Sunday, March 22, 2015
Under Newman, unless "the tippee is particularly loquacious, sub-tippees will never be liable" http://t.co/yr6Y0sGvIE— Stefan Padfield (@ProfPadfield) March 18, 2015
"when a duty of care breach is not the exclusive claim, a court may not dismiss based upon an exculpatory provision" 2002WL31584292 #corpgov— Stefan Padfield (@ProfPadfield) March 18, 2015
SEC Chair on "the current state of shareholder activism; the shareholder proposal process; and fee-shifting bylaws" http://t.co/TMQbyNaJDt— Stefan Padfield (@ProfPadfield) March 21, 2015
Sunday, March 15, 2015
ICYMI: "UK poised to miss target for women board members" http://t.co/ybNIs96Hql— Stefan Padfield (@ProfPadfield) March 11, 2015
"Why are Top Tier Audit Failures so Common?" http://t.co/OLiPbfK60F— Stefan Padfield (@ProfPadfield) March 12, 2015
Sunday, March 8, 2015
"Lacking a voice, the court continued, a corporation cannot testify... Without a conscience, it cannot take an oath." http://t.co/zFlAJjZz6o— Stefan Padfield (@ProfPadfield) March 4, 2015
"The principles call on institutional investors to report to...stakeholders...how they are fulfilling their duties" http://t.co/ChFTbMBLi4— Stefan Padfield (@ProfPadfield) March 5, 2015
"corporate criminal prosecutions have turned the Justice Department into a kind of protection racket" http://t.co/Z0EqUZEoIv— Stefan Padfield (@ProfPadfield) March 6, 2015
"'tsunami' of unregistered & unlisted shares of small businesses expected to come on the market due to new rules" http://t.co/btkF7TB2n3— Stefan Padfield (@ProfPadfield) March 7, 2015
Sunday, March 1, 2015
The following comes to us fromJ. Scott Colesanti and Mandy Li Weiner:
To a degree large or moderate, New York shall soon be at the vanguard of Bitcoin regulation. Since last July, observers have been asked to witness the shotgun marriage of the coin of no realm and a daunting state licensing measure; to date, no vows have been taken.
The initial proposal from the Department of Financial Services was truly bold and far-reaching. Eschewing a classification of Bitcoin itself, the Department took aim at parties doing business with State residents by issuing, buying/selling, converting or storing the notorious cryptocurrency (and other, similar virtual currencies). Such entities and operators would have been required to register for the popularly dubbed "Bitlicense" at an indeterminate cost.
The requirements attending the proposed Bitlicense were rich and varied. Traditional State consumer protection provisions focused on customer complaints and record keeping. More novel provisions seemingly borrowed from securities law authorities on business continuity planning and anti-money laundering programs, and from sister State warnings regarding cryptocurrencies as investments. Consequentially, New York's broad, multi-layered protocol would have closed the door of entry to an appreciable number of businesses and startups, as well as related enterprises.
Not surprisingly, last Fall, there emerged on the Internet (albeit in piecemeal fashion) a consistent chorus of domestic, interstate, and international objections. That commentary, from parties including conversion sites and start-up companies, voiced concerns ranging from infringement of free speech to niche resentment at measures designed for financial intermediaries. Meanwhile, support for the initial proposal in the form of public comment letters was hard to locate. And, among federal authorities, only FinCEN has to date directly addressed the question of regulating the ersatz currency.
Still a Shotgun Marriage
Complicating matters is the continuing bad press attached to Bitcoin. Another round of mishaps at conversion exchanges in the past year highlighted issues ranging from questionable marketing to cybersecurity. Other States evidence both the carrot and the stick in the inevitable march towards rules governing the persistent cash alternative. California is considering a measure to coronate the online currency with legal status. Conversely, Missouri voiced its concerns via a June 2014 enforcement action that faulted a company for inadequate disclosures about virtual currencies in general. Concurrently, Congress is entertaining Bills that would shield Bitcoin exchangers from State regulation altogether. The one consistent truth is that supporters of the cryptocurrency seem to have established a daily Internet presence. Here, again, New York has seized the opportunity for regulatory arbitrage: In January, a spokesperson from DFS felt compelled to correct the statement by exchanger/storage repository Coinbase that it had been the first licensed Bitcoin exchange in a plethora of states including New York (no licenses have as yet been issued).
Interestingly, DFS Superintendant Lawsky himself has acknowledged that "The [proposed] rules also generally mirror the types of requirements that other banks, financial institutions, and money transmitters have to live by – with some alterations owing to the unique nature of virtual currencies." Yet the tension among interests appears to be growing, and New York officials no doubt find their efforts pausing to balance the State's heightened interest in protecting consumers (and extinguishing untrustworthy companies) while permitting industry creativity and innovation to flourish. Accordingly, the revised DFS regulation continues to grapple with the dual aims of a stringent standard and enough wiggle room to account for dynamic regulatory and entrepreneurial fields.
The Main Course
Thus, the revised legislation retains many of the original provisions, but it also attempts to appease more parties. For example, Bitlicensees are held to slightly less record-keeping and anti-money laundering protocols.
The price for the Bitlicense has been mercifully capped at $5,000. And the definitional section now makes equally clear that software development and "merchant" payment activities will often be exempt. But the grandest largess takes the form of a 2-year conditional license (granted at the "sole discretion" of the Superintendant), a variation expressly designed for "an applicant that does not satisfy all of the regulatory requirements upon licensing."
Additionally, third parties have benefitted from the revisions: The revised regulations clarify that certain software developers, "miners" (i.e., creators of Bitcoin), those offering customer loyalty programs, rewards (such as airline vouchers) and gift cards are not required to obtain a Bitlicense.
To be sure, the 2015 changes to the 2014 proposal exemplify a newfound DFS responsiveness to the concern of the crossroads of the technology and finance that is virtual currency. However, pure capitalists should note: Even in amended form, the proposal contains substantial costs attending requirements of cash reserves, quarterly reporting, the employ of cybersecurity employees, business continuity planning, transaction records and consumer disclosures. Further, some new obligations have been added – most notably, the requirement that the surety trust account for customers be maintained with a "qualified custodian" (i.e., a banking entity approved by the DFS). The next round of comments should reveal whether the Department's revised approach has achieved meaningful supervision of the industry without concurrently extinguishing some of the characteristics that make virtual currency attractive in the first place.
The revised regulations, which are available at http://www.dfs.ny.gov/legal/regulations/rev_bitlicense_reg_framework.htm, are presently subject to a 30-day comment period. The union of registration and innovation will likely not be decided until late 2015. By borrowing from expansive notions found in securities law and long arm statutes, the seminal State law with the decidedly federal twist will, of course, garner national attention. With objections to strict regulation ranging from Congress to IT developers, wedding guests from both sides of the aisle are still advised to hold onto their receipts.
Mandy Li Weiner, Hofstra University School of Law Class of 2017, is a Business Law Honors Concentration Fellow.
Professor J. Scott Colesanti, a former industry regulator and arbitrator, has taught Securities Regulation at Hofstra since 2002. His 2014 study of the potential application of the securities laws to Bitcoin exchanges is available on SSRN.
Sunday, February 22, 2015
ICYMI: "Round-Up of Recent Business Divorce Cases From Across the Country" http://t.co/B6sllwMAde— Stefan Padfield (@ProfPadfield) February 18, 2015
"LLCs dominate entity formation & cutting edge has moved..to..'series' a quasi-separate, quasi-person..within an LLC" http://t.co/sfDe490kic— Stefan Padfield (@ProfPadfield) February 19, 2015
Sunday, February 15, 2015
My final pre-publication draft of "Corporate Social Responsibility & Concession Theory," 6 Wm. & Mary Bus. L. Rev. 1 http://t.co/1m7Aeapdbz— Stefan Padfield (@ProfPadfield) February 15, 2015
"The growth of social impact has led to a proliferation of reporting methods" http://t.co/s6MQLCZxq4— Sustainable Business (@GuardianSustBiz) February 12, 2015
Sunday, February 8, 2015
Two SEC commissioners attack SEC for turning a "blind eye" to Oppenheimer's "wholly failed" compliance culture (2/2) http://t.co/BzAdJvGWpA— Jean Eaglesham (@jeaneaglesham) February 4, 2015
Sunday, February 1, 2015
I've created a public list of business law professors at US law schools that I follow: https://t.co/9Lu23dl1iO— Stephen Bainbridge (@ProfBainbridge) January 27, 2015
News release: SEC to hold roundtable on proxy voting on February 19. http://t.co/QnHLML4HzW— SEC_News (@SEC_News) January 27, 2015
"Alex Tabarrok on Private Cities | EconTalk | Library of Economics and Liberty" http://t.co/nmP6FrOBRY— Stefan Padfield (@ProfPadfield) January 28, 2015
"Court held that the parties’ choice of Delaware law to govern the terms of a noncompete agreement was unenforceable" http://t.co/Y3Z6dWnCbL— Stefan Padfield (@ProfPadfield) January 30, 2015
Sunday, January 25, 2015
"The aim of the precautionary principle...is to prevent decision makers from putting society as a whole...at risk" http://t.co/jcscjY5JIb— Stefan Padfield (@ProfPadfield) January 25, 2015
Henry G. Manne, RIP, David Henderson | EconLog | Library of Economics and Liberty http://t.co/27sLpCxsaA— Carlo Stagnaro (@CarloStagnaro) January 18, 2015
"split 'corporate America' into 'main street businesses' and 'crony capitalist big business'" http://t.co/meDNiw1F1t— Stefan Padfield (@ProfPadfield) January 20, 2015
ICYMI: Updated link: "Proxy Access Punt: Top 5 Things People Are Asking" http://t.co/LtmJTMfpCz— Stefan Padfield (@ProfPadfield) January 25, 2015
Sunday, January 18, 2015
ICYMI: "Piketty Shreds Marginal Productivity as Neoclassical Justification for Supersized Pay" http://t.co/H99ZIYfng8— Stefan Padfield (@ProfPadfield) January 11, 2015
“Directors were not aware of the problems ... the audit revealed b/c they aren’t involved in day-to-day operations.” https://t.co/ppmHWhCdun— Stefan Padfield (@ProfPadfield) January 12, 2015
Risk factors, non-GAAP financials & trend analysis expected to attract SEC scrutiny during filing season http://t.co/z97f5gdmmk— FEI Daily (@dailyfei) January 15, 2015
Sunday, January 11, 2015
Yes the planet got destroyed. But for a beautiful moment in time we created a lot of value for shareholders. pic.twitter.com/6ER8bLma9J— Marc Benioff (@Benioff) December 28, 2014
NYC just banned plastic foam. Business has been slow to voluntarily phase out the material, despite links to cancer: http://t.co/1eZQMj1zuJ— Sustainable Business (@GuardianSustBiz) January 8, 2015
Delaware's Top Five Worst Shareholder Decisions for 2014 (#3: ATP Tour v. Deutscher): Perhaps more than any ot... http://t.co/qMa5F9sJgP— TheRacetotheBottom (@RTTBCorpGov) January 9, 2015
Practice sitting still and freeing the mind from distractions; then you will be better able to live in harmony with others. #mindfulness— Stefan Padfield (@ProfPadfield) January 10, 2015
Thursday, January 8, 2015
The following comes to us from Lee Epstein, the Ethan A.H. Shepley Distinguished University Professor at Washington University in St. Louis. (I should note that I attended this conference a few years ago and, while I ended up taking my scholarship in a different direction, I can highly recommend the workshop to anyone interested in doing empirical legal scholarship.)
The 15th annual workshop on Conducting Empirical Legal Scholarship, co-taught by Lee Epstein and Andrew D. Martin, will run from June 15-June 17 at Washington University in St. Louis. The workshop is for law school faculty, lawyers, political science faculty, and graduate students interested in learning about empirical research and how to evaluate empirical work. It provides the formal training necessary to design, conduct, and assess empirical studies, and to use statistical software (Stata) to analyze and manage data.
Sunday, January 4, 2015
"The 5 most important stories about the Supreme Court in 2014 .. 4. The rights of corporations continue to increase." http://t.co/hxAafPyCxN— Stefan Padfield (@ProfPadfield) December 31, 2014
Business ethics and Utilitarianism Compared http://t.co/fHIFFw8lWC— jose mario maximiano (@DrMaximiano) January 1, 2015
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.
Sunday, December 28, 2014
"current update about the adoption of the Revised Limited Liability Company Act ('RULLCA')" http://t.co/wORQa4h58N— Stefan Padfield (@ProfPadfield) December 22, 2014
ICYMI: "Corporate transparency: The disappearing subsidiary" http://t.co/5qKheqbA5X— Stefan Padfield (@ProfPadfield) December 24, 2014
"Institutional Investors, Proxy Advisors Fail To Use Economic Value Creation As Major Factor In Say-on-pay Voting" http://t.co/hdNahfeAnw— Stefan Padfield (@ProfPadfield) December 27, 2014
Sunday, December 21, 2014
"the benefit corporation model relies on stockholders to enforce the duties to other constituencies" 4 Harv. Bus. L. Rev. 235 #socent— Stefan Padfield (@ProfPadfield) December 21, 2014
Sunday, December 14, 2014
"well-connected attorneys..get..the Supreme Court to take up cases-and business is capitalizing on their expertise" http://t.co/54LH5djzm2— Stefan Padfield (@ProfPadfield) December 8, 2014
Sunday, December 7, 2014
“Some B-corporations are trying to reintroduce a focus on employee welfare” http://t.co/jmQV4hz3bX— Frank Pasquale (@FrankPasquale) December 6, 2014
Sunday, November 30, 2014
What’s a CEO Really Worth? Too Many Companies Simply Don’t Know http://t.co/92Vt2o6LfY— Richard Leblanc (@DrRLeblanc) November 22, 2014
"New website uses crowdfunding to finance lawsuits" http://t.co/h8gav7j3kn— Stefan Padfield (@ProfPadfield) November 25, 2014
"fraud-on-the-market’s evolution..has been driven..by a..series of contributions by Judge Easterbrook, Judge Posner" http://t.co/zlFYtwwkZ2— Stefan Padfield (@ProfPadfield) November 26, 2014
Sunday, November 23, 2014
"The first libertarian intellectual was Lao-tzu, the founder of Taoism." http://t.co/pKP1gAOPYe— Stefan Padfield (@ProfPadfield) November 18, 2014
"LLC Operating Agreements: Top 10 List of Material Terms" http://t.co/69BVC6RRZZ— Stefan Padfield (@ProfPadfield) November 18, 2014
Ex-Chief of Iceland Bank Sentenced to Jail for Role in 2008 Crisis http://t.co/AnGJBUE0UL— DealBook (@dealbook) November 19, 2014