and presented with me at the 2015 ABA LLC Institute, for example) and value his observations about transactional business law. I also know him to be a highly decorated teacher--having won (according to his website bio) six teaching awards since 1998. I look forward to his posts--and I am sure you will enjoy them!
This past week, I completed the second leg of my June Scholarship and Teaching Tour. My time at "Method in the Madness: The Art and Science of Teaching Transactional Law and Skills" at Emory University School of Law last week was two days well spent. I had a great time talking to attendees about my bylaw drafting module for our transaction simulation course, Representing Enterprises, and listening to others talk about their transactional law and skills teaching. Great stuff.
This week's portion of my academic tour begins with a teaching whistle-stop at the Nashville School of Law on Friday, continues with attendance (with my husband) at a former student's wedding in Nashville on Saturday evening, and ends (my husband and I hope) with Sunday brunch out with our son (and his girlfriend if she is available). Specifically, on Friday, I teach BARBRI for four hours in a live lecture. The topics? Well, I drew a short straw on that. I teach agency, unincorporated business associations (including a bit about both extant limited liability statutes in Tennessee), and personal property--all in four hours. Ugh. Although I am paid for the lecture and my expenses are covered, I would not have taken (and would not continue to take) this gig if I didn't believe that I could be of some help to students. These topics--especially agency and partnership law, but also personal property--often are tested on the bar exam. So, on I press.
I also am completing work this week on the draft article that I will present in Chicago and Seattle on the last two stops of my tour. I will say more about that article in next week's post. In the mean time, let me know if you have any suggestions (or good jokes) on the law of agency, partnerships, LLCs, or personal property (e.g., tenancies, gifts, bailments, adverse possession, replevin) for my lecture on Friday . . . . It's so hard to make these speed-lectures somewhat engaging for the students. [sigh]
Sunday, June 12, 2016
Saturday, June 11, 2016
A colleague sent me a link to a White House blog post focusing on Title III of the Jumpstart Our Business Startups Act (JOBS Act), known as the Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure Act (CROWDFUND Act). The main theme of the blog post, entitled The Promise of Crowdfunding and American Innovation, is stated in its summary: ''Crowdfunding' rule makes it possible for entrepreneurs across the country to raise small-dollar investments from ordinary Americans." This much is true. And the post accurately notes that "previous forms of crowdfunding" also already did this.
But the post goes on to extol the virtues of the CROWDFUND Act, which offers (among other things) a registration exemption for investment (or securities) crowdfunding--a very special type of crowdfunding involving the offer or sale of debt, equity, investment contracts, or other securities. Or at least the blog post tries to extol the virtues of the CROWDFUND Act. I am not buying it. In fact, the post doesn't come up with much of substance to praise . . . .
The coauthors focus a key paragraph on explaining why the CROWDFUND Act is heavy on investor protection provisions. But they do not talk about the costs of the legislation in relation to its potential benefits, except in the most superficial way--mentioning "risks" without classifying them and outlining the "multiple layers of investor protections." Although it was written before the final Securities and Exchange Commission rules were adopted under the CROWDFUND Act, my article for the Kentucky Law Journal offers a more detailed picture of benefits and costs and shares my view that the costs are likely to outweigh the benefits for many market participants.
Maybe sensing this (and the possible lack of success of the CROWDFUND Act that may result from this imbalance), the coauthors of the White House blog post offer the following:
One encouraging recent sign is not only the launch of many new regulated crowdfunding platforms, but also the growing ecosystem of “startups helping startups” to provide services for this new marketplace—making it easier for entrepreneurs to fulfill disclosure requirements, verify investor credentials, educate investors, and more. Over time, these new tools may increase transparency and provide strong accountability not only for “the crowd,” but also for the “family and friends” that have long served as entrepreneurs’ first source of seed capital.
This is a super effect of crowdfunding generally and of securities crowdfunding under the CROWDFUND Act specifically--the emergence of new services and market participants to support crowdfunding and small capital raising more generally. I predicted this in my first article on crowdfunding (co-authored with one of my former students) : "Because '[c]rowdfunding is a market of and for the participants,' some traditional financial intermediaries may be shut out of this sector of the capital formation process. No doubt, however, new support roles for crowdfunding will develop as the industry matures." [(p. 930, n.263) (citations omitted)] But these market innovations would be more pronounced, imv, if the CROWDFUND Act provided participants with a more balanced set of costs for the benefits provided. As the blog post notes, "it’s still a fact that not every entrepreneur has access to needed capital." More can be done to solve this problem with a registration exemption that allows for small capital raising--funding at well less than the $1 million level set under the CROWDFUND Act--at less cost.
The blog post concludes with more platitudes. ("America’s entrepreneurs are our engines of economic growth, innovation, and job creation . . . .") Really, this blog post is a bit of a puff piece--manifesting both good marketing (for those who read and believe it) and overoptimism.
But then again, what did I expect from a blog post put out by White House staff? I suppose, given the President's support for the CROWDFUND Act (and the JOBS Act overall--which the coauthors also praise more generally in a paragraph of the post), I should expect the White House to promote the use of the CROWDFUND Act through these kinds of public relations messages. OK. I get that. Nevertheless, I admit to being disappointed that more is not being done in the Executive Branch and elsewhere to point out the shortcomings of the CROWDFUND Act and fine tune the regulation of securities crowdfunding so that it can have its maximum positive impact on business and project innovators and investors alike. Instead, I fear that well intending proponents are over-promoting the CROWDFUND Act, which may ultimately sour folks on securities crowdfunding as a capital raising alternative if few are able to take advantage of the current regulatory exemptions. We'll see. I hope I am wrong in worrying about this. Time will tell.
Friday, June 10, 2016
I have been following Professor Angela Duckworth's work on grit for well over a year, so I was eager to read her new book, Grit: The Power of Passion and Perseverance. In fact, I can't remember the last time I bought and read a book within a few weeks of it being published.
The book is an easy read, written for a for a popular audience, and I was able to finish it in three relatively short sittings.
Below, I reflect on the book, hopefully in a balanced way.
Thesis. As may be evident from previous posts of mine, I like Duckworth's thesis - essentially, that passion and perseverance in pursuit of long-term goals are important in achieving success. Duckworth is careful to caveat her thesis, noting at hard work and passion are important, but are not the only factors that matter in achieving success. With this caveat, her thesis seems rather obvious and uninteresting.
Grit Scale. The Grit Scale Duckworth created for her studies seems easy to fake, and to her credit, she admits that it can be faked, like most self-reporting measures. Given the ability to fake the Grit Scale, I am not sure that it would be of much use in practical settings where the stakes are high (such as admissions or hiring). In one of the more interesting studies, Duckworth discusses how they gave the Grit Scale to West Point cadets before going through Beast Barracks (described as the toughest part of the four years). Supposedly, Grit scores did a nice job predicting who would stay and who would drop out. Given that the scale is easy to fake, maybe the interesting finding is not "those who actually have more grit perform better" but rather "those who think they have more grit (or are willing to lie that they have more grit) perform better.
Parenting and Teaching. As a parent, I appreciated her chapter on parenting for Grit (though she admits that these are just her thoughts, and unlike other parts of the book, the parenting chapter is lacking directly applicable scientific studies). In particular, she notes the importance of being both supportive and demanding. This is also fairly obvious, but easy to forget, hard to consistently apply, and important to remember. This instruction applies to teachers as well -- make clear that you have high expectations, but also communicate you are there to help and believe the students can meet the expectations with work. For a skeptics view, at least on the point of whether grit can be taught, see here.
Creativity, Talent, Structural Barriers: While Duckworth admits that there are other factors that contribute to success, I didn't think she made a strong case for grit being more important than creativity or talent. In fact, most of the gritty people she mentioned had certain natural advantages over many others. While grit may be needed to get things done, it seems like creativity and talent and access are all necessary and may be even more important than grit in some cases.
Anecdotes. There are a number of anecdotes in the book. The stories are less convincing than the academic studies, but the stories help illustrate her points. I especially liked the sports stories, including the ones about the UNC women's soccer team and the Seattle Seahawks. The coach of the UNC soccer team, for example, had his team memorize passages related to each team core value, and then also integrated the values into practices and games. Much better than a meaningless organization vision statement.
All in all, I think the book was worth reading, if only to stay current on some of the theories that are likely to be talked about by educators at all levels, and to inspire more passion and perseverance in general.
For a fair and thoughtful critique of Grit see here.
Thursday, June 9, 2016
Keep reading only if you have 3 minutes that you don't care about being productive or relating to business law, at least not directly.
The Federal Election Committee issued a proposed draft of an advisory opinion on a question brought by Huckabee for President, Inc.--the committee responsible for the 2016 presidential campaign of former Arkansas Governor Mike Huckabee. The Committee wanted to know if it can use part of a legal defense fund to pay a settlement. The FEC says yes. This isn't an election law blog, so I won't go into the details. The litigation arose over the campaign's use of the song "Eye of the Tiger". The FEC, feeling quite cheeky writes the following:
The complaint, seeking injunctive relief and monetary damages, alleged that 21 the Committee had violated federal copyright law by playing the song “Eye of the Tiger” at a campaign event on September 8, 2015. The Committee, rising up to the challenge of its rival, incurred attorneys’ fees and other expenses in defending itself in that litigation. After briefly relishing the thrill of the fight, the parties settled the lawsuit for an undisclosed amount.
Has the political circus of the 2016 election warped the sense of decorum at the FEC or should we all want to be friends with the lawyers there? I can't decide. But I do know that you should (a) click on the link to the song, and (b) jam away in your office for the next 4 minutes.
You are welcome.
I attended my first Law and Society meeting this year (made easier by the fact that it was held in New Orleans, my newly-adopted city!) And as Joan indicated in a prior post, she gave a presentation on her most recent project, tentatively titled “Pillow Talk, The Parent Trap, Sibling Rivalries, Kissing Cousins, and Other Personal Relationships in U.S. Insider Trading Cases.” And very shortly after she concluded, a news story dropped in my inbox about SEC v. Maciocio, involving two longtime friends charged in an insider trading scheme that lasted for several years.
The reason the case interests me is that I assume the SEC (and the DOJ in a parallel criminal complaint) are teeing it up in light of the pending Supreme Court case of Salman v. United States.
According to the SEC’s allegations, Maciocio worked for a pharmaceutical company that engaged in business dealings with several other companies. Hobson was his longtime childhood friend. The details of their relationship are described in the SEC’s complaint, including their days of Little League baseball, and daily phone calls and emails.
Hobson, as it turns out, was a securities broker. So, Maciocio tipped off Hobson whenever his employer struck a new business deal – as you do – allowing Hobson to reap nearly $200,000 in trading profits. Maciocio made similar trades himself.
But the striking thing about the complaint is that the SEC is extraordinarily vague in describing any personal benefit that Maciocio received from tipping Hobson. Maciocio profited from his own trades, of course, but in exchange for passing information to Hobson, the SEC only alleges that he received barely-described “investment advice” and “stock tips” – not much of a benefit, considering that Hobson was Maciocio’s broker and presumably would have given advice anyway. Beyond that, the SEC openly alleges that the tips were simply a “gift” to Maciocio’s “close personal friend.”
The reason this is striking, of course, is that in Dirks v. SEC, 463 U.S. 646 (1983), the Supreme Court - reacting to the extraordinarily bizarre facts before it - invented the rule that gratuitous tipping does not a Section 10(b) violation make.
So the critical question is, does friendship maintenance have legally cognizable value?
Well, that's what the Supreme Court is set to consider in Salman: whether “gift” of information is enough to count as a 10(b) violation, even in the absence of a concrete benefit to the tipper. In Salman, though, the giftee was a relative, and the law has a much harder time with the nebulous bonds of friendship. The difficulty is that without a grand theory of insider trading – which the law has yet to develop – it's not clear what kind of relationships suffice. The last thing we want is a case by case analysis about whether a friendship was close enough to count - creating uncertainty for everyone who trades - and there's no obvious reason why a tip to a casual buddy should somehow be less harmful to markets than a tip to a BFF. Then again, if friendship isn't enough, the government will make do with whatever benefit peppercorns it can find - steak dinners, anyone? - which hardly makes any more sense.
Point being, Joan – I look forward to seeing what you can make of all this!
Wednesday, June 8, 2016
If you've been slamming away on a writing deadline then perhaps you've missed the opportunity (like me) to dive into the recent Chancery Court of Delaware Dell appraisal rights opinion (downloadable here). Have no fear, your summary is here.
Vice Chancellor Laster valued Dell’s common stock at $17.62 per share, reflecting a 28% premium above the $13.75 merger price that was paid to Dell shareholders in October 2014 in a going private transaction lead by company-founder Michael Dell. Dell's going private transaction was opposed by Carl Icahn and this juicy, contentious transaction has its own required reading list. When conceding defeat, Carl Icahn sent the following letter to Dell Shareholders:
New York, New York, September 9, 2013
Dear Fellow Dell Inc. Stockholders:
I continue to believe that the price being paid by Michael Dell/Silver Lake to purchase our company greatly undervalues it, among other things, because:
1. Dell is paying a price approximately 70% below its ten-year high of $42.38; and
2. The bid freezes stockholders out of any possibility of realizing Dell’s great potential.
Fast forward nearly 3 years later and it seems Vice Chancellor Laster agrees. VC Laster reached his undervaluation decision despite no finding of significant fault with the company’s directors' conduct or a competing bidder. Instead, VC Laster focused on the fall in the company’s stock price, and a failure to determine the intrinsic value of Dell before negotiating the buyout. The business press and law blogs have exploded with articles, a few of which are highlighted below:
- For a good summary of the ruling see this succinct Delaware Chancery Court blog post and Andrew Ross Sorkin's NY Times article.
- For a good discussion of how appraisal remedies were applied in Dell, see Steven Davidoff Solomon's NY Times article here.
- For a discussion of the increase in shareholder appraisal actions and contributing factors (arbitrage) and the future of appraisal rights, see this ABA article.
Tuesday, June 7, 2016
Michigan's softball team lost in the College World Series, and there was understandable disappointment. I thought coach Carol Hutchins message, though, was spot on:
“One thing I learned after the national championship, it definitely doesn’t define you,” she said. “If winning defines you, you’re not focused on the right things. I’m defined by all the women that I’ve been able to help grow up and who have impacted my life equally. I define myself by that.
“We’ve won a lot of games here, we’ve lost a lot of games here. It’s a sport. We do the best we can every day.”
Yes. You can't control who you play. You control how you prepare, and how you try, and how you care. Sometimes, you can control how you play, but not always who you play against or the tools you have at your disposal.
This is true as a lawyer, too. You may have bad facts. Or a bad client. Or a whole host of other hurdles. On a bad day (hopefully) you may go up against someone who is just better than you. You can control how you prepare, how hard you work, and how much you care. The rest, is out of your hands.
You can't let winning define your worth. If you do, there's a good chance you will underestimate your value when you lose. And overestimate it when you win. A little perspective goes a long way, and odds are, with perspective, as long as you sustain your effort, you have a better chance at winning more often.
Monday, June 6, 2016
The first part of my June scholarship and teaching tour is now done. Having just returned from the Law and Society Association conference in New Orleans (about which I will say more in later posts), I now am preparing for my presentation on Friday at "Method in the Madness: The Art and Science of Teaching Transactional Law and Skills," this year's conference hosted by Emory University School of Law's Center for Transactional Law and Practice. Emory Law convenes these conferences every other year. The conferences always focus on teaching transactional business law and skills.
Here's the abstract for my presentation:
Drafting Corporate Bylaws: From Alpha to Omega
The archetypal introductory law school course in business associations law characteristically introduces students to corporate bylaws. Typically, course references to corporate bylaws occur in the context of corporate formation and in cases construing corporate bylaws in the context of private ordering, fundamental corporate changes, and the like. Treatment of the subject is necessarily somewhat superficial and episodic. Although students may be exposed to bylaw provisions and even, in some cases, a sample set of corporate bylaws, little time exists in the standard basic Business Associations course to address the optimal drafting process for drafting organic documents (including corporate bylaws).
An advanced business associations offering or a business planning course, however, provides a wonderful opportunity to engage students in this type of activity and give them a deeper appreciation for the governance significance of corporate bylaws. For the past two years, I have taught a module in Representing Enterprises, a transaction simulation course offered to participants in The University of Tennessee College of Law’s Concentration in Business Transactions, that focuses on drafting bylaws for a closely held start-up corporation organized under Tennessee law. The module offers a sequenced approach to the construction of corporate bylaws, starting with an in-depth survey of applicable statutory and decisional law, progressing through the identification of forms and norms, and ending with individual and group drafting exercises. The five class meetings (ten classroom hours in total over a period of two-and-a-half weeks) in the module engage facilitated peer-to-peer teaching and focus on relevant drafting processes (incorporating and reflecting on the students’ approaches to the required course assignments) and resulting outtakes (more precisely, takeaways).
In this presentation, I will share in more detail the content of and pedagogy involved in this course offering. As support, I will supply all participants with the module syllabus and the staged series of assignments that I give to the students to execute on the embodied learning objectives. This presentation should be particularly useful to those offering, planning on offering, or considering offering a business entity planning and drafting opportunity for law students. But it also may be valuable for those teaching introductory doctrinal offerings in business associations law.
If you cannot be at the conference and are interested in the materials supporting or PowerPoint slides for this presentation, please just let me know.
Also, you may want to note that many (most) presentations at the conference will be memorialized in a forthcoming volume of our student-edited business law journal, Transactions: Tennessee Journal of Business Law. Transactions has been a partner of Emory Law in its biennial conferences from the start. The Transactions volumes from the Emory Law conferences typically are quite popular among business law instructors. I use my copies a fair amount. So, you may want to get one of these, too. Just fyi: the book usually comes out in the spring semester following the conference. Also note that some of the included works are produced from transcripts of the proceedings (very tough to do) and some are papers prepared by the presenters on the topic of their presentation.
Atlanta, here I come!
Sunday, June 5, 2016
insider trading: "empirical analysis of European states' adoption of the equality of access theory" 7 Wm. & Mary Bus. L. Rev. 275 #corpgov— Stefan Padfield (@ProfPadfield) May 30, 2016
"These two justices [Kagan & Sotomayor] are the most interrupted in oral arguments; is a gender dynamic at play?" https://t.co/6329LBxjt9— Stefan Padfield (@ProfPadfield) June 3, 2016
Saturday, June 4, 2016
How much do we trust institutional investors to protect their interests?
Delaware law has gradually been inching toward a recognition that in a stock market dominated by institutional investors, old assumptions – about a dispersed, uninformed, and rationally passive shareholder base – must give way to a new recognition of shareholder sophistication and incentives.
You can see the tendrils of this growing awareness in, for example, opinions like Corwin v. KKR Fin. Holdings LLC, 125 A.3d 304 (Del. 2015), where the Delaware Supreme Court held that a shareholder vote in favor of a merger would act as a ratification of the directors’ conduct – a ruling that implicitly relied on an expectation of shareholder sophistication. See id. (“When the real parties in interest—the disinterested equity owners—can easily protect themselves at the ballot box by simply voting no, the utility of a litigation-intrusive standard of review promises more costs to stockholders in the form of litigation rents and inhibitions on risk-taking than it promises in terms of benefits to them.”) You can see it in then-Vice Chancellor Strine’s opinion in In re Pure Res. S'Holders Litig., 808 A.2d 421 (Del. Ch. 2002), where he held that controlling shareholder tender offers need not always be subject to entire fairness review, in light of the “increased activism of institutional investors and the greater information flows available to them” – which influenced later standards applied to the merger context. See Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014).
You can also see it in Myron Steele’s recent lecture at Fordham, where he predicted that “it’s only a matter of time before substantive coercion is history. Because when you have a seventy-five percent institutional stockholder base, it’s not like you're their guardian. They’re perfectly capable of making their own decisions…” See 20 Fordham J. Corp. & Fin. L. 352 (2015).
But in In re Appraisal of Dell, 2016 Del. Ch. LEXIS 81 (Del. Ch. 2016), Vice Chancellor Laster pooh-poohed market judgments, embarking on a prolonged discussion about why shareholders – and even market analysts – might fail to recognize the value of new investments with long term payoffs, not even necessarily because they lack information, but because of what he deemed an “anti-bubble.” The most eyebrow-raising moment came when, in support of this thesis, he cited Martin Lipton’s blog posts at the HLS Forum and CLS Blue Sky. Martin Lipton**, of course, frequently argues that shareholders are uninformed and not to be trusted, in support of a general agenda of minimizing shareholder power and maximizing management discretion.
All of this just begs the question: if shareholders’ judgments are so untrustworthy, why do their votes in favor of a merger have such an immunizing effect?*
*the contradiction is made more obvious by Martin Lipton's recent blog post decrying the Dell decision; the irony, of course, is that Lipton's own arguments were used to justify the court's conclusion that shareholder valuations are unreliable.
**in case anyone was wondering, no relation.
Friday, June 3, 2016
Next week, I will post some reflections on the contents of the book, but for now, I would like to discuss professors publishing for a popular audience. Tongue-twisting alliteration unintended.
I am thankful that Duckworth wrote this book for a popular audience rather than in a way that would target a narrow slice of academia. Even as a professor myself, I find books written for popular audience easier to digest, especially if in a different discipline. While popular press books often oversimplify, I would rather a professor author a popular press book on her studies (and studies in her field) than have a journalist attempt to explain them. Also, while a popular press book may oversimplify, professors tend to be intentional about avoiding claims that are too sweeping. Note that in this interview, like the book, Duckworth is careful to state that grit is not the only thing that contributes to success. Finally, especially when the professor has done the background academic work first, as Duckworth did in many peer-reviewed journal articles, a popular press book can reach more people and inspire change and may eventually lead to broader engagement with the underlying academic articles.
Grit, as a popular press book, has already reached a large audience. Grit was published by Scribner: An Imprint of Simon & Schuster (not a university press) and jumped into the top-5 of The New York Times best-seller list for hardcover non-fiction. Duckworth had already reached well over a million people with her TED talk, and the book allowed her to be much more nuanced than she could be in a 6 minute speech. The TED talk was a gateway to her popular press book and perhaps her popular press book with be a gateway to the academic research she cites.
One problem with engaging a large, popular audience is that the professor may lose control of her message, and people may misinterpret the findings. Duckworth looks like she is staying engaged in the conversation, however, and has, for example, written to argue against grading schools on grit.
In short, there are certainly potential problems when writing about academic topics for a popular audience, but I am glad Duckworth took on the challenge and spread her research in this way. That said, as I will discuss next week, Grit does have weaknesses, in addition to its strengths.
Thursday, June 2, 2016
See below for information on the The Midwest Academy of Legal Studies in Business (MALSB) Annual Conference in Chicago, IL and their call for papers. I attended MALSB this year, found it beneficial, and reflected on the conference in this post.
Midwest Academy of Legal Studies in Business
2017 Annual Conference
March 22 – 24, 2017
The Palmer House Hilton Hotel – Chicago, Illinois
Conference Registration and Call for Papers
The Midwest Academy of Legal Studies in Business (MALSB) Annual Conference is held in conjunction with the MBAA International Conference, long billed as “The Best Conference Value in America.”
The MBAA International Conference draws hundreds of academics from business-related fields such as accounting, business/society/government, economics, entrepreneurship, finance, health administration, information systems, international business, management, and marketing. Although the MALSB will have its own program track on legal studies, attendees will be able to take advantage of the multidisciplinary nature of this international conference and attend sessions held by the other program tracks.
Wednesday, June 1, 2016
Readers attending Law & Society in New Orleans at the end of the week should make a note of the following corporate and securities law panels taking place on Friday, June 3rd and Saturday, June 4th.
FRIDAY, JUNE 3
2:45 PM - 4:30 PM
1146—Panel Session—Financial Market Regulation
Room: Salon C, NOLA Marriott
4:45 PM - 6:30 PM
1147—Panel Session—Rulemaking, National and International
Room: Salon C, NOLA Marriott
SATURDAY, JUNE 4
8:15 AM - 10:00 AM
1150—Panel Session—Investors, Consumers, and the Public Interest
Room: Salon C, NOLA Marriott
2:45 PM - 4:30 PM
1152—Panel Session—Corporate Governance and Value
Room: Salon C, NOLA Marriott
2:45 PM - 4:30 PM
2895—Roundtable—Corporate Diversity: Comparative and Critical Perspectives
Room: Galerie 5, NOLA Marriott
4:45 PM - 6:30 PM
1154—Panel Session—Addressing Agency Costs and Corporate Wrongdoing
Room: Salon C, NOLA Marriott
*updated June 1st at 4:20 to include 2 additional panels submitted by a reader (Shlomit Azgad-Tromer)
Thursday June 2nd : Power Business and Legal Practice, 12:45- 2:30 PM
Friday June 3rd : Stakeholders and the Corporation, 4:45-6:30 PM
Tuesday, May 31, 2016
Donald Trump was in my home state of West Virginia recently, and he promised to bring back coal jobs:
And West Virginia. And we’re going to get those miners back to work. I’ll tell you what. We’re going to get those miners back to work . . .
Let me tell you, the miners in West Virginia and Pennsylvania which was so great to me last week and Ohio and all over, they’re going to start to work again. Believe me. You’re going to be proud again to be miners.
How he plans to do this is not clear, but part of it will be to attack the EPA's Clean Power Plan. Okay, but that's a relatively recent development, and was certainly not the cause of the decline in coal production since the last production peak in 2008. The primary cause: cheap and abundant natural gas from horizontal drilling and hydraulic fracturing.
In my former home state of North Dakota, Trump was telling voters he would rescind President Obama’s climate change rules and work to make the Keystone XL pipeline a reality to ship petroleum from Canada’s oil sands to the U.S. Gulf Coast refineries. Further, Trump has stated that he would relax regulations that limit coal leases on federal lands and reduce hydraulic fracturing regulations on federal lands.
It appears, then, that his plan to support the coal, oil, and natural gas industries will be to lower costs. That should increase supply, right? The problem for each industry, though, is that excess supply has lowered prices so much that all three areas are cutting back on activity (and jobs). Reducing governmental restrictions would lower costs even more, which is not likely to increase jobs or production in the current climate. Any such change might increase margins for existing activities, but it would not likely incentivize a change in behavior that would lead toward the state goals of increased employment. As the Financial Times recently explained:
One of the factors behind that [oil market] collapse was Saudi Arabia’s strategy of continuing to produce at high levels above 10m barrels per day, rather than cutting output to ease the glut of oil.
More oil (or gas or coal) equals lower prices. Lower taxes and regulations equals lower cost of exploration and production, which leads to? More oil (or gas or coal) and lower prices. Even worse, low prices tend to encourage automation, which is particularly not good for jobs.
One can debate whether there is value in reducing these kinds of regulations, but one needs to explain how greater supply and lower prices is going to help any of these industries in the way the policies are purporting to (or another justification is needed). But then, Trump has not explained how he intends to implement any of his promises or how any of his proposals would work.
Newsflash: Just saying something, no matter how confidently and assertively it is said, doesn't make it true. I sure hope a majority of voters recognize this come November.
Monday, May 30, 2016
This year, my research and writing season has started off with a bang. While grading papers and exams earlier this month, I finished writing one symposium piece and first-round-edited another. Today, I will put the final touches on PowerPoint slides for a presentation I give the second week in June (submission is required today for those) and start working on slides for the presentation I will give Friday.
All of this sets into motion a summer concert conference, Barbri, and symposium tour that (somewhere along the line) got a bit complicated. Here are the cities and dates:
New Orleans, LA - June 2-5
Atlanta, GA - June 10-11
Nashville, TN - June 17
Chicago, IL - June 23-24
Seattle, WA - June 27
I know some of my co-bloggers are joining me along the way. I look forward to seeing them. Each week, I will keep you posted on current events as best I can while managing the research and writing and presentation preparations. The topics of my summer research and teaching run the gamut from insider trading (through by-law drafting, agency, unincorporated business associations, personal property, and benefit corporations) to crowdfunding. A nice round lot.
This coming week, I will be at the Law and Society Association annual conference. My presentation at this conference relates to an early-stage project on U.S. insider trading cases. The title and abstract for the project and the currently envisioned initial paper (which I would, of course, already change in a number of ways) are as follows:
May 30, 2016 in Business Associations, Conferences, Corporate Finance, Corporate Governance, Corporations, Joan Heminway, Research/Scholarhip, Securities Regulation, Social Enterprise, Teaching, White Collar Crime, Writing | Permalink | Comments (0)
As a former student of modern American History (yes, that was my undergraduate major, along with International Relations), I find Memorial Day both sobering and inspiring. The number of servicemen and servicewomen, as well as others, that we have lost at war is staggering. As I may have written in a former post, my dad, my father-in-law, and my secretarial assistant all are veterans. I am glad they made it out alive. So, today I will spend some time reflecting on those who didn't emerge victorious in the fight for life at war as well as on those who did emerge victorious from that fight. I am grateful for them all.
Sunday, May 29, 2016
"Despite..Court's characterization of corp[s] as 'associations of citizens'..not all corp[s] are associational" 69 Vand.L.Rev. 639 #corpgov— Stefan Padfield (@ProfPadfield) May 24, 2016
Proposal: "duty to become informed & deliberate on the impact of corporate decisions on multiple stakeholders" 2015B.Y.U.L.Rev.1309 #corpgov— Stefan Padfield (@ProfPadfield) May 24, 2016
Saturday, May 28, 2016
A former law student of mine who practices in Delaware just alerted me to this Delaware Online article.
The article describes the proposed bill as follows:
House Bill 371 would restrict the number of corporate shareholders who can petition the court for a stock appraisal to only those who own $1 million or more of a company's stock or 1 percent of the outstanding shares, depending on which is less. Currently, any shareholder can ask the court to appraise their shares. Those motions are typically filed when a company is the target of an all-cash acquisition and the shareholder wants to ensure the buyer is paying a fair price for the stock. (emphasis added)
Corporate governance expert Charles Elson is quoted as saying:
. . . he understands the argument on both sides. "Anytime you attempt to restrict the rights of a smaller shareholder, it is going to be controversial whether or not the approach is warranted"
The article cites co-authored work by my Nashville neighbor, Randall Thomas (Vanderbilt Law):
A study published earlier this month by four noted corporate law professors, including Wei Jang of Columbia Business School and Randall S. Thomas of Vanderbilt Law School, found that hedge funds have accounted for nearly 75 percent of the amount awarded in all appraisal actions over the last few years. The study also found that 32 percent of the cases involved stakes below $1 million or 1 percent of a company's stock.
Go read the entire article.