Monday, February 28, 2022
Yesterday, I was privileged to attend a wonderful Knoxville Symphony Orchestra performance as part of its Chamber Classics Series. The featured piece was the Bach Concerto for Two Violins--an amazing piece of work. It was preceded in the program by a wonderfully catchy Stravinski Octet. The second half of the program focused solely on a Shostakovich piece (arranged by Rudolph Barshai): Chamber Symphony, Op. 73a. I want to focus here for a moment on this last composition.
Dmitri Shostakovich was a Russian (Soviet) composer. He died back in 1975. As my husband and I looked at the program in anticipation of the Shostakovich work, we could not help but think of the ongoing Russian invasion of Ukraine. We have watched with horror and sadness the violence, destruction, displacement, and more. Of course, the program for the concert today was many months in the making; the Knoxville Symphony Orchestra could not have anticipated that a Russian composer's music would be played in these circumstances . . . .
In his introduction to the Shostakovich Chamber Symphony, our conductor, Aram Demirjian, explained that Shostakovich was periodically critical of the Soviet government, despite its patronage of his work. He explained that the arrangement we were about to hear was derived from a Shostakovich string quartet with Shostakovich's consent. The original string quartet was composed in 1946 after an earlier symphony composition was censured by the Soviet government. Demirjian noted that Shostakovich labeled the five movements of the quartet as follows:
- Blithe ignorance of the future cataclysm
- Rumblings of unrest and anticipation
- Forces of war unleashed
- In memory of the dead
- The eternal question: why? and for what?
As he expressly noted, Shostakovich's five movements reflecting on the progression of war at an earlier time seem eerily appropriate given our circumstances today . . . .
The Shostakovich piece--plus the rollouts of deepening economic sanctions against Russia and its President, concern about cyberattacks, and fears of nuclear warfare--have had me thinking about short-term and long-term impacts on cross-boarder transactions and multinationals. I have been teaching the regulation of securities offerings in my Securities Regulation course, including offers and sales of securities made by foreign issuers or offshore. Early news of and speculation about the impact of the Ukraine invasion on investment markets has been published. See, e.g., here and here. Corporate finance, writ large, is affected by the invasion and the West's responses to it. The New York Times reported that "[t]he market volatility generated by the crisis has . . . chilled I.P.O.s and complicated dealmaking."
In that same article, the Times noted effects on business more broadly. "Multinationals have halted operations in Ukraine and moved employees to safety, with Russia’s assault sending shudders through boardrooms around the world." Other news outlets have published similar reports. See, e.g., here, here, and here.
It seems important to be raising issues in our business law classrooms relating to all of this. In addition to the public offering/corporate finance angle, there are at least two connections to the material in my Securities Regulation course that may be productive to explore. I will share both briefly here, in case they may be of interest for the teaching done by some of our readers.
The first idea is to focus in on the investor side of the equation, given the investor protection policy underpinnings of the federal securities laws. A few weeks ago, we spent a class day on investors--who they are in today's markets and how theory and policy may impact and be impacted by those demographics. The mews media also have been covering the investor side of the corporate finance equation, including retail investing issues. See, e.g., here. In my classroom, we can revisit and think through how (if at all) the market impacts of the Ukraine invasion change investor protection--and the concept of the reasonable investor.
The second idea is to work in a discussion of the funding of the Ukrainian war effort when addressing the definition of "underwriter" for purposes of the registration exemption in Section 4(a)(1) of the Securities Act of 1933, as amended. The New York Times reported that "Ukraine and allied nonprofits are raising money from donors (including in cryptocurrency) to fund resistance forces." In covering underwriter status, I teach the SEC v. Chinese Consolidated Benevolent Association case. For those of you who are unfamiliar with the case, it involves efforts among Chinese persons here in the United States to fund China's efforts to resist Japanese aggression in the second Sino-Japanese conflict. (FYI, this book chapter offers lots of great background information on context that the case does not provide.) It would seem appropriate to offer hypotheticals relating to funding any long-term Ukrainian resistance through the sale of investment interests that may be securities and to discuss the possible effects of the advent of cryptocurrencies (and blockchains more generally) on securities regulation in financings and other investment contexts.
I am sure some of you have your own ideas about whether and how to work discussions of the current, disquieting news relating to the Ukrainian invasion into your business law classrooms. Please share thoughts that you may have in the comments to this post. As the conflict continues, there will no doubt be more to talk about.