Business Law Prof Blog

Bromberg Chair - SMU Law

Dr. Anne R. Bromberg of Dallas has committed $2 million to SMU for the creation of The Alan R. Bromberg Centennial Chair in Corporate, Partnership, Business and Securities Law in honor of her late husband, a renowned professor in the SMU Dedman School of Law. The new chair will support the Law School in strengthening research and coursework in corporate, partnership, business and securities law, honoring Professor Bromberg’s prolific scholarship and mentoring style of leadership. We anticipate appointment at the rank of full professor beginning in Fall 2022. J.D. degree required. To ensure full consideration for the position, the application submitted by October 1, 2021, but the committee will continue to accept applications until the position is filled.

Applications must be submitted electronically via Interfolio (https://apply.interfolio.com/91455). These materials should include a cover letter, resume, research agenda, writing sample(s) and a list of references. Reference Position No. and (Area of Law): 00053425 (Bromberg Chair).

SMU will not discriminate in any program or activity on the basis of race, color, religion, national origin, sex, age, disability, genetic information, veteran status, sexual orientation, or gender identity and expression. The Executive Director for Access and Equity/Title IX Coordinator is designated to handle inquiries regarding nondiscrimination policies and may be reached at the Perkins Administration Building, Room 204, 6425 Boaz Lane, Dallas, TX 75205, 214-768-3601, [email protected].

Sharfman on the Problem of Three

Friend of the blog Bernard Sharfman has posted The Problem of Three In the Voting of Public Company Shares over at RealClearMarkets.  A brief excerpt follows.

The problem of the Big 3’s concentration of voting power is illustrated in Engine No. 1’s proxy fight at ExxonMobil …. Engine No. 1’s stated objectives in seeking the election of its own nominees was to: 1) enhance the value of ExxonMobil’s common stock; 2) reduce ExxonMobil’s carbon emissions; and 3) transition ExxonMobil into a global leader in profitable clean-energy production. Yet Engine No. 1 never provided specific recommendations on how it was going to accomplish these objectives. This was odd, as one would expect Engine No. 1 to present such recommendations if it were to convince shareholders that its director nominees were worthy of being elected.

The inability to provide such recommendations must have been a clear indication to the shareholders of ExxonMobil, including the Big 3, that Engine No. 1 was not truly informed about the operations of ExxonMobil or how it was going to achieve its stated objectives. Nevertheless, Engine No. 1 succeeded in getting three of its four nominated directors elected to Exxon’s board. How in the world was it able to do this?

…. I argue in my writing that Engine No. 1 was able to get the Big 3’s support by appealing to their desire to be perceived as investment advisers who are making a difference in mitigating climate change…. Such opportunistic shareholder voting by investment advisers is arguably a breach of an investment adviser’s fiduciary duties under the Investment Advisers Act of 1940. If so, it is up to the SEC to provide the necessary investor protection through enforcement actions. Alternatively, there is a potential market solution for mitigating the “Problem of Three.” This market solution … is for index funds to provide investors with some policy control over their proportional voting interest, as represented by their percentage of ownership in a specific fund.

South Texas Law - Seeking Faculty

SOUTH TEXAS COLLEGE OF LAW HOUSTON

Location: Houston, TX

Subjects: Criminal Law; Criminal Procedure; Evidence; Professional Responsibility; Business Associations

Start Date: August 1, 2022

South Texas College of Law Houston invites applications from entry-level or lateral faculty for up to three full-time, tenure-track positions at the assistant or associate professor level beginning in the 2022-23 academic year. Our curricular needs include criminal law, criminal procedure, evidence, professional responsibility, and corporations, with additional areas of potential interest in health, international, energy, and environmental law. We seek candidates with outstanding academic records who are committed to excellence in teaching and sustained scholarly achievement. Members of minority groups and others whose backgrounds will contribute to the diversity of the faculty are especially encouraged to apply.

South Texas College of Law Houston is committed to fulfilling our mission of providing a diverse body of students with the opportunity to obtain an exceptional legal education, preparing graduates to serve their community and the profession with distinction. The school, located in downtown Houston, was founded in 1923 and is the oldest law school in the city. South Texas is a private, nonprofit, independent law school, fully accredited by the American Bar Association and a member of the Association of American Law Schools, with 60 full-time and 60 adjunct professors serving a student body of 900 full and part-time students. South Texas is known for its collegial culture and commitment to student success. The school is home to the most decorated advocacy program in the U.S. and the nationally recognized Frank Evans Center for Conflict Resolution. Additional information regarding South Texas is available at http://www.stcl.edu.

Applications may be directed to Professor Joe Leahy, [email protected].

South Texas College of Law Houston is an Equal Opportunity/Affirmative Action Employer. All qualified applicants will receive consideration for employment without regard to race, color, religion, sex, national or ethnic origin, ancestry, age, disability, sexual orientation, gender identity, veteran status, or any other characteristic protected by law.

North Dakota Law - Faculty Openings

The University of North Dakota School of Law invites applications for one or more tenure-track positions beginning fall 2022. Areas of interest include Federal Indian Law, Lawyering Skills, Civil Procedure, Business Associations, Energy, and Oil & Gas. Please feel free to share this announcement widely.

The UND School of Law seeks colleagues dedicated to fostering well-rounded and public-minded legal professionals with skills to serve as effective, self-reflective, and ethical leaders who will contribute greatly to their communities. Our distinctive character as one of the nation’s smaller public law schools—and as the sole law school in North Dakota—informs our program of legal education, which reflects a thoughtful and collaborative approach to teaching and learning. We maintain a close relationship with our state’s bench and bar and a special interest in connecting with and serving our state’s rural as well as urban populations. UND is committed to creating a welcoming atmosphere for everyone in our community, and our law school strives to cultivate a friendly and supportive learning environment to help our students develop into conscientious legal professionals. We value teachers who demonstrate intentionality and creativity and are interested in infusing their teaching with writing, research, cooperative learning, interpersonal skills, and/or other pedagogies. We also seek scholars with innovative research agendas and encourage work that transcends disciplinary boundaries, including the scholarship of teaching and learning. We desire colleagues who view service to the law school, the academy, and the legal profession as integral to their own success.

UND is committed to creating an inclusive and equitable environment that respects, acknowledges and celebrates diversity and individual differences. Successful applicants for this position will demonstrate a commitment to equity and inclusion through interest or past experience, as well as the ability to work and collaborate in a diverse, multicultural, and inclusive setting.

Interested candidates may find additional information and may apply at https://campus.und.edu/human-resources/careers/job-openings.html.

If you have any questions, please feel free to contact the UND School of Law’s Faculty Selection Committee at [email protected].

Still Talking About Corporate Scienter

A couple of weeks ago, I posted about how courts are not terribly precise when evaluating allegations of corporate scienter in Section 10(b) claims.  Since then, a couple of cases were decided that provide some useful examples of the problem.

First up, there’s the Second Circuit’s Plumbers & Steamfitters Local v. Danske Bank, decided earlier this week.  Apparently, the Estonia subsidiary of Danse Bank got into trouble for money laundering, and the plaintiffs alleged this resulted in a number of false statements by Danse Bank itself.  The court dismissed all of the statement claims on various grounds, and then turned to the final allegations that, due to Estonia’s conduct, Danse Bank had engaged in a scheme to defraud.  The court rejected the claim in a few brief sentences:

At no point do [the plaintiffs] articulate with precision the contours of an alleged scheme to defraud investors, or which specific acts were conducted in furtherance of it. Instead, the claim rests upon the incorporation of the previous 140 pages of the pleading paired with the conclusory assertion that “Defendants carried out a common plan, scheme, and unlawful course of conduct that was intended to . . . deceive the investing public” and “artificially inflate the market price of Danske Bank ADRs.” App’x at 160. Money-laundering at a single branch in Estonia cannot alone establish that Danske Bank itself carried out a deceptive scheme to defraud investors. Absent some sort of enumeration of which specific acts constituted an alleged scheme in connection with the purchase or sale of securities, the Funds’ claim does not comply with the applicable heightened pleading standard and cannot go forward.

(emphasis added).

The court did not explain why a Danse Bank subsidiary is being treated as distinct from Danse Bank itself, or how one should assess Danse Bank’s actions and intent distinct from the behavior of its subsidiaries.  I can’t even say the decision was wrong, because I don’t know what standards the court used to reach it.

Next up, there’s Hurst v. Enphase Energy, 2021 WL 3633837 (N.D. Cal. Aug. 17, 2021), where, as relevant here, plaintiffs tried to demonstrate scienter by pointing out that several insiders made unusual sales prior to the end of class period disclosure.  The court rejected the argument by saying:

Defendants correctly highlight that seven of the eight identified insiders are not named in this action, and such sales are irrelevant to scienter.

No further analysis was provided; the court simply cited two other cases, Wozniak v. Align Tech., Inc., 2011 WL 2269418 (N.D. Cal. June 8, 2011) and In re Splash Tech. Holdings, Inc. Sec. Litig., 160 F.Supp.2d 1059 (N.D. Cal. 2001).  Wozniak, like the Enphase court, did not discuss the matter further. 

But let’s unpack this.

Insider trading is often described in 10(b) opinions as a “motive” to commit fraud – for example, in Splash, the court didn’t exactly say that nondefendants’ trades were never relevant, but it did suggest they’d only be relevant if there was evidence the trades were intended to manipulate the stock to assist their colleagues’ fraud.  But that is too broad brush. Insider trading may also be a result rather than a cause.  I.e., imagine a corporation where insiders are committing fraud for some reason – they feel pressure from stockholders or their bosses to get results, they have bonuses on the line, they’re afraid of losing their jobs, whatever it is.  Now they, and possibly other people in the organization, have inside information that the company is not in fact as successful as it pretends to be.  Anyone with this knowledge may decide to sell stock and cash in while they can; the sales, in this scenario, are not the reason for the fraud, but they do evidence someone’s knowledge that something in corporate reporting was amiss.  That knowledge may contribute to an inference of scienter, in the sense that information was known to someone demonstrating that the defendants’ public statements were false and would mislead investors.

Why, then, would nondefendants’ trades be relevant here?

There are a number of possibilities, and they depend on your theory of scienter.

In the simplest example, suppose the selling shareholders worked closely with the individual defendants who spoke publicly.  Or suppose they sat in the surrounding offices.  It might very well be a reasonable inference that if they knew something was amiss, the individual defendants – who worked with them – knew it as well.  Maybe it’s not a strong inference, maybe it doesn’t carry the day, but it’s not an irrational one and it hardly makes sense to dismiss the possibility with a bright line declaration that nondefendants’ sales are irrelevant.

But let’s say we’re talking about corporate scienter rather than individual scienter.  Now, again, nondefendant individual sales may be relevant here, but how they are relevant depends on your theory of how to attribute scienter to a corporation.

Suppose corporate scienter is gleaned from the overall functioning of the organization.  The fact that there is evidence that at least some insiders (maybe highly placed ones) had knowledge of the truth, and yet the company issued false statements despite that knowledge, may give rise to an inference of exactly the kind of communication breakdown that justifies treating the entity as though it behaved recklessly.

Or, suppose corporate scienter is based on the scienter of someone who – as some circuits have held – approved the false statement, or furnished information for inclusion.  These insiders may very well have done that.  Maybe they approved false statements, or supplied false information to someone else.  Their sales indicate knowledge of the truth; their actions permit their own scienter to be attributed to the entity.

Why not just name them as defendants, then?  Simple: Their internal involvement with corporate information flow may not be enough to constitute a false statement under Janus Capital Group, Inc. v. First Derivative Traders, 564 U.S. 135 (2011), and though they may have participated in a scheme to defraud under Lorenzo v. SEC, 139 S. Ct. 1094 (2019), given how narrowly the Supreme Court has read reliance in the 10(b) context, see Stoneridge Inv. Partners LLC v. Scientific- Atlanta Inc., 552 U.S. 148 (2008), it’s not clear plaintiffs would be able to state a claim against them individually.  Thus, evidence of their knowledge contributes to an inference of scienter against the entity, but they are not proper defendants individually.

And, indeed, in Splash – which was cited by the Enphase court and held that the trades of nondefendants were irrelevant – the actual individuals who traded had been defendants earlier in the case, and were dismissed because plaintiffs could not show they had personally made any false statements.

Or! There is another possibility.  As I discussed in my post two weeks ago, some circuits have held that if truthful information was available to persons who played a role in approving or furnishing false information, etc, plaintiffs may be able to create a pleading stage inference that someone who approved or furnished false information acted with scienter, even if they cannot identify who that person is in their complaint.  And those allegations might create a strong inference of corporate liability for 12(b)(6) purposes, with the specific guilty agent to be identified later.

Insider sales by nondefendants may help contribute to that inference.  Maybe plaintiffs can’t show they were personally involved with generating the false statements, but there may be enough of them – highly placed – that you can infer at least one of them probably was.  Or, going back to the proximity issue, if they are adjacent to power, their knowledge may contribute to an inference that the truth was widely known at least among higher level people, so that, again, it is likely that at least one such person contributed to the false statements while knowing the truth.

I am not saying that any of these inferences were appropriate in Enphase – maybe not.  And how strong they are likely to be is necessarily going to vary case by case.  But the issue deserves more unpacking than a simple maxim that nondefendant sales are irrelevant to to scienter.

New Paper: Supreme Risk

For your reading enjoyment, I've posted a new draft, Supreme Risk, to SSRN.  This is the abstract:

While many have discussed the social issues that might arise because of a majority-conservative Supreme Court, one critical consequence of the current Supreme Court has been overlooked: the role of the Supreme Court in generating or avoiding systemic risk. For some time, systemic financial risk has been regulated by a mix of self-regulatory organizations (SROs), such as the Depository Trust Corporation, and federal regulators such as the Financial Stability Oversight Council. However, the Supreme Court’s recent jurisprudence now creates real risk that federal courts will declare keystone SROs unconstitutional because they do not fit neatly into an eighteenth-century constitutional framework.

SROs are under-appreciated regulatory entities comprised of industry members regulating their own industries with deferential oversight from federal administrative agencies. While ordinary civics discussions entirely omit SROs, they play a critical legal and economic roles and exercise enormous power delegated to them by the federal government. Yet as nominally private entities, they enforce federal law and their own rules without abiding by the restrictions imposed on governmental entities, such as providing due process.

This article makes three contributions to the literatures in financial regulation and constitutional law—disciplines which rarely interact. First, it provides a detailed account of how SROs became functionally integrated into the federal government and serve as federal law enforcement and regulators. Second, it shows how four different constitutional doctrines, now resurging under a conservative-majority Supreme Court, pose existential threats to existing SRO models. Third, the Article explains how Supreme Court decisions declaring SROs unconstitutional or limiting their powers generate systemic risk and may trigger a financial crisis.

Notre Dame Law - Open Position Announcement

NOTRE DAME LAW SCHOOL may have one or more tenured or tenure-track faculty positions that will begin in Fall 2022. At the heart of a Catholic university, Notre Dame Law School aims to educate lawyers and sustain a community of scholars who understand law as a vocation—a way to serve God and humankind. Our Catholic mission also moves us to be open and welcoming to people of all viewpoints and religious traditions. The Law School’s interest is not limited to any particular subject or subjects. Applicants for these positions should possess excellence in academic background and either demonstrated excellence in scholarship and teaching or the potential for such excellence. Notre Dame is an Equal Opportunity/Affirmative Action Employer of all protected classes including veterans and individuals with disabilities. We welcome applications from women and people of color who will enrich and diversify our faculty. 

The University of Notre Dame supports the needs of dual career couples and has a Dual Career Assistance Program in place to assist relocating spouses and significant others with their job search. The University is also a member of the Greater Chicago Midwest Higher Education Recruitment Consortium. Contact: Professor Sam Bray, Vice Chair, Faculty Appointments Committee, via email at [email protected] or by mail at Notre Dame Law School, P.O. Box 780, Notre Dame, IN 46556.

Georgia State Law - Open Positions - Business Law +

Assistant/Associate Professor of Law Positions

Georgia State University College of Law invites applications for two tenure-track Assistant or Associate Professor positions to begin no later than the 2022-23 academic year. In particular, we seek candidates who will teach in one or more of the areas of contract law, corporate law, evidence, civil procedure, and commercial law.

Part of a comprehensive research university, the College of Law is a dynamic urban-centered law school located in the heart of Atlanta with approximately 650 full- and part-time law students. We seek candidates who will make substantial and meaningful scholarly contributions, participate actively in the life of the law school, and who will enhance the College of Law’s strong teaching reputation. We encourage applications from candidates who would diversify our faculty.

The faculty of Georgia State University College of Law is a collegial and accomplished community of scholars and teachers. Faculty members have published in leading law reviews and peer-reviewed journals, have authored books and book chapters, opinion pieces, and white papers, and have frequently appeared in national and international news outlets. Faculty scholarship is supported through research assistance, summer stipends, travel support, and awards. The College of Law is consistently recognized as a best-value law school and a top-ranked school for diversity and achieves excellent bar passage and post-graduate employment rates. The College of Law also features innovative and nationally renowned programs in access to justice, legal analytics, health law, metropolitan and urban growth, and sports and entertainment law.

Applicants will have a J.D. or foreign equivalent and a strong academic record. In addition, applicants should demonstrate a track record or promise in teaching and research. The successful candidates will teach 3-4 courses per academic year in the College of Law and advise graduate students. Applicants should apply with a statement of interest, full curriculum vitae, research agenda, teaching evaluations (if applicable), diversity statement (if applicable), and list of references at https://academicjobsonline.org/ajo/jobs/19259. Please note that applicants may be required to submit further documentation prior to a campus interview, including three written letters of recommendation.

Review of applications will begin immediately and continue until the positions are filled. To ensure full consideration, please submit your application by September 15, 2021. Applications received after this date may be considered at the discretion of the College of Law Recruitment Committee. For any questions related to the positions, please contact Professors Erin Fuse Brown ([email protected]) or Yaniv Heled ([email protected]).

Georgia State University, a University System of Georgia unit, is an equal opportunity educational institution and an equal opportunity/affirmative action employer. As required by Georgia State University, an appointment is contingent upon successfully demonstrating degree attainment and completing a background investigation.

AALS Section on Securities Regulation: CFP Deadlines Extended

Please note the deadline extensions on the following previously posted calls for papers for the 2022 AALS Annual Meeting.

+     +     +     +     +

Section on Securities Regulation: Open Call for Papers

The AALS Section on Securities Regulation invites submissions for its session at the 2022 annual meeting of the AALS. The annual meeting will be held virtually from January 5-9, 2022, with Section on Securities Regulation panel scheduled for Saturday, January 8 from 12:35-1:50pm. We welcome submissions at any stage of development, although preference may be given to more fully developed papers over abstracts and paper proposals. The submission should relate to the following session description:

Equality and Access in Securities Markets

Recent years have seen increasing attention to issues of equality and access in securities markets. Nasdaq has proposed requiring listed company boards to include at least one female member and one member from an underrepresented minority. The SEC recently amended Regulation S-K to add human capital as a broad topic for disclosure, but declined to require companies to divulge diversity data. In addition to issues relevant to regulated companies, gaps remain in the gender and racial diversity of the SEC’s own commissioners and staff. More broadly, equity and access in securities markets have expanded due to Robinhood and similar modalities, as exemplified by the “meme stock” phenomenon. This panel will provide a forum for securities regulation scholars to discuss the reforms on the table as well as others that require more attention.

By August 31, 2021, please send your submission to Jackie Walters at [email protected]. The authors of the selected papers will be notified in September 2021. In addition to the proposal submission please also indicate (a) whether you are tenured, pre-tenure, or other; and (b) whether you are in your first five years as a law professor (including any years spent as a fellow or visiting assistant professor).

Section on Securities Regulation: Emerging Voices in Securities Regulation

The AALS Section on Securities Regulation invites submissions from junior scholars (defined as those who have been in a tenure-track position for 7 or fewer years) for its Emerging Voices session at the 2022 AALS annual meeting. The session will be held virtually on Saturday, January 8 from 4:45-6:00 p.m. (EST). The session brings together junior and senior securities regulation scholars for the purpose of providing junior scholars feedback on their scholarship and helping them prepare their work for submission for publication. Junior scholars’ presentations of their drafts will be followed by comments from senior scholars and further audience discussion.

If you would like to present your draft as a junior scholar, by August 31, 2021, please send your draft to Professor Jeremy McClane at [email protected]. We welcome submissions at any stage of development, although preference may be given to more fully developed papers over abstracts and paper proposals. The authors of the selected papers will be notified by mid-September 2021. 

If you would like to volunteer to provide feedback as a more senior scholar, please let Professor McClane know, at [email protected], by August 31, 2021. Thank you in advance for your generosity.

On behalf of the Section on Securities Regulation

Chair: Jeremy McClane (University of Illinois)
Chair-Elect: Kristin N. Johnson (Emory University)

Member of the Executive Committee:
Benjamin Edwards (University of Nevada, Las Vegas)
Gina-Gail S. Fletcher (Duke University)
Arthur B. Laby (Rutgers University)
Usha R. Rodrigues (University of Georgia)
Andrew Tuch (Washington University in St. Louis)
Yesha Yadav (Vanderbilt University)

February 2022 Virtual Symposium on Sustainability and Call for Papers

VIRTUAL SYMPOSIUM and SPECIAL ISSUE

CALL FOR PAPERS

The Changing Faces of Business Law and Sustainability

The Business and Human Rights Initiative at the University of Connecticut, the Center for the Business of Sustainability at Penn State University’s Smeal College of Business, the College of Business at Oregon State University, and the American Business Law Journal (ABLJ) are pleased to invite submissions related to the role of business law to support and enhance firm and societal engagement on sustainability. This theme is consistent with 2020 AACSB Standard 9.

The COVID-19 pandemic, climate change, and public protests for social justice—as well as whole host of other emerging risks and threats to the environment and society—have generated newfound questions about the appropriate roles of legal rules, principles, and institutions towards promoting sustainable and broad-based value through business. Legal scholarship provides fertile ground for identifying the definitions, conflicts, contradictions, barriers, and limitations of business sustainability. It also provides promise for generating solutions to these challenges that accord with the rule of law, fairness, and equity while furthering the interests of firms and impacted communities. Effective scholarship in this regard requires a perspective that transcends any single area of law, regulatory domain, industry, or jurisdiction.

We seek manuscripts related to any areas of law applicable to the ways in which sustainability is, or should be, addressed by business. Appropriate topics include, but are not limited to:

· Legal structures, opportunities, or regulatory mechanisms to incentivize or increase sustainability in business

· Private and hybrid public-private governance mechanisms related to sustainability and business

· Incentive systems for technological and commercial innovation in sustainability

· Regulation of ESG investing, reporting, and risk management practices

· Critiques of legal and economic structures that fuel unsustainable business practices

· The implications of diversity, equity, and inclusion practices by business for sustainability

· The intersections of business sustainability with human rights and/or globalization

· Issues related to the intersection of business, sustainability, and environmental justice, social justice, and/or structural racism

Complete information about the Symposium on Sustainability and Call for Papers is here: Download ABLJ 2022 Symposium Call for Papers

Reyes on "Autonomous Business Reality"

Prof. Carla L. Reyes has published Autonomous Business Reality in the Nevada Law Journal.  The article apparently just became available on Westlaw.  The abstract is below and you can find a version of the paper on SSRN here.

Society tends to expect technology to do more than it can actually achieve, at a faster pace than it can actually move. The resulting hype cycle infects all forms of discourse around technology. Unfortunately, the discourse on law and technology is no exception to this rule. The resulting discussion is often characterized by two or more positions at opposite ends of the spectrum, such that participants in the discussion speak past each other, rather than to each other. The rich context that sits in the middle ground goes disregarded altogether. This dynamic most recently surfaced in the legal literature regarding autonomous businesses. This Article seeks to fill the gap in the current discussion by creating a taxonomy of autonomous businesses and using that taxonomy to demonstrate that automation, standing alone, is not what makes autonomous businesses exceptional. Rather, the capacity of autonomous businesses to make radical governance changes more prevalent in the market pushes the boundaries of current choice of entity and governance paradigms while also illuminating low-technology functional equivalents that may offer more traditional businesses a path to governance reform.

To make these claims, this Article begins in Part I by briefly introducing the two emerging technologies that enable business automation. Part II reviews the existing literature and argues that by focusing on only one specific segment of the current autonomous business landscape, the literature misses key opportunities to evolve business law. Part III builds a map of existing autonomous businesses, demonstrating the differences among them and explaining them as a function of design trade-offs. Part III then uses that map to build a taxonomy of autonomous businesses and offers a framework for considering the broader impacts of autonomous businesses on law. Part IV examines ways that autonomous business reality may incentivize reforms in traditional corporations while simultaneously emphasizing the need for continued research and innovation in choice of business entity, organizational governance, and regulatory compliance.

Idaho Law Faculty Openings!

The University of Idaho College of Law is hiring! We are searching for: (1) a tenure-track or tenured faculty member to teach Tax Law and related courses, (2) a tenure-track or tenured faculty member to direct our Entrepreneurship Law Clinic, and (3) an assistant or associate clinical professor in the area of Academic Success. More information about each of these positions is available below.

The University of Idaho is a comprehensive research institution, providing students with opportunities to study law at two locations, in Moscow and in Boise. Moscow is a vibrant college town in the Palouse region of the Inland Northwest, with affordable housing, excellent public schools, and diverse cultural offerings. Boise is one of the fastest-growing cities in the country, with thriving tech and startup communities, an exciting music scene, and a lively downtown. Both locations are in close proximity to natural beauty and outdoor recreation and have been named among the best places to live in the country.

As a land grant law school, the College is committed to public service and to providing an accessible and high-quality education in an inclusive environment. We have a strong, integrated clinical program and offer emphasis areas in Business Law & Entrepreneurship, Native American Law, and Natural Resources & Environmental Law. The University of Idaho is an affirmative action, equal opportunity employer, and we welcome and encourage qualified individuals of all backgrounds and identities to apply, including and especially those from historically underrepresented groups within the legal profession. More information about the College is available at https://www.uidaho.edu/law.

Tax

The University of Idaho College of Law seeks to hire a tenure-track or tenured faculty member in the area of Tax Law for its Moscow location. Both entry-level and lateral candidates are encouraged to apply. The faculty member will be responsible for teaching an introductory tax course, as well as other classes that may include advanced tax courses and Wills, Trusts, and Estates. The faculty member will also be responsible for mentoring students, advising students on curricular and co-curricular activities, and developing a scholarly, outreach, and engagement agenda that will enrich the scholarly and legal communities and those they serve. Candidates must have a J.D. from an accredited school or the equivalent, a distinguished academic record, a record or the promise of teaching excellence and scholarly productivity, and a record or the promise of expertise in tax law. Preferred qualifications include post-J.D. practice, clerking, or teaching experience and an interest in teaching Wills, Trusts, and Estates. Interested candidates should submit an application, including a statement of demonstrated commitment to fostering an inclusive community, at https://www.uidaho.edu/human-resources. Please direct questions to Sam Newton, the search committee chair, at [email protected]<mailto:[email protected]>. Priority consideration will be given to applications received by September 15, 2021.

Entrepreneurship Law Clinic

The University of Idaho College of Law seeks to hire a tenure-track faculty member to direct its Entrepreneurship Law Clinic, which serves Idaho's startup and small business community. Depending on the successful candidate's expertise and qualifications, the clinic may also operate as a USPTO Certified Trademark Clinic. The faculty member will be responsible for supervising the clinic, teaching one additional course on a related subject, mentoring and advising students, and developing a scholarly, outreach, and engagement agenda that will enrich the scholarly and legal communities and those they serve. Applicants must have a J.D. from an accredited school or the equivalent; a distinguished academic record; at least five years of post-J.D. practice or clerking experience, two of which must have been spent primarily in areas relevant to serving clients in the startup and small business community; active membership in at least one state bar and the ability to obtain Idaho State Bar admission as a supervising attorney by November 1, 2022; and a record or the promise of teaching and scholarly excellence. Preferred qualifications include clinical teaching experience and at least three years of experience in trademark prosecution before the USPTO within the last five years. Interested candidates should submit an application, including a statement of demonstrated commitment to fostering an inclusive community, at https://www.uidaho.edu/human-resources. Please direct questions to Aliza Cover, the search committee chair, at [email protected]<mailto:[email protected]>. Priority will be given to applications received by September 15, 2021.

Academic Success

The University of Idaho College of Law seeks to hire a full-time clinical faculty member to teach academic skills courses, develop and administer academic support and advising programs, and implement relevant policies, in collaboration with the College's student services team. The position is a fiscal-year appointment with faculty voting rights and associated faculty governance responsibilities. The faculty member will design, implement, and promote activities to help all College of Law students achieve their full academic and professional potential through academic skills, bar preparation, and advising programs, as well as through individualized academic counseling and advising. Applicants must have a J.D. from an accredited school or the equivalent, a distinguished academic record, and at least three years of practice, teaching, or clerking experience. Preferred qualifications include three or more years of experience in student affairs, academic success, or related job duties; passage of a bar exam in any state; teaching and/or tutoring experience in highly specialized fields, preferably law; experience working calmly and respectfully with students or others in crisis; and ability to work collaboratively in creating and delivering programming and advising related to academic success. Interested candidates should submit an application, including a statement of demonstrated commitment to fostering an inclusive community, at https://www.uidaho.edu/human-resources. Please direct questions to search committee chair Benji Cover ([email protected]<mailto:[email protected]>). Priority will be given to applications received by September 15, 2021.

A Big Week for Scalia Law’s Capitalism & Rule of Law Project

The following showed up in my inbox this week and may be of interest to readers of this blog:

As part of our Capitalism & Rule of Law Project (CapLaw), the Law & Economics Center (LEC) at George Mason University Antonin Scalia Law School is having a big week, including by focusing attention on an important anniversary in the debate over capitalism and the rule of law. Two years ago today, on August 19, 2019, the influential Business Roundtable released what it called a “new Statement on the Purpose of a Corporation signed by 181 CEOs who commit to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders.” This statement is one of many alarming calls for the abandonment of traditional and time-tested principles of corporate governance, perhaps most succinctly captured in the title of Milton Friedman’s 1970 essay in The New York Times: “The Social Responsibility Of Business Is to Increase Its Profits.”

Here's a selection of CapLaw highlights from this week: 

• Yesterday, August 18, the LEC hosted a luncheon panel, "Business Roundtable v. Milton Friedman: Reflections on the Second Anniversary of 'Redefining' the Purpose of the Corporation" attended by over 50 thought leaders. The panel featured experts from the University of Pennsylvania Carey Law School, George Mason University Antonin Scalia Law School, University of Iowa College of Law, Harvard Law School, and was moderated by The Honorable David J. Porter, Circuit Judge, U.S. Court of Appeals for the Third Circuit. The full video is available here.
• On August 10, George Mason Law & Economics Research Paper No. 21-20, "The Illusion of Success: A Critique of Engine No. 1’s Proxy Fight at ExxonMobil," now available for download, was posted to the Social Science Research Network (SSRN) by LEC Research Fellow Bernard S. Sharfman (also Senior Governance Research Fellow at RealClearFoundation). 
• Earlier this week, Sharfman's paper was accepted for publication and is now forthcoming with the Harvard Business Law Review Online. 
• On August 16, Bernard Sharfman and Henry N. Butler, Professor of Law and Executive Director, Law & Economics Center, George Mason University Antonin Scalia Law School had their op-ed "Engine No. 1 is all talk, no strategy with Exxon Mobil" published by MarketWatch.com. 
• On August 18, their op-ed was re-published by RealClearMarkets.
• Today, August 19, another scholar in the CapLaw Project, Jonathan R. Macey (Sam Harris Professor of Corporate Law, Corporate Finance, and Securities Law, Yale Law School) published an op-ed "Why is the ESG Focus on Private Companies, Not the Government?" on BloombergLaw.com.
• Also today, on August 19, Donald J. Kochan, Professor of Law and Deputy Executive Director, Law & Economics Center, George Mason University Antonin Scalia Law School, published an op-ed "Corporations Don't Exist for 'Social Good' Agenda" in The Detroit News.
• Finally, yet again today, August 19, Professor Kochan also published a separate op-ed, "The Purpose of a Corporation is to Seek Profits, Not Popularity" in The Hill.

An Unusual Insider Trading Case

Insider trading isn’t really my specialty – that’s John’s area – but everyone’s talking about SEC v. Panuwat, which means I feel like I need to weigh in.

In short: Company insider (Panuwat) obtains confidential information from his employer that the firm is to be acquired.  He immediately trades in the stock of a similar but unrelated company – recognizing, correctly, that news of the acquisition will lift the stocks of comparable firms.  Has he violated Section 10(b) and Rule 10b-5 by misappropriating confidential information from his employer?

First, I note that Panuwat’s trades took place on August 18, 2016 and the SEC filed its complaint on August 17, 2021.  Which, you know, tells you something about the SEC’s ambivalence and risk assessment for this case. (The statute of limitations for imposing a penalty is 5 years).

Second, this problem has been considered before.  Here’s Ian Ayres and Joe Bankman on the subject (h/t to the Twitter birdie who called this to my attention), and here’s a recent empirical paper by Mihir N. Mehta, David M. Reeb, and Wanli Zhao concluding that these kinds of trades are relatively common (discussed in this Law360 article).

There’s probably a lot that can be said about the policies regarding the prohibition on insider trading and whether they should be extended to this scenario – Ayres and Bankman cover that, and John’s recent posts are all about different justifications for prohibiting inside trading – but I actually want to make a small doctrinal analogy to something that I know more about, namely, misstatement cases under Section 10(b).

In that context, courts have occasionally addressed the issue of what to do when a false statement about one company artificially inflates the stock price of a different company.  For example, in Semerenko v. Cendant Corp., 223 F.3d 165 (3d Cir.2000), Cendant falsified its financials, and then proposed a stock-for-stock takeover of ABI.  In response, ABI’s stock price rose, only to fall when the fraud at Cendant was revealed and the merger called off.  Were statements about Cendant’s financials made in connection with ABI’s stock?  The Third Circuit said maybe, and remanded for further inquiry (offering somewhat contradictory standards as to how the inquiry would be conducted for the Cendant defendants versus the auditor defendants).

Then there’s Ontario Public Service Employees Union Pension Trust Fund v. Nortel Networks Inc., 369 F.3d 27 (2d Cir. 2004).  In that case, Nortel made false statements about its financial condition, and when the truth was revealed, the stock price of JDS Uniphase fell, because Nortel was its largest customer.  When JDS Uniphase shareholders sued Nortel, the Second Circuit said that JDS shareholders had no standing to pursue claims against Nortel.

And recently, Juul – which is a private company – made false statements about its marketing tactics – which, when the truth was revealed, ultimately caused Altria’s stock price to fall because of Altria’s 35% investment in Juul.  A district court allowed Altria’s investors to sue Juul and certain of its managers, because “the connection between JUUL’s allegedly false statements and Plaintiffs purchase of Altria’s stock lacks the remoteness found in Nortel Networks.” Klein v Altria Group, 2021 WL 955992 (E.D. Va. Mar. 12, 2021)

What does all of this have to do with SEC v. Panuwat?  I guess that’s in the eye of the beholder.

On the one hand, you could say the situations are entirely distinct.  Section 10(b) prohibits fraud in connection with a securities transaction.  And when someone makes false statements about a particular company, there are limits to whether that fraud is related to securities transactions in other companies.

When it comes to misappropriative insider trading, though, the question is whether confidential information was used (in violation of a relationship of trust and confidence) for the purpose of a securities trade.   See U.S. v. O’Hagan, 521 U.S. 642 (1997) (“The ‘misappropriation theory’ holds that a person commits fraud ‘in connection with’ a securities transaction, and thereby violates § 10(b) and Rule 10b–5, when he misappropriates confidential information for securities trading purposes, in breach of a duty owed to the source of the information. Under this theory, a fiduciary's undisclosed, self-serving use of a principal's information to purchase or sell securities, in breach of a duty of loyalty and confidentiality, defrauds the principal of the exclusive use of that information.”).  One might argue that, unlike in the misstatement context, there’s nothing in that standard that requires the securities trade to be of the same, or even a related, company; indeed, the whole reason we have a “misappropriation” theory of insider trading in the first place is to address what happens when an insider of one company – in O’Hagan, a fiduciary of an acquirer planning to launch a tender offer – uses confidential information to trade in the securities of a different company – in O’Hagan, the target.

Plus, I mean, as a practical matter, courts don’t like securities plaintiffs, but they also don’t like employees who trade on confidential information, so you can anticipate outcomes through that realist lens.

But!  I think there’s another wrinkle here.  When the Nortel court rejected the plaintiffs’ claim, it explicitly expressed concern about a slippery slope. Everything in markets affects everything else; that’s why quants develop whole strategies based on minute market correlations.  If traders could sue for losses experienced by one company due to statements by a different company, that could dramatically expand 10(b) liability – which, many argue, already should not extend as far as it does.  It would mean, for example, that if a drug company lies about the efficacy of a new treatment, traders who short its competitors could sue.  If a company lowballs its earnings (not uncommon when they’re trying to cram through a merger), traders who go long on its competitors could sue.  And on and on.

You could argue that these concerns are not present when we’re talking about insider trading, because there’s a limiting principle: The trader must have misappropriated inside information.  If that’s proved, then we may be less concerned about which securities he or she traded.

But is that true, though?

Because here’s the thing.  There’s a longstanding debate within insider trading doctrine about whether liability turns on the trader using the confidential information to trade, or whether liability is triggered whenever someone trades while in possession of confidential information, or whether – splitting the baby – trading while in possession gives rise to an inference of “use” which can then be rebutted.  See, e.g., footnote 2 of Zachary Gubler’s A Unified Theory of Insider Trading Law.  The SEC’s longstanding position is that trading in possession is sufficient to trigger liability in most circumstances.  See Rule 10b5-1 (“a purchase or sale of a security of an issuer is ‘on the basis of’ material nonpublic information about that security or issuer if the person making the purchase or sale was aware of the material nonpublic information when the person made the purchase or sale”).  And the proposed Insider Trading Prohibition Act that recently passed the House also prohibits trading “while aware of material, nonpublic information relating to such security …or any nonpublic information, from whatever source, that has, or would reasonably be expected to have, a material effect on the market price of any such security.”

So now imagine an employee who has confidential information about his or her employer.  Under the SEC’s rule, trading in any public company stock that might be affected by the information is prohibited under 10b-5 – regardless of whether the employee used the information, or not.  The door is blown wide open.

Now, in the complaint against Panuwat, the SEC doesn’t merely rest on a “trading while in possession” theory.  Instead, the SEC explicitly alleges that Panuwat used the confidential information he acquired from his employer:

within minutes of receiving the Medivation CEO’s email on August 18, 2016, and while knowing or being reckless in not knowing that such entrusted information was material and nonpublic, Panuwat used this information concerning the Medivation acquisition to trade. Specifically, Panuwat logged on to his personal brokerage account from his work computer and purchased 578 Incyte call option contracts with strike prices of $80, $82.50, and $85 per share—significantly above Incyte’s stock price of $76 to $77 per share at the time—and the soonest possible expiration date, September 16, 2016. Panuwat was aware that Incyte was not expected to make any significant announcement, such as issuing a quarterly earnings report, before the options expiration date. Rather, Panuwat anticipated that Incyte’s stock price would jump within less than a month on public disclosure of the upcoming Medivation acquisition announcement. Panuwat had never traded Incyte stock or options before.

(emphasis added)

Which may cover this case specifically but unless the SEC is planning to tweak its own rules on this more generally, I think here’s where the problem arises.

Testing Our Intuitions About Insider Trading - Part II

As Congress and the SEC continue to contemplate reforms to the U.S. insider-trading enforcement regime, I suggested in my last post that it is important for us all to explore our intuitions about what we think insider trading is, why it is wrong, who is harmed by it, and the nature and extent of the harm. If we are going to rethink how we impose criminal and civil penalties for insider trading, we should have some confidence that the proscribed conduct is wrongful and why. One way to do this is to place ourselves in the shoes of traders and ask, “What would I do?” or “What do I think about that?” To this end, I have developed some scenarios designed to test our attitudes regarding trading scenarios that distinguish the four historical insider trading regimes (laissez faire, fiduciary-fraud, equal access, and parity of information).

In the last post, I offered a scenario that would result in liability under a parity-of-information regime, but not under the other three. Those of you who were not convinced that the trading in that scenario was wrongful may favor one of the less restrictive models.

In this post, I offer the following scenario to test our attitudes regarding trading under an equal-access model. An equal-access regime precludes trading by those who have acquired information advantages by virtue of their privileged access to sources that are structurally closed to other market participants (regardless of whether such trading violates a duty of trust and confidence). An equal access model is narrower in scope than the parity-of-information model, but broader than the laissez-faire and fiduciary-fraud models. Consider these facts:

A senior VP at BIG Corp (a publicly traded company) took the lead in closing a big deal to merge BIG Corp with XYZ Corp (another publicly traded company). The shares of both BIG Corp and XYZ Corp will skyrocket when the deal is announced to the public in seven days. The senior VP asks the CEO and board of Big Corp if, instead of receiving the usual cash bonus that would be his due for leading such a deal, he can purchase shares of XYZ Corp for his personal account in advance of the announcement. The CEO and board approve the VP’s trading—deciding that the BIG Corp shareholders will save money from this arrangement. The VP buys XYZ Corp shares in advance of the announcement and he makes huge profits when the deal is announced.

Was the senior VP’s trading wrong or harmful? If you do not think the senior VP or Big Corp has done anything wrong or harmful in this scenario, then you will probably not favor the equal-access model for insider trading regulation—which would render this conduct illegal. You will likely favor some version of the less restrictive laissez-faire or fiduciary-fraud model instead. My next post will offer a scenario to test our intuitions about the fiduciary-fraud model (the third most restrictive regime).

Again, the hope is that walking through these scenarios will help bring some clarity to our shared understanding of when trading on material nonpublic information is wrong and harmful—and (given our answers to these questions) the nature and extent to which it should be regulated. Please share your thoughts in the comments below!

Professors Jackson & Morley on SPACs

A few days ago, NYU’s Robert Jackson and Yale’s John Morley filed a lawsuit contending that the world’s largest SPAC was actually an investment company and thus subject to the Investment Company Act of 1940.  A copy of the complaint is available here.  The case has also been covered by the D&O Diary and the N.Y. Times.

A few days after the suit was filed, Bill Ackman, the SPAC’s sponsor, announced an intention to return investor funds.  He also took the opportunity to take a swipe at Jackson and Morley:

Why you might ask, would a PSTH shareholder bring such a meritless lawsuit when any shareholder would understand that the mere filing of the lawsuit, and the delays inherent in its resolution, would impair PSTH’s ability to create shareholder and warrant holder value within its remaining term, by interfering with the process of consummating a merger transaction?

While the lawsuit is brought on behalf of a purported shareholder of PSTH, this individual is simply an unwitting prop to enable the academics, and the plaintiff law firms with whom they have partnered, to bring the lawsuit. The two law professors who concocted the legal theory behind the complaint conceded to the press that their motivation in bringing the lawsuit was “to reform” the entire SPAC industry.

As the largest SPAC ever, PSTH is an attractive target in that its scale and visibility maximize media attention for the lawsuit’s claims and the professors’ proposed efforts at reform. . . .

Notably, one of the professors who is leading the suit, Robert Jackson, served as an SEC Commissioner between January 2018 and February 2020. During his more than two-year term as Commissioner, the SEC reviewed and declared effective more than 100 SPAC IPO registration statements, and oversaw dozens of de-SPAC merger transactions. If Mr. Jackson is so sure that SPACs are in fact illegal investment companies, why didn’t he take steps to shut them down while he was an SEC Commissioner

Still, as William Birdthistle has pointed out, the SPAC had largely just held securities for a year after its IPO, making it seem like it operated as . . . an investment company.  Jackson and Morley make this point on the first page of the Complaint:

Under the ICA, an Investment Company is an entity whose primary business is investing in securities. And investing in securities is basically the only thing that PSTH has ever done. From the time of its formation, PSTH has invested all of its assets in securities. And it has spent nearly all of its time negotiating a transaction that would have invested those assets in still more securities.

The Complaint explains that the SPAC compensated its investment manager in a way that would have been impermissible under the Investment Company Act and Investment Advisers Act:

Defendants’ decision to avoid registering the Company as an investment company has allowed them to use their positions of control to extract compensation from PSTH in forms and amounts that violate federal law. Rather than pay reasonable fees and structure them in the standardized and transparent ways required by the ICA and IAA, the Company has paid its investment advisers indirectly, in the form of complex securities of the Company that were never offered for purchase by the Company’s public investors.

It will be interesting to continue to watch the SPAC space to see how things continue to develop.  For now, I’d call this a $4 billion win for Jackson and Morley.

New Book: Seven Essentials for Business Success: Lessons From Legendary Professors

In previous blogs (here and here), I've highlighted the wonderful negotiation materials that George Siedel, Professor Emeritus of Business Law at the University of Michigan, has created and generously made available free of charge (here).  I'll be using his House on Elm Street negotiation once again this fall in my MBA course! 

Today, I wanted to call BLPB readers' attention to his new book: Seven Essentials for Business Success: Lessons from Legendary Professors.  I'm really excited to read it, especially because my dissertation advisor, G. Richard Shell, the Thomas Gerrity Professor, Professor of Legal Studies & Business Ethics and Management at Wharton, is one of the seven award-winning professors profiled!  Without doubt, Richard is a truly legendary professor from whom I've already learned so much.  I look forward to learning more from him and from the additional six professors highlighted in the book.  Once I finish reading it, I'll be sure to share some of my favorite takeaways.   

Here's Amazon's description:

Successful leaders are great teachers, and successful teachers serve as models of leadership. This book enables both leaders and teachers to understand and use the best practices developed by award-winning professors, each of whom teaches one of the seven areas that are essential for business success.

These professors candidly discuss their successes and failures in the classroom, the mentors who inspired them, how they developed their teaching methods, and their rigorous preparation for class. Through descriptions of the professors in action, readers will gain an insider’s perspective on their teaching skills, and witness how they teach the seven essentials for success in a variety of settings—MBA, Executive MBA, and executive education courses. The chapters also describe the daily lives (professional and personal) of the professors, and the impact they have beyond the classroom in improving organizations and society.

If you are a leader or teacher—or if you are interested in the content of a business school education—this book provides an insider’s perspective on the best practices used by legendary professors when teaching the seven essentials that represent the core body of knowledge for business success.　

Starting the Academic Year in a Triple Pandemic (Again)

At UT Law, our orientation period for the new academic year began on Friday.  I am back in the classroom today teaching a two-session introductory period course on case briefing and legal analysis.  Regular classes begin on Wednesday.  

The struggle I had in creating my syllabi this year was real.  Under current prescriptions and proscriptions, we are teaching in person, with no physical distancing, masked.  But masks are not required throughout the building.  Moreover, while vaccination is encouraged, it is not required for faculty, staff, or students, and we are prohibited from asking faculty and staff colleagues and students about vaccination status.  There have been more student accommodation requests than usual in my large-section course.  In general, COVID-19, the political divide, and social (especially racial) unrest--which overlap to create a veritable triple pandemic--are seemingly collectively conspiring against us in so many ways, including in the educational setting.  I am feeling the weight of it all.

But undaunted, I move forward in my law teaching!  I have addressed some key concerns in my syllabi this semester.  I include two sections from my syllabi below that may be of interest.  Feel free to dismiss or use these as you will.  Most of the substance of the "COVID-19;community heatlh" piece is from language provided to campus faculty by our Provost's office, through our Teaching & Learning Innovation group (part of our Division of Faculty Affairs).  The rest comes from CDC (Centers for Disease Control and Prevention) guidance.

COVID-19; community health:  The campus administration has advised us that, with the spread of the Delta variant of COVID-19, students, faculty, and staff will be required to wear masks in classrooms, labs, and for indoor academic events required for students such as orientation. This requirement will remain in place until conditions improve and the university communicates new instructions.

The university strongly recommends that all members of the campus community be vaccinated for their own protection, to prevent disruption to the semester, and to prevent the spread of COVID-19. Vaccination information and appointment signups are available at tiny.utk.edu/vaccine. The Student Health Center medical staff is available to students to answer questions or discuss concerns about vaccines, and the center provides vaccines free of charge for anyone 18 years or older who would like one.

If you think you are sick or have been exposed to COVID-19, you should contact the Student Health Center or your preferred health care provider. You can also contact the university’s COVID-19 support team for guidance by filling out the COVID-19 self-isolation form at covidform.utk.edu.

You must not attend class if you have tested positive for COVID-19 and are in the isolation period, if you have COVID-19 symptoms and have not been cleared by a medical provider, or if you are an unvaccinated close contact in the quarantine period.

If you need to miss class for illness, please contact me by telephone at 865-974-3813 or by electronic mail at [email protected].

Over the course of the semester, you can find more information and updates at utk.edu/coronavirus.

We also are advised that following other simple practices also promotes good health in and outside the classroom.  These include:

• • maintaining physical distance from others when possible;
  • avoiding crowds and poorly ventilated spaces;
  • frequent and thorough hand-washing;
  • covering coughs and sneezes;
  • cleaning and disinfecting high-touch surfaces; and
  • monitoring your personal health daily.

More information on observing solid general health practices in the current environment is available here. 

I know this is not where we all wanted to be right now in terms of public health risks in our activities together.  It remains a lot for us to deal with mentally and emotionally, as well as physically.  We remain committed to the safety and health of everyone in our community—a professional education community within a larger university campus.  As service professionals, we are counseled in the Preamble to the American Bar Association’s Model Rules of Professional Conduct to “demonstrate respect for the legal system and for those who serve it.”  And those of you who consider yourselves to be VFLs (Vols for Life) likely know that the Volunteer Creed—the heart of our campus values—similarly reminds us that we bear the torch in order to give light to others. As aspiring legal professionals and Tennessee Volunteers (a/k/a Law Vols), we therefore commit to caring for one another and for the members of the communities in which we live, work, and learn. It is important that we demonstrate professionalism and the Volunteer spirit by following health requirements and guidance as the same becomes available to us.

Civil, inclusive, professional environment:  Our classroom and course website are professional education and work settings within our overall College of Law community.  As such, they are places for open, frank, and sometimes difficult conversations and debates.  Respect, inclusion, reflection, and tolerance are values inherent to this environment.  Each class member is responsible for upholding these values in communications and other conduct.  I note also in this regard the campus principles of civility and community, which can be found at http://civility.utk.edu.  (I make a cameo appearance in the video on the principles that is found here.)  These principles are at the core of what we do.

Please help me in creating a welcoming environment for our class community.  If you use a name or pronouns other than what is represented in the course roll or might expect, please email me with your preferred name or pronouns.  Also, please offer me help in pronouncing your name correctly—either in advance or through critical feedback if I err.

There obviously is a lot of customization in this language.  But I hope that there are a few nuggets in these paragraphs that are useful to some of you.  For the sake of completeness, I should note that I am using this text in a master course syllabus and have a separate reading syllabus for each course that only includes the assignments and related instructions.

I wish all well as we begin another semester and year.

New York Law School - Full-Time Tenure Track Faculty Positions

New York Law School seeks to add to the tenured and tenure-track faculty and invites applications from both entry-level and junior lateral candidates.  We are particularly interested in candidates whose scholarly work and teaching involve core curricular subjects, including constitutional law, as well as business law (e.g. corporations and financial markets).

NYLS is deeply committed to fostering an inclusive community. The School is an equal opportunity employer. We warmly welcome applications from women, members of underrepresented racial and ethnic minority groups, persons with disabilities, LGBTQI+ individuals, veterans, and all other candidates whose backgrounds, experiences, and viewpoints would contribute to the diversity of our school. To view NYLS’s Strategic Plan, visit www.nyls.edu/strategy, and for information on the School’s commitment to diversity and inclusion, see www.nyls.edu/diversity.

Salary

Highly competitive

How to Apply

Please submit a detailed curriculum vitae listing relevant legal practice and law school experience, a cover letter expressing your interest and describing your qualifications, and a list of references, to William P. LaPiana, Associate Dean for Academic Affairs, at [email protected].

About New York Law School

Founded in 1891, New York Law School (NYLS) is an independent law school located in Tribeca, the heart of New York City’s legal, government, financial, and emerging tech centers. Known as “New York’s law school,” NYLS embraces the city as its classroom by complementing a rigorous legal education with an innovative and diverse set of “uniquely New York” experiential learning opportunities. Since opening its doors, NYLS has produced graduates who have gone on to hold high elected and appointed office in the city, lead large and small firms, and gain broad recognition as captains of business and industry. Its renowned faculty of prolific scholars has built the School’s strength in key areas of the law, including business and financial services, intellectual property and privacy, and government and public interest law. NYLS has more than 18,000 graduates and currently enrolls around 1,100 students in its full-time and part-time J.D. programs. The School also offers an advanced-degree program leading to the LL.M in Taxation degree.

Let’s Talk About Corporate Scienter

A plaintiff alleging claims under Section 10(b) of the Securities Exchange Act must show that the defendant acted with “scienter,” which usually means either an intent to mislead investors, or reckless indifference to whether investors would be misled.

Since corporations, as well as natural persons, can be Section 10(b) defendants, there is often a question as to how a corporation’s “state of mind” can be determined for Section 10(b) purposes.  For example, the Third Circuit brushed up against this issue in Pamcah-UA Local 675 Pension Fund v. BT Group PLC, 2021 WL 3415060 (Aug. 5, 2021), and in In re Cognizant Tech. Solutions Corp. Securities Litigation, 2020 WL 3026564 (D.N.J. June 5, 2020), the court tried to develop a Section 10(b) corporate-scienter taxonomy.  My very first article, Slouching Towards Monell: The Disappearance of Vicarious Liability Under Section 10(b), was about how courts identify corporate scienter.  But I’m still finding that a lot of judicial opinions demonstrate confusion on this subject, which inspires me to post about it now.  To be sure, this is not an issue unique to 10(b) actions – it comes up in other areas of law – but Section 10(b) has some specific challenges, so I’m focusing on 10(b) here.

[More under the jump]

Continue reading