Sunday, May 26, 2019

Confining Lenders With CDS Positions

As it’s a holiday weekend, I’ll be brief and flag for readers one of the most intriguing news stories – given my research interests - that I came across this past week.  In Sirius Computer moves to block derivatives holders from speculation, Kristen Haunss notes:

Language in the financing package backing Sirius’ buyout by private equity firm Clayton, Dubilier & Rice (CD&R) prohibits lenders that own derivative positions from voting on company matters, according to three sources familiar with the loan credit agreement. As investor activism rises, the borrower wants to prevent these holders from declaring a default that could pay off for their hedged trades.

It’s an interesting move to limit potential strategic behavior by lenders with CDS positions.  The story notes that additional such limitations could be seen in the future.  If you want to learn more about recent cases of such strategic lender behavior, a great place to start would be Gina-Gail S. Fletcher’s Engineered Credit Default Swaps: Innovative or Manipulative?, which will be published in the New York University Law Review.

May 26, 2019 | Permalink | Comments (0)

Saturday, May 25, 2019

George Mason Panel on Securities Litigation

A couple of weeks ago, I was lucky to participate in a panel on securities litigation at George Mason University Antonin Scalia Law School, along with Professor J.W. Verret, Jonathan Richman of Proskauer Rose, Steven Toll of Cohen Milstein, moderated by Judge Michelle Childs of the District of South Carolina.  We had a lively discussion about current issues concerning these actions, including what I guess is now being branded as “event-driven” litigation, definitions of materiality, and arbitration clauses in charters and bylaws.

In my opening remarks, I discussed merger litigation and the shift from state to federal courts, covering much of the territory I previously described on this blog (of course, since that post, the Supreme Court dismissed the Emulex case as improvidently granted).  I also drew from research by Matthew Cain, Steven Davidoff Solomon, Jill Fisch, and Randall Thomas, presented in April at the ILEP symposium on corporate accountability.  (Their research is not yet public but I will link here as soon as it becomes available).

In the meantime, if you’re interested, you can watch a video of the panel here:


The other panels from the symposium are also available for viewing at this link.

May 25, 2019 in Ann Lipton | Permalink | Comments (0)

Friday, May 24, 2019

Scooters and the Difficulty of Measuring Social Value


"Bird Scooter" by mikecogh is licensed under CC BY-SA 2.0 

Here in Nashville, Mayor David Briley announced that he is seeking to ban scooters. This announcement follows the first scooter-related death in the city.

Currently, I am working on a project that looks at how social value is measured and reported. As I dig deeper, I am becoming even more convinced that measuring social value may be too difficult for us to do well.

Let’s take scooters as an example. How would you measure (and report) the social value of these scooter companies? How many points should a “third-party standard” assign for the jobs created, for the gasoline saved, for the affordable transportation provided, for the fun produced? How many points should you subtract for a death, for injuries, for obstructing sidewalks? In the language of the Model Benefit Corporation Legislation, how do you know if a scooter company is producing “[a] material positive impact on society and the environment, taken as a whole”?

Over the past few weeks, I’ve been diving into the B Impact Assessment, (which is the top third-party standard used by benefit corporations) and, frankly, the points assigned seem somewhat arbitrary and easy for companies to manipulate. In my opinion, almost any company, including a scooter company, could get the 80+ points needed to qualify as a certified B corp. if they learned and worked the system a bit (and, as most readers know, you don’t even have to be certified to become a benefit corporation under the state statutes.)

I know bright people who would emphatically argue that scooter companies create a “material positive impact,” and I know bright people who think scooter companies are socially destructive. Social reporting does not have to be totally useless; it would be interesting to have the data on scooter usage (how many people are using them for their commute, what is the injury rate relative to cars, etc?). But the total amount of social value is not easily reduced to numbers and social reports. Given the nuance of each decision, the various externalities, and the difficulty in quantifying the social impact, I have previously suggested giving stakeholder representatives certain governance rights (such as the ability to elect and sue the board of directors). This way, directors will be more likely to consider each stakeholder group when making decisions.

May 24, 2019 in Business Associations, CSR, Haskell Murray, Legislation, Social Enterprise | Permalink | Comments (1)

Thursday, May 23, 2019

AALS PR Section Call for Papers

We have a new call for papers in Professional Responsibility.  It's the law regulating the business of law.


AALS Section on Professional Responsibility 

2020 Annual Meeting

Call for Papers Announcement


Confronting the Big Questions About the Regulation of the Legal Profession

Saturday, January 4, 2020
10:30 a.m.-12:15 p.m.

Washington, D.C.


The AALS Professional Responsibility Section is pleased to announce a Call for Papers for the Section’s program at the AALS 2020 Annual Meeting in Washington, D.C. 


Program Description:

In its 2016 Final Report, the American Bar Association Presidential Commission on the Future of Legal Services concluded after a two-year inquiry that “technology, globalization, and other forces continue to transform how, why, and by whom legal services are accessed and delivered. Familiar and traditional practice structures are giving way in a marketplace that continues to evolve. New providers are emerging, online and offline, to offer a range of services in dramatically different ways. The legal profession, as the steward of the justice system, has reached an inflection point. Without significant change, the profession cannot ensure that the justice system serves everyone and that the rule of law is preserved. Innovation, and even unconventional thinking, is required.” Some of this change must come in the form of fundamental reconsideration of how we regulate the legal profession, the practice of law, and the delivery of legal services.  This program calls for scholars to heed the ABA Futures Commission’s call and apply unconventional thinking  to confront the big questions about the future of lawyer regulation.

Topics addressed at the program might include: 

  • What does the market for legal services look like today?
  • What regulatory changes need to be made to improve the delivery of legal services?   
  • Do the current prohibitions on multidisciplinary practice, nonlawyer ownership of law firms, multijurisdictional practice, and the unauthorized practice of law need to be reconsidered in the interest of improving the delivery of legal services? 
  • What regulations are necessary to ensure ethical delivery of services and consumer protection? 
  • What regulatory changes have been implemented in other countries and what impact have those changes had on the delivery of legal services?


Submission Information: 

Papers should be submitted to the section chair, Ben Cooper, via email at, no later than September 1, 2019, with the subject line: PR Section Call for Papers. 1-2 papers will be selected from the Call for Papers to be presented at the section program along with other panelists, including ABA President Judy Perry Martinez, Professor William Henderson, and Professor Rebecca Sandefur.  

May 23, 2019 | Permalink | Comments (0)

Wednesday, May 22, 2019

Exam Grading -- No LLCs as Corporations (So Far)

It has been kind of a unique end of the semester, and I am working feverously to get through my Business Organizations exams. I'm getting there.  So far, I have had zero exams reference a "limited liability corporation."  If this holds, it will be at least three years in a row.  

I have had a couple of folks refer to LLC veil piercing as piercing the "corporate" veil (another no-no), and I did have some other "corporate" references to LLCs (e.g., "an LLC's corporate formalities"), so we're not all the way there. But so far, I am seeing improvement, and I appreciate the effort.  

Here's hoping for 48 of 48 describing the LLC (as an entity) correctly.  I hope the rest of my colleagues are holding up well here in the home stretch. Good luck to all. 

May 22, 2019 in Business Associations, Corporations, LLCs, Teaching | Permalink | Comments (0)

Looking at Shareholder Voting through the Lens of Authority

The following comes to us from Bernard Sharfman:

I have slightly revised a key paragraph from the Introduction of my new article, Enhancing the Value of Shareholder Voting Recommendations. This paragraph takes the approach that shareholder voting is really more about authority than accountability. Using this approach has significant implications for the use of board voting recommendations. I would appreciate any comments that you may have on the following:

[S]hareholder voting in a public company cannot be looked at as simply another tool of accountability, i.e., a device to minimize agency costs or enhance efficiency, such as when shareholders file a direct or derivative lawsuit, initiate a proxy contest, attempt a hostile takeover, or take significant positions in the company and then advocate for change (hedge fund activism, here and here). When shareholders vote they are also participating, alongside the board, in corporate decision making. That is, they are temporarily transformed into a locus of corporate authority that rivals the authority of the board. As co-decision makers it is critical that shareholders and those with delegated voting authority, such as mutual fund advisers, have at their disposal informed and sufficiently precise voting recommendations, no matter what the source, including the board of directors. If shareholders and investment advisers with delegated voting authority feel that the board can provide them with the most precise voting recommendations, then those are the recommendations that they should use.

May 22, 2019 in Stefan J. Padfield | Permalink | Comments (0)

Monday, May 20, 2019

Remembering a College Classmate, Friend, and Fellow Business Lawyer

Last week, a wonderful man in my life died.  Jonathan Spencer, a classmate from and fellow class leader for Brown University, died unexpectedly a week ago.  He collapsed while exercising and was unable to be revived.  At the time of his death, he was the General Counsel of the Museum of Science Fiction in Washington, DC, a museum that he helped to found.  The above photo was taken last year at our 35th reunion celebrations.  Although we did not see each other a lot in between reunions, we shared a passion for Brown and our class.

We also shared a professional connection, as the title of this post indicates.  Jonathan was a fellow business lawyer.  He focused on communications technology for much of his career.  His formal professional bio as currently posted at the Museum of Science Fiction is as follows:

Jonathan Spencer, General Counsel. Jonathan is a technology and transactional attorney with over 25 years of experience having held senior and executive level positions with several Internet and telecommunications companies. Jonathan has also representedtechnology and media companies, financial institutions and nonprofit organizations. Jonathan is a former chair of the Association of Corporate Counsel’s IT, Privacy and E-Commerce Committee and has spoken at programs for the American Bar Association, the Association of Corporate Counsel, the American Society of Association Executives and the International Technology Law Association. Jonathan is a graduate of Brown University and Duke University School of Law.

I can assure you, as impressive as his professional accomplishments are, Jonathan was far more than an impressive business lawyer.  He had a seemingly boundless intellectual capacity.  At his memorial services in Falls Church, Virginia yesterday, it was noted by family that "Before Google and Wikipedia, there was Jonathan."  That rang so true to me.  But more importantly, perhaps, Jonathan had an incredible joy for life.  He was "all in" when he chose to do things--from simple conversations with friends and classmates about mutual interests through event planning and fundraising work for Brown to world travel (and much more in between).  He lived life--making sure that he enjoyed the present moment as he strived to achieve all that he accomplished.  His altogether too-short life reminds me to do the same.

The photo below was taken of the two of us at Brown Homecoming back in 2007.  We were on campus for a leadership weekend and attended the football game while we were there.  A fellow classmate found this picture for me a few days ago.  I will treasure it and all of the memories of our times together.  Jonathan, may you rest in eternal peace, and may your family be comforted in their time of grief.  You will be missed by us all.


May 20, 2019 in Joan Heminway, Technology | Permalink | Comments (2)

Sunday, May 19, 2019

Farewell, John Nagle

Today, I thought of Haskell Murray’s recent post, Reflections on the Life of a Smiling, Selfless Educator: Rivers Lynch, in thinking about paying tribute to my former colleague, mentor, and friend, University of Notre Dame Law School Professor John Nagle, who passed away yesterday.  Like so many, I am stunned and devastated by John’s death.  He too was a smiling, selfless educator who positively impacted the lives of so many.

John was a tremendous scholar in the areas of environmental law, property, legislation & regulation, and biodiversity and the law.  Yet because of his characteristic selflessness, I could always as his junior colleague count on him to critically read and comment on my work on topics such as the Federal Reserve and clearinghouses!  His feedback, in addition to his lasting support and encouragement, has been a priceless gift in my life.  I will be forever grateful.

Others have written about how John creatively integrated his life and research.  For example, he managed to “convert his love of the outdoors and our national parks into a research agenda.”  In catching up with John, I always loved hearing about his most recent national park adventure.  And others have written about his devotion to his family and faith.  I too received an email from John one year saying we wouldn't get to catch up at AALS because he didn’t want to miss any of his daughter’s basketball games!

John knew what he valued and what his priorities were in life.  And he lived accordingly.  He had a clear definition of success and lived consistent with that vision.  Harvard Business School Professor Clayton M Christensen asks “How Will You Measure Your Life?”  John had a ready answer for this question.   

Perhaps one of the best ways I can honor John and his memory is to reflect upon my values and priorities, and to ask myself whether I’m using my time, talent, and treasure in such a way that these values and priorities are actually being put into practice, and to encourage others to engage in similar reflection.           

(published 5/19/19, revised 5/20/19)

May 19, 2019 | Permalink | Comments (3)

Saturday, May 18, 2019

The Trump Administration versus the Supreme Court

In 2014, the Supreme Court decided Burwell v. Hobby Lobby Stores, where it held that it is possible for a for-profit corporation to have a religious identity, derived from the religious commitments of “the humans who own and control those companies.”  In so holding, the Court relied in part on state laws that permit even for-profit corporations to pursue purposes beyond stockholder wealth maximization.  As the Court put it:

Not all corporations that decline to organize as nonprofits do so in order to maximize profit. For example, organizations with religious and charitable aims might organize as for-profit corporations because of the potential advantages of that corporate form, such as the freedom to participate in lobbying for legislation or campaigning for political candidates who promote their religious or charitable goals.  In fact, recognizing the inherent compatibility between establishing a for-profit corporation and pursuing nonprofit goals, States have increasingly adopted laws formally recognizing hybrid corporate forms. Over half of the States, for instance, now recognize the “benefit corporation,” a dual-purpose entity that seeks to achieve both a benefit for the public and a profit for its owners.

In any event, the objectives that may properly be pursued by the companies in these cases are governed by the laws of the States in which they were incorporated—Pennsylvania and Oklahoma—and the laws of those States permit for-profit corporations to pursue “any lawful purpose” or “act,” including the pursuit of profit in conformity with the owners’ religious principles.

So it was a bit of an eyebrow-raiser to read this April Executive Order in which Trump declares:

The majority of financing in the United States is conducted through its capital markets.  The United States capital markets are the deepest and most liquid in the world.  They benefit from decades of sound regulation grounded in disclosure of information that, under an objective standard, is material to investors and owners seeking to make sound investment decisions or to understand current and projected business.  As the Supreme Court held in TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976), information is “material” if “there is a substantial likelihood that a reasonable shareholder would consider it important.”  Furthermore, the United States capital markets have thrived under the principle that companies owe a fiduciary duty to their shareholders to strive to maximize shareholder return, consistent with the long-term growth of a company.

(emphasis added),

As readers of this blog are likely aware, academics love to argue over whether existing law requires that corporations be run solely to maximize stockholder wealth, and of course over whether such law – if it exists – is a good idea or a bad idea.  See generally Joan MacLeod Heminway, Shareholder Wealth Maximization as a Function of Statutes, Decisional Law, and Organic Documents, 74 Wash. & Lee L. Rev. 939 (2017).  Usually, however, these battles occur in the context of state law.  And while federal law – securities regulation, and so forth – often implies a corporate purpose of wealth maximization, I have to admit, I don’t recall seeing so blatant a statement about it before.

In any event, this section of the Executive Order directs the Department of Labor to review its existing guidance re: ERISA plans’ involvement in ESG matters.  It’s a follow-up to last year’s Labor Department release – which I blogged about here – warning that ERISA plans may violate their duties to plan beneficiaries if they engage on ESG matters,  or vote for ESG-related proxy proposals, for reasons other than plan wealth maximization.

As I’ve previously discussed, the SEC is currently reviewing rules governing the proxy process – including the role of proxy advisory services – to determine if additional regulation is needed.  Much of this fight is, of course, about shareholder involvement in ESG matters and corporate governance more generally.  I assume from this latest Executive Order that we’re about to see something of a two-pronged effort to limit shareholder power, with new guidance and/or regulations issuing from the SEC on one side and the Labor Department on the other.  Anyone’s guess how successful this effort is likely to be, but I will highlight Andrew Tuch’s recent article, Why Do Proxy Advisors Wield So Much Influence? Insights From U.S.-U.K. Comparative Analysis, B.U. L. Rev. (forthcoming), pointing out that proxy advisory services have far less influence in the UK than in the United States, which he attributes to the fact that US shareholders have less power, and have reached less consensus on best practices in corporate governance, than shareholders in the UK.  He concludes that many of the attempts to limit shareholder power – and the power of proxy advisors – in the US will not only be ineffective, but will actually strengthen proxy advisors’ hand.

May 18, 2019 in Ann Lipton | Permalink | Comments (0)

Friday, May 17, 2019

Call for Panelist (Self-Nominations)- Pedagogy Session-AALS Section on Transactional Law and Skills- Markets and Regulation: The Shifting Context of Transactional Practice

The AALS Section on Transactional Laws and Skills is pleased to announce its program, “Markets and Regulation: The Shifting Context of Transactional Practice,” to be held (per the draft program) from 8:30-10:30 on Sat. Jan. 4 at the AALS 2020 Annual Meeting in Washington D.C. on “Pillars of Democracy: Law, Representation, and Knowledge.” This session will explore the changing regulatory context of transactional legal practice, which is rapidly evolving in response to new innovations and challenges across a range of markets. Emerging issues range from privacy law and cybersecurity, to national security concerns, antitrust, and international trade and investment, to the prospect of new regulatory responses to climate change and other environmental threats. The forms these regulatory responses take are also diverse, including not only traditional public regulation, but also private governance, which draws upon the efforts of NGOs, trade associations, and international organizations.

Pedagogy Panel: In addition to paper presentations from our Call for Papers (circulated separately), the program will feature a panel of 3-4 speakers who will focus on how to incorporate regulatory concepts and issues across the transactional curriculum, including in clinics and other experiential courses, as well as in doctrinal courses. Our Section is proud to announce that this program will be co-sponsored by the Section on Business Associations and the Section on Securities Regulation.

Panelist (Self-) Nomination Information: We invite any full-time faculty member of an AALS member school, whether or not they are a member of the Section, who would like to participate on the pedagogy panel to email (i) a brief statement of interest of no more than 300 words indicating their approach; and (ii) their CV to Virginia Harper Ho, Chair of the Section, at on or before May 18, 2019. Invited panelists will be notified by no later than June 10, 2019. All presenters will be responsible for paying their registration fee, hotel, and travel expenses. Any inquiries about this Call for Nominations should be submitted to the Section Chair Virginia Harper Ho, University of Kansas School of Law, at or (785) 864-9217.

May 17, 2019 in Conferences | Permalink | Comments (0)

Call for Papers - 2020 AALS Section of Transactional Law & Skills: Markets & Regulation

AALS SECTION ON TRANSACTIONAL LAW AND SKILLS Markets & Regulation: The Shifting Context of Transactional Practice 2020 AALS Annual Meeting Washington, D.C.

The AALS Section on Transactional Laws and Skills is pleased to announce a call for papers for its program, “Markets and Regulation: The Shifting Context of Transactional Practice,” to be held at the AALS 2020 Annual Meeting in Washington D.C. on “Pillars of Democracy: Law, Representation, and Knowledge.” This session will explore the changing regulatory context of transactional legal practice, which is rapidly evolving in response to new innovations and challenges across a range of markets. Emerging issues range from privacy law and cybersecurity, to national security concerns, antitrust, and international trade and investment, to the prospect of new regulatory responses to climate change and other environmental threats. The forms these regulatory responses take are also diverse, including not only traditional public regulation, but also private governance, which draws upon the efforts of NGOs, trade associations, and international organizations.

In addition to paper presentations, the program will feature a panel focusing on how to incorporate regulatory concepts and issues across the transactional curriculum, including in clinics and other experiential courses, as well as in doctrinal courses. This program will be co-sponsored by the Section on Business Associations and the Section on Securities Regulation.

Submission Information: The Section on Transactional Law and Skills invites any full-time faculty member of an AALS member school who has written an unpublished paper, or who is interested in writing a paper on this topic, to submit a 1 or 2-page proposal or full draft to Virginia Harper Ho, Chair of the Section, at on or before August 15, 2019. Papers accepted for publication but that will not yet be published as of the 2019 meeting are also welcome. Please remove the author’s name and identifying information from the submission and instead include the author’s name and contact information in the submission email. Up to two papers will be selected after review by members of the Executive Committee of the Section. Authors of selected papers will be notified by September 15, 2019. The Call for Paper presenters will be responsible for paying their registration fee, hotel, and travel expenses. Any inquiries about the Call for Papers should be submitted to the Section Chair Virginia Harper Ho, University of Kansas School of Law, at or (785) 864-9217.

May 17, 2019 in Call for Papers, Conferences | Permalink | Comments (0)

Wednesday, May 15, 2019

Limits on FINRA's Restricted Firm Proposal

A recent op-ed by St. John's Christine Lazaro captures some of the issues FINRA's new proposal won't solve:

In the event of a product failure, or concentrated misconduct, firms simply cannot make investors whole and a restricted fund will not last long enough to pay a string of arbitration awards resulting from the misconduct. Troubled firms will remain more likely to shut down, leaving investors with no recourse, with the key people simply moving on to new firms.

Finra must do more to ensure that firms, and those in charge of the firms, are held accountable when their brokers go astray. While this proposal is a welcome step in the right direction, until Finra defines "accountability" to mean protecting investors and making them whole, investors will not be fully protected.

These product failures happen fairly regularly.  When some toxic offering slips through and blows up, investors working with smaller firms will still find themselves out of luck.  Instead of the second or third arbitration award pushing the firm out of business, it might be the fourth or the fifth.  Although it's something of an improvement, we're still in a world where only the first few smaller firm customers to secure an arbitration award may be paid.

May 15, 2019 | Permalink | Comments (0)

ICYMI: #corpgov Midweek Roundup (May 15, 2019)

May 15, 2019 in Stefan J. Padfield | Permalink | Comments (0)

Tuesday, May 14, 2019

An Oops In My New Paper: Survey of West Virginia Oil and Gas Law

So, this post is about shameless self-promotion and a cautionary tale.  A while back I was asked to write the West Virginia section of Texas A &M Journal of Property Law's Oil and Gas Survey.  It's a short overview of recent developments, and one of the many perils of the law review process is how long such things take to get to print.  

Even worse than a slow timeline, a miscommunication meant that my final round of edits did not make it into the piece, and there are a couple of errors. The editors were appropriately apologetic, and I know it all happened in good faith.  I take some ownership, too, in that I was not at all demanding about knowing the schedule for the next round of edits or the overall timeline.

Ultimately, despite the (nonsubstantive) errors, I hope the piece will be helpful to some folks. There are some interesting oil and gas cases happening in West Virginia (and around the country), and how they turn out could have a significant impact on the oil and gas business.  

Here's the abstract to my article, which you can find here

This Article summarizes and discusses important recent developments in West Virginia’s oil and gas law, including legislative action and case law. This Article is divided into three Sections. First, West Virginia’s evolution in its approach to fractional mineral owner disputes in the Marcellus Shale. After multiple efforts to pass a forced pooling bill, the state settled instead on a cotenancy solution. Second, West Virginia addressed flat-rate royalties, following two court cases, a legislative response, and a subsequent court challenge to the legislation. Finally, this Article discusses three developments in lease interpretation: (1) what will be deemed “reasonably necessary” for oil and gas development in West Virginia; (2) if implied pooling rights are included in West Virginia leases that are silent on the matter; and (3) whether non-executory and non-participating royalty owners have rights to approve pooling.

May 14, 2019 in Current Affairs, Family Business, Joshua P. Fershee, Law Reviews | Permalink | Comments (2)

Monday, May 13, 2019

Qualified Opportunity Funds - Securities Law Advisory

Today, I have been attending and presenting at the Midwest Symposium on Social Entrepreneurship in Kansas City, Missouri.  This is the Seventh Annual installment of this event, which engages entrepreneurs, lawyers, government actors, and others in education, networking, and discussions around various issues (which differ from year to year) relating to social enterprise structure, governance, finance, and operations.  I love attending this symposium.  The people are socially and intellectually stimulating.  I appreciate Tony Luppino inviting me to participate.

There is much I could write about the programs today.  However, I will focus in one one small thing for now: Opportunity Zones and more particularly the funds that invest in them.  A quick description of Opportunity Zones and a cautionary message on related investment funds follow.

The U.S. Internal Revenue Service has defined Opportunity Zones as follows in a Q&A posted on its website:

An Opportunity Zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation of authority to the Internal Revenue Service.

The main point is to encourage investment in businesses or real estate in distressed areas of the United States through federal tax incentives.

Unsurprisingly, investment funds have been established to make these tax-advantaged financings.  From that state of affairs stems my public service announcement.  As I listened to folks talking about this form of funding real estate and businesses, the securities lawyer in me became uncomfortable.  The presenters appeared to be ignoring the seemingly obvious conclusion that the process of seeking investors to participate in these investment funds is a securities offering that must be registered under federal or state securities laws, unless an exemption is available.  So, I raised that point from the audience . . . .

Sure enough, if one looks or resources on the Internet, one learns that promoters of these funds seem to have reached the same legal conclusion about the potential application of securities offering registration/exemptions.  (See, e.g., here and here.)  Federal registration exemptions in or under the Securities Act of 1933, as amended, that might work in this context include those for private placements (Section 4(a)(2) or Rule 506(b)) and intrastate offerings (Section 3(a)(11) and Rules 147 and 147A).

Bottom line word to the wise?  Find an exemption for the offer or sale of investment interests in a Qualified Opportunity Fund or register the offering with the Securities and Exchange Commission and any applicable state securities commission.  Otherwise, proceed at your regulatory peril . . . .


May 13, 2019 in Joan Heminway, Securities Regulation | Permalink | Comments (0)

Sunday, May 12, 2019

Humans, Robots, Industrialization, and Tax Policy

In general, I’m probably about as excited to listen or read about the area of tax law as most people are about the area of clearing and settlement (not that I understand this!).  However, at a January 2019 symposium organized by the University of Pennsylvania Journal of Business Law, in collaboration with the Center for the Study of Business Ethics, Regulation, & Crime at the University of Maryland, on Harmonizing Business Law, Kathryn Kisska-Schulze & Karie Davis-Nozemack completely captured my attention in a presentation that focused on “the intersection of U.S. industrialization with employment and innovation tax policies.”  I’d never given any thought to the potential implications of the increasing automation of the workplace for existing social safety nets.  Yet it immediately struck me as a critical, timely issue. 

So, I was delighted this weekend to have a chance to read their recently posted article, Humans vs. Robots: Rethinking Policy for a More Sustainable Future (forthcoming, Maryland Law Review).  I learned a lot.  For example, I never knew that in addition to writing about the “invisible hand” and moral sentiments, that Adam Smith also wrote about tax!  As this article is a really interesting read about a topic of great significance, I wanted to share its abstract and to encourage readers' review:

Robotic and software innovation threatens to displace one third of the global workforce by 2030. Widespread worker displacement would decimate U.S. social safety net funding. To address these issues, Bill Gates and others have proposed a robot tax. A robot tax, while elegant on its face, masks the underlying tension between innovation and employment tax policies. Only by examining the foundational principles of these two policies is it evident that their dissonance can only be harmonized by requiring these policies to remain faithful to their original objectives.

Innovation policy has strayed from its twin economic and social welfare objectives. As economic progress has more recently eclipsed the importance of social goals, innovation policy no longer works in concert with employment tax policy. Indeed, insofar as innovation policy fosters workforce automation substitution to the detriment of the U.S. social safety net, it undermines employment tax policy. Employment tax policy never contemplated the extent and sudden arrival of automation substitution in the workforce. In its current form, the employment tax is insufficiently robust to adjust to automation substitution. Consequently, a new approach to tax policy analysis is needed.

The intersection of innovation and tax is an undertheorized area. This article highlights the tension that automation creates amongst employment tax and innovation policies by identifying the fundamental objectives that motivate each policy. This paper is the first to harmonize the dissonance between innovation and employment tax policy, the first to use the lens of sustainability to address the dissonance, and the first to introduce sustainable taxation as a superior approach for crafting tax policy and for harmonizing employment tax and innovation policies, in particular.      

May 12, 2019 | Permalink | Comments (0)

Saturday, May 11, 2019

Vanguard's Votes

Vanguard recently announced that it will no longer centralize proxy voting across all of its funds; instead, its externally managed funds will set their own proxy voting policies.  Although these represent only around 9% of Vanguard’s assets under management, they include almost all of Vanguard’s actively managed funds and actively managed equity assets

I haven’t really seen much explanation for the shift from Vanguard itself – its own statement on the matter is quite vague – but I suspect they may have made the change for the same reason that Fidelity separates active and passive voting authority, namely, to avoid having the active funds grouped with the passive for the purposes of Section 13(d) of the Securities Exchange Act.  Fidelity’s policy is longstanding because historically, it specializes in active funds.  Vanguard, by contrast, is nearly synonymous with index funds, so my guess is that it reached a point where the active assets under management were becoming a regulatory risk, especially if those funds wanted to take positions with a view toward influencing – or supporting those who influence – management.  As John Morley points out, Section 13(d) limits the ability of large fund providers to take activist stances; Vanguard, I think, just opened that door a crack.  (If anyone else has more info on this or a different theory, please drop a comment or otherwise let me know.)

That said, I think this is a good move.  I’ve long argued that mutual funds’ practice of centralizing their voting behavior is problematic both from the perspective of fund governance and from the perspective of corporate governance.  On the fund governance side, vote centralization may fail to reflect the distinct interests of individual funds.  On the corporate governance side, a diversified portfolio of funds may influence managerial decisionmaking in ways that conflict with the interests of less diversified shareholders.  Given the concerns these days that mutual fund companies exercise too much power over corporate behavior, decentralizing voting authority seems like the most obvious - and appropriate - solution.


May 11, 2019 in Ann Lipton | Permalink | Comments (1)

Friday, May 10, 2019

Managing Compliance Across Borders Conference at the University of Miami- June 26-28




Join me in Miami, June 26-28.



Managing Compliance Across Borders

June 26-28, 2019

Managing Compliance Across Borders is a program for world-wide compliance, risk and audit professionals to discuss current developments and hot topics (e.g. cybersecurity, data protection, privacy, data analytics, regulation, FCPA and more) affecting compliance practice in the U.S., Canada, Europe, and Latin America. Learn more

See a Snapshot: Who Will Be There?
You will have extensive networking opportunities with high-level compliance professionals and access to panel discussions with major firms, banks, government offices and corporations, including:

  • BRF Brazil
  • Carnival Corporation
  • Central Bank of Brazil
  • Endeavor
  • Equal Employment Opportunity Commission
  • Eversheds Sutherland
  • Fidelity Investments
  • Hilton Grand Vacations
  • Ingram Micro
  • Jones Day
  • Kaufman Rossin
  • LATAM Airlines
  • Laureate Education, Inc.


  • MasterCard Worldwide
  • MDO Partners
  • Olin Corporation
  • PwC
  • Royal Caribbean Cruises
  • Tech Data
  • The SEC
  • TracFone Wireless
  • U.S. Department of Justice
  • Univision
  • UPS
  • XO Logistics
  • Zenith Source


Donna E. Shalala Student Center
1330 Miller Drive
Miami, FL 33146


CLE Credit
Upwards of 10 general CLE credits in ethics and technology applied for with The Florida Bar


Program Fee: $2,500 $1,750 until June 1 
Use promo code “MCAB2019” for discount 

Non-profit and Miami Law Alumni discounts are available, please contact:
Hakim A. Lakhdar, Director of Professional Legal Programs, for details

Learn More: Visit the website for updated speaker information, schedule and topic details.

This program is designed and presented in collaboration with our partner in Switzerland

University of St. Gallen








May 10, 2019 in Compliance, Conferences, Corporate Governance, Corporations, CSR, Current Affairs, Ethics, Financial Markets, International Business, Law Firms, Law School, Marcia Narine Weldon, White Collar Crime | Permalink | Comments (0)

Thursday, May 9, 2019

2018 Top Ten List - Corporate and Securities Law Articles

Every year the Corporate Practice Commentator releases its annual annual poll of best corporate and securities law articles.  I had the pleasure of seeing earlier stages for some of these papers at conferences over the past few years.    

These are the results this year:

The Corporate Practice Commentator is pleased to announce the results of its twenty-fifth annual poll to select the ten best corporate and securities articles.  Teachers in corporate and securities law were asked to select the best corporate and securities articles from a list of articles published and indexed in legal journals during 2018.  Just short of 400 articles were on this year’s list.  Because of the vagaries of publication, indexing, and mailing, some articles published in 2018 have a 2017 date, and not all articles containing a 2018 date were published and indexed in time to be included in this year’s list.

The articles, listed in alphabetical order of the initial author, are:

Yakov Amihud, Markus Schmid & Steven Davidoff Solomon.  Settling the Staggered Board Debate.  166 U. Pa. L. Rev. 1475-1510 (2018).

Tamara Belinfanti & Lynn Stout.  Contested Visions: The Value of Systems Theory for Corporate Law.  166 U. Pa. L. Rev. 578-631 (2018).

James D. Cox & Randall S. Thomas.  Delaware’s Retreat: Exploring Developing Fissures and Tectonic Shifts in Delaware Corporate Law.  42 Del. J. Corp. L. 323-389 (2018).

Jill E. Fisch.  Governance by Contract: The Implications for Corporate Bylaws.  106 Cal. L. Rev. 373-409 (2018).

Jill E. Fisch, Jonah B. Gelbach & Jonathan Klick.  The Logic and Limits of Event Studies in Securities Fraud Litigation.  96 Tex. L. Rev. 553-618 (2018).

George S. Geis.  Traceable Shares and Corporate Law.  113 Nw. U. L. Rev. 227-277 (2018).

Cathy Hwang.  Deal Momentum.  65 UCLA L. Rev. 376-425 (2018).

Dorothy S. Lund.  The Case against Passive Shareholding Voting.  43 J. Corp. L. 493-536 (2018).

Edward B. Rock & Daniel L. Rubinfeld.  Antitrust for Institutional Investors.  82 Antitrust L. J. 221-78 (2018).

Mark J. Roe.  Stock-Market Short-Termism’s Impact.  167 U. Pa. L. Rev. 71-121 (2018).

May 9, 2019 | Permalink | Comments (0)

Wednesday, May 8, 2019

ICYMI: #corpgov Midweek Roundup (May 8, 2019)

May 8, 2019 in Stefan J. Padfield | Permalink | Comments (0)