Saturday, March 11, 2023

Everything is a Security

This week, NYAG Letitia James filed a complaint against KuoCoin, a crypto exchange, for various violations of NY law, including running an unregistered commodities and securities exchange, and acting as an unregistered securities broker.

The allegations focus on three different crypto assets: Luna, TerraUSD, and Ether.  In particular, James claims that Ether is both a commodity and a security – the latter allegation necessary to support the claim that Kuo should have registered as a securities broker.

Now, as we all know, the SEC and the CFTC have generally taken the view that Ether is a commodity, not a security, but Ether’s shift to a proof-of-stake model has raised questions about whether Ether’s status should change under federal law.  James highlights the proof-of-stake model in her briefing in support of a petition for a permanent injunction against KuoCoin.  But more interestingly, she argues in the alternative that Ether is a security under New York State’s prehistoric Waldstein test, articulated in In re Waldstein, 160 Misc. 763 (Sup. Ct, Albany Cnty. 1936).  That test says a security is “any form of instrument used for the purpose of financing and promoting enterprises, and which is designed for investment.”

Waldstein has, according to Westlaw, been cited in a total of 32 cases since it was articulated in 1936, and in many of those cases, it’s mentioned but not really applied.  When it is applied, it seems to have been used in conjunction with Howey and/or Reves, and it seems courts often conclude that the instrument under consideration comes out the same way under all tests.  See, e.g., People v. Van Zandt, 981 N.Y.S.2d 275 (Sup Ct., Bronx Cnty. 2014); Xerox Corp v. New York State Tax Appeals Tribunal, 973 N.Y.S.2d 458 (App. Div. Third Dep’t 2013); People v. First Meridian Planning, 614 N.Y.S.2d 811 (App. Div. Third Dep’t 1994); All Seasons Resorts v. Abrams, 68 N.Y. 2d 81 (1986).  But this time, James is using Waldstein in a manner that (might) diverge from how at least federal agencies have interpreted Howey, which begs the question whether New York courts will hold that Waldstein and Howey are different, and/or that Waldstein is still good law.  Mostly, though, this is a lesson for my students that though we focus on Howey and Reves in class, states can have entirely different definitions of what counts as a security for the purposes of state regulation.

March 11, 2023 in Ann Lipton | Permalink | Comments (0)

Friday, March 10, 2023

Recommended: "A Roundtable on Recent Developments at the FTC"

On March 6, the Federalist Society hosted "A Roundtable on Recent Developments at the FTC." Yesterday, I had the chance to listen to a podcast of the event and I think it may be of interest to BLPB readers. All the relevant links can be found here. Below is a brief description of the event.

Recent months have seen a flurry of notable developments at the Federal Trade Commission, including oral arguments in the high-profile Axon v. FTC and SEC v. Cochran Supreme Court cases, administrative complaints challenging deals between Altria and JUUL and Illumina and GRAIL, and FTC Commissioner Christine Wilson’s announced resignation. Please join us for an in-person luncheon featuring a panel of antitrust law experts examining these developments and debating what might come next at the FTC.

March 10, 2023 in Stefan J. Padfield | Permalink | Comments (0)

Thursday, March 9, 2023

Central Michigan University Seeking Tenure-Track Entrepreneurship Faculty

Position Summary

The College of Business Administration at Central Michigan University invites applications for one or more entrepreneurship faculty members to begin service at the rank of assistant professor, associate professor, or full professor on August 21, 2023.

CMU anticipates the successful applicant will take a leadership role in the department. This could include serving as the Department Chairperson, serving as the Director of the Master in Entrepreneurial Ventures (MEV) program, or service in another administrative capacity. A reduced teaching load is available for successful applicants serving in one of these roles.

Tenure-track faculty are generally expected to teach three courses per semester, maintain an active research agenda, and actively participate in service activities. Courses may be face-to-face or online and at the undergraduate or graduate level. Faculty may also: advise students; engage in assessment of learning activities; help develop and promote CMU’s entrepreneurship offerings; support CMU’s New Venture Competition (NVC) and other extra-curricular initiatives; and strengthen partnerships on and off campus.  Candidates must have the ability to perform the essential functions of the job with or without reasonable accommodations.

Required Qualifications

Candidates must have a terminal degree: (i) a Ph.D. or D.B.A in entrepreneurship or a related business field (from an AACSB accredited institution); or, (ii) a J.D. (from an ABA accredited institution) with significant entrepreneurship-related experience; or, (iii) other relevant terminal degree (from a major national university) with significant entrepreneurship-related experience.  For those pursuing a Ph.D. or D.B.A., ABD applicants will be considered if it is clear that the applicant’s degree will be conferred at the time of appointment.

Message to Applicants

CMU encourages applicants from diverse academic backgrounds to apply. You must submit an online application to be considered an applicant for this position. To apply, please visit our website at Inquiries about the position may be directed to the Entrepreneurship Chairperson David Nows at [email protected]; however, the applicant must apply directly through the online Central Michigan University applicant portal.

CMU, an AA/EO institution, strongly and actively strives to increase diversity and provide equal opportunity within its community. CMU does not discriminate against persons based on age, color, disability, ethnicity, familial status, gender, gender expression, gender identity, genetic information, height, marital status, national origin, political persuasion, pregnancy, childbirth or related medical conditions, race, religion, sex, sex-based stereotypes, sexual orientation, transgender status, veteran status, or weight (see

March 9, 2023 in Entrepreneurship, Joan Heminway, Jobs | Permalink | Comments (0)

Wednesday, March 8, 2023

Professor Packin on Financial Inclusion Gone Wrong: Securities and Crypto Assets Trading for Children

Today, a LexisNexis alert shared the great news that Professor Nizan Geslevich Packin's article, Financial Inclusion Gone Wrong: Securities and Crypto Assets Trading for Children, has now been published in the Hastings Law Journal.  It's a fascinating work that I had the privilege of seeing presented at last year's National Business Law Scholars Conference (NBLSC) at OU Law.  I'm excited to see it's now published, and I can't wait to learn about more exceptional work like this at this year's NBLSC in Knoxville, Tennessee.  Hope to see many of you there! 

Article citation: Nizan Geslevich Packin, Financial Inclusion Gone Wrong: Securities and Cypto Assets Trading for Children, 74 Hastings L. J. 349 (2023). 

Here's the abstract posted on SSRN:

"According to studies, for most Americans, money is a major source of anxiety. Looking for ways to help Americans address this source of anxiety, some believe that increasing children’s financial orientation could help lower their money-related anxiety levels as adults. Identifying this market as a business opportunity, and reassured by research that shows that by age six, children are already veteran consumers of mobile apps, financial technology (FinTech), decentralized finance (DeFi) and even traditional financial entities have started offering services and products to children. These services and products include a broad array of financial-related products and services – from enabling children to earn money for doing their chores, to trade stocks and crypto assets, and even earn digital assets and currencies while playing video games.
The potential of this new market’s clientele is valuable for two reasons. First, having more customers is always a good thing. Second, children will eventually mature into adult customers and presumably will continue using the services and products they like and with which they are familiar. And although some legal challenges are associated with children, who are minors, not only entering into financial-based contracts but also doing so online, this business trend will continue to grow as offering financial services to children is becoming socially acceptable. Society’s newly adopted paradigms for describing, understanding, and shaping children’s rights, domestic relationships, custodial status, and even digital purchasing power are all supportive of this trend. Moreover, FinTech and DeFi financial apps and games can help teach children about the value of money, the importance of investing, and the risks involved in trading.
Yet, FinTech and DeFi apps and games could also have a developmentally and behaviorally disruptive effect on children, similarly to other consumed digital content. Moreover, they should be a source of concern to anyone focused on investor and consumer protection, including regulatory agencies such as the SEC and FINRA, which have already expressed concerns about gamification and digital engagement practices. Given “the financialization of everything,” using legal and ethical reasoning, and behavioral economics tools, this Article calls for the search for effective financial literacy education for children to be replaced by a search for policies more conducive to good consumer and investor protection outcomes, which should guide lawmakers in regulating FinTech and DeFi apps and games offered to children in light of: (i) the addictiveness of digital gaming; (ii) how gamifying finance makes it feel less serious; (iii) the connection between gamification and gambling; (iv) how children’s financial choices are more susceptible to the influence of outside parties than are those of adults; (v) the FinTech and DeFi apps and games’ failure to teach children the importance of concepts such as debt, credit, and financial commitments; and (vi) the unrealistic burden on young parents who already struggle with the need to constantly supervise their children’s online activities, in our digital era, by expecting them to monitor their children’s online financial activities."   

March 8, 2023 in Colleen Baker | Permalink | Comments (1)

Monday, March 6, 2023

2023 National Business Law Scholars Conference - Call for Papers

Screen Shot 2023-03-06 at 11.23.56 PM

The website for the previously announced 2023 National Business Law Scholars conference at The University of Tennessee College of Law is live!  The call for papers for the conference can be found there, but the essential information is repeated below, for your reference.

The conference will take place Thursday, June 15 and Friday, June 16, 2023. This is the 14th meeting of the National Business Law Scholars Conference, an annual conference that draws legal scholars from across the United States and around the world whose work spans a variety of business law disciplines.

Call for Papers

We welcome all scholarly submissions relating to business law. Junior scholars and those considering entering the academy are especially encouraged to participate. If you are thinking about entering the academy and would like to receive informal mentoring and learn more about job market dynamics, please let us know when you make your submission.

Submission Guidelines

You may use the “Submit now!” button on the conference website to submit an abstract by Friday, April 7, 2023. Please be prepared to include in your submission the following information about you and your work:

– Name
– E-mail address
– Affiliation/school
– Paper title
– Paper description/abstract
– Keywords (3-5 words)
– Does the paper relate to DEI issues?*
– Dietary restrictions
– Mobility restrictions

*If yes, based on availability, would you prefer to be on (1) a DEI-focused panel, (2) a subject matter-focused panel (not specifically DEI-focused), or (3) any panel (i.e., no preference as to type of panel)?


If you have any questions, concerns, or special requests regarding the schedule, please indicate that in your submission or email Professor Eric C. Chaffee directly at [email protected]. We will respond to submissions with notifications of acceptance a few weeks after the submission deadline. We anticipate the conference schedule will be circulated in May.

I hope to see many of you in Knoxville in June!  It is a lovely time to be in East Tennessee.  If you would like to do local sight-seeing, Nashville is only about 2.5 hours away by car, Chattanooga is 1.5 hours away, and Asheville, North Carolina is just 2 hours away.  It can be less expensive to fly into those other local cities, and they all are great places to visit in this part of the world.

March 6, 2023 | Permalink | Comments (0)

Sunday, March 5, 2023

"Keeping Your Own Counsel" - Walter Effross

Friend-of-the-BLPB Walter Effross recently informed me of his blog, Keeping Your Own Counsel (subtitled “Simple Strategies and Secrets for Success in Law School”). The blog is a companion piece to Walter's new book designed for pre-law and law students, also entitled Keeping Your Own Counsel. Walter let me know that one can check out the book’s table of contents, preface, and first two chapters through Amazon’s “Look inside” feature and that a summary of six of the book's themes is in his most recent blog post.

He also noted that his February 25th blog post provides links to his conversations with leading in-house and outside counsel about the definition and goals of, career opportunities in, and ways to remain current on, the increasingly relevant practice of Environmental, Social, and Governance (ESG) law.  He specifically recommends one of those conversations--the one with Fox Rothschild LLP partner David Colvin--even to law students who are not specifically interested in ESG because it addresses practical ethical issues.  He indicated (and I agree) that the overall post may be of particular interest to our readers.  So many of us are focused on ESG and related regulation in our work at the moment . . . .

I send congratulations to Walter on the blog and the book, along with gratitude that he alerted us to both.

March 5, 2023 in Books, Current Affairs, Joan Heminway, Law School, Weblogs | Permalink | Comments (0)

Saturday, March 4, 2023

Much Ado About Nothing

After VC Laster held that officers have Caremark duties, and can be the subject of derivative suits for violating them, there was a flurry of commentary to the effect that this would radically expand legal liability, open corporate officers up to a host of new lawsuits, and generally represented a bold new direction in Delaware law.  Now, of course, he’s done what was the most predictable thing in the world: He dismissed the claims on grounds of demand futility.   Which demonstrates there was nothing radical – or even particularly new – about his opinion originally.

So, the backstory:

The McDonald’s plaintiffs alleged that the directors of the company, its CEO, and its “Chief People Officer,” David Fairhurst, created and/or ignored a culture of pervasive sex discrimination and sexual harassment.  Fairhurst in particular was alleged to have done nothing about employee reports of harassment, to have tolerated a culture where employees feared reporting harassment, to have cultivated a “party atmosphere” that encouraged harassment, and ultimately to have engaged in sexual harassment himself.  Matters were so bad that there were coordinated EEOC complaints, nationwide employee walkouts, and inquiries from U.S. Senators.

On January 26, VC Laster held that if the allegations were true as to Fairhurst, then Fairhurst had violated his fiduciary duties to the corporation under Caremark by failing to identify the problem, attempt to redress it, and report matters to the board.  Fairhurst also violated his duties by personally engaging in illegal conduct – harassment – for his own benefit.  

On March 1, VC Laster issued a second opinion dismissing all claims against the directors on grounds of demand futility, with an additional order that claims against Fairhurst were also dismissed on demand futility grounds (that order is available on the docket, but is not currently on the court’s public website).

So, when it comes to the claims against Fairhurst, which were the ones that inspired the handwringing, it’s important to distinguish two separate issues which were collapsed in some of the reporting.  One is, what were Fairhurst’s duties to his employer?  The other is, assuming he violated those duties, can shareholders bring lawsuits over it?

Starting with Fairhurst’s obligations, the main concern was about Caremark duties and whether VC Laster unduly expanded them.  Now, sure, there’s an ongoing larger debate about why we have Caremark duties and what their function is or should be – compare Stephen M. Bainbridge, Don’t Compound the Caremark Mistake by Extending it to ESG Oversight with Elizabeth Pollman, Corporate Oversight and Disobedience – but in this case, I think the label “Caremark” obscured more than it illuminated.  Fairhurst was the human resources guy.  His literal function – his actual responsibilities, what he was hired to do – was to handle employee relationships.  The most basic aspects of his job were to ensure the company was complying with employment and labor laws, and generally to maintain a good or at least tolerable company culture.  And he, quite flagrantly, did not do his job.

Professor Bainbridge (no fan of Caremark liability in the first place), was particularly vexed that VC Laster’s opinion expanded Caremark duties to mere garden variety lawbreaking instead of “mission critical” lawbreaking.  I think that misapprehends the point of the “mission critical” label, and this is something that VC Laster elucidates in his March opinion dismissing claims against the director defendants.  “Mission critical” was intended to identify things that are important enough to the company that they deserve board-level attention, and, in particular, things where the board should be affirmatively setting up a reporting system even in the absence of notice of a problem.  I.e., “mission critical” is how we know whether it’s a Big Thing or a little thing, and we don’t expect board members to constantly monitor little things even before they become Big Things, because being a board member is only a part time gig.  “Mission critical,” in other words, is how we define the scope of the board’s non-delegable oversight duties at the outset.  It is how we define the board’s actual job.

But Fairhurst was an officer, not a board member, and he had a different job.  Even if I concede that avoiding sexual harassment would not have been “mission critical” for McDonald’s at the board level, it absolutely was “mission critical” for Fairhurst.  We can call it Caremark, but we can also call it Fairhurst’s job description.  When it came to Fairhurst’s sphere of authority, this was not a little thing, it was a Big Thing.  If Fairhurst had been charged with keeping the copiers supplied with toner, and he ignored that job, it also would have been “mission critical” for him.  Which is why, in the January opinion, VC Laster made clear that when it comes to officers, who (unlike board members) do not have responsibility for the whole company, Caremark duties are shaped by their particularized spheres of authority.  

After that, we are in Agency 101 territory, or, more specifically, Restatement (Third) of Agency § 1.01 territory, namely, that agents are fiduciaries who consent to act under the principal’s control.  I can’t think of an agency principle in the world more fundamental than that agents should not flagrantly ignore their assigned responsibilities. 

So, yes, of course, the Chief People Officer violated his fiduciary duties to the company when he decided that he just wasn’t going to do his job, resulting in – I cannot emphasize this enough – nationwide employee walkouts.  The only surprising thing about the whole mess is that, in the Year of Our Lord 2022 (when this was briefed), Fairhurst even made the argument that, as Chief People Officer, he had no duty to prevent sexual harassment, and further, that he expected a court would accept that argument and write it down and publish it where other people could see it.

Thats-a-bold-strategy-cotton GIFs - Get the best GIF on GIPHY

But then there’s the next question, which is, if he did violate his duties, can shareholders be the ones to bring the lawsuit?  And on this, again, VC Laster got it exactly right, exactly the way I explain it to my students, and it surprises me that anyone could think otherwise. 

Namely, we all experience little torts every day.  Someone bumps into us on the street; a delivery is late, or wrong; the dry cleaner loses our clothes.  We (usually) make a decision not to sue over these things, because it would be expensive to do so, or time-consuming, or the tortfeasor is judgment proof, or a lawsuit would expose us to embarrassing discovery.  Instead, we handle matters other ways.  We lump it, or we complain to the manager, or we refuse to do business with the vendor again.  Companies are in the same boat – sure, they could sue every employee who makes a mistake or steals some petty cash, but sometimes, most of the time, it makes more sense to handle matters with a firing or some other form of internal discipline.  And boards are charged with making those decisions, just as they’re charged with other aspects of managing the company.

But occasionally, we don’t actually trust that boards can make that decision fairly.  When?  Well, most obviously, when the board members themselves were the tortfeasors.  But there might be other situations, such as when board members have close relationships with the tortfeasors.  In those scenarios, shareholders get to substitute their judgment for that of the board, and bring the lawsuit in the company’s name.  And that’s what a derivative lawsuit is.  Not every defendant in a derivative lawsuit is a board member, or even an officer – a while ago, for example, shareholders of HealthSouth brought a derivative lawsuit against the company’s auditor, on the ground that the auditor had breached its contract with the company by failing to catch all the accounting fraud.  See Ernst & Young, LLP v. Tucker ex rel. HealthSouth Corp., 940 So. 2d 269 (Ala. 2006).

The demand requirement of Rule 23.1 is how we sort out situations where we can and can’t trust the board to decide whether the company should bring a lawsuit – and that is how we ensure that imposing duties on corporate officers will not result in an explosion of liability, not by limiting their duties in the first place.  And that is exactly what happened in McDonald’s.  Fairhurst violated his duties to the company (and very possibly his employment contract).  That potentially triggered liability to the company, in the same way that any employee who abandons his responsibilities would be liable for damages caused.  But, ultimately, boards decide when a lawsuit is the most appropriate method of discipline, and VC Laster concluded that shareholders did not have a good reason to think that the board could not make that decision in this case.

That also takes care of another objection to VC Laster’s original ruling, namely, the part where he held Fairhurst violated his duties by engaging in sexual harassment personally.  Any agent violates their duties when they engage in misconduct; this is the kind of thing I teach in the beginning of a BizOrgs class.  The agent might also violate his employment agreement, behave negligently, or do any of a thousand other things that could trigger either contract or tort liability to his principal, just as Ernst & Young might have violated its contract with HealthSouth by conducting a negligent audit.  A finding that there is liability as between the employee (or the contractor) and the company is entirely unremarkable.  The rubber meets the road when it comes to what the principal decides to do about those things, and in particular, who makes that decision.  When that law changes, it’ll be notable.

March 4, 2023 in Ann Lipton | Permalink | Comments (0)

Friday, March 3, 2023

Neyland, Bates, and Lv on "Who Are the Best Law Firms?"

Professors Jordan Neyland (George Mason, Antonin Scalia Law School), Tom Bates (Arizona State University), and Roc Lv (ANU/Jiangxi University), have recently posted their article, Who Are the Best Law Firms? Rankings from IPO Performance to SSRN. Here's the Description:

If you have ever wondered who the best law firms are (which lawyer hasn’t?), have a look at our new ranking. My co-authors—Tom Bates at ASU and Roc Lv at ANU/Jiangxi University—and I developed a ranking method based on law firms’ clients’ outcomes in securities markets. 

There is no shortage of recent scandals in rankings in law. In particular, U.S. News’ law school rankings receive criticism for focusing too much on inputs, such as student quality or acceptance rates, instead of student outcomes like job quality and success in public interest careers. Many schools even refuse to submit data or participate in the annual ranking. Similar critiques apply to law firm rankings. We propose that our methodology improves upon existing methods, which frequently use revenue, profit, or other size-related measures to proxy for quality and reputation. Instead, we focus on the most important outcomes for clients: litigation rates, disclosure, pricing, and legal costs.

By focusing on the most relevant outcomes, this ranking system makes it harder for those being ranked to “game the system” without actually producing better results. Moreover, we use multivariate fixed-effect models to control for confounding effects, which provides some assurance that the ranking is based on a law firm’s skill rather than good timing or choosing “better” clients with a lower risk of getting sued.

We suggest that our innovation can provide some guidance and help improve upon extant methods. Rankings can be valuable tools to help evaluate a firm, school, or other institution. Despite the limitations and criticisms of rankings in law, perhaps the solution is to improve the current system instead of withdrawing from it altogether.

March 3, 2023 in Corporations, John Anderson, Law and Economics, Law Firms | Permalink | Comments (0)

Thursday, March 2, 2023

Supercharging Private Markets Creates Risks for Ordinary People

A full court press to lower the gates to private markets has emerged.  Last month, Duke's Gina-Gail Fletcher testified before the House Committee on Financial Services, Subcommittee on Capital Markets.  The Committee titled the hearing: "Sophistication or Discrimination? How the Accredited Investor Definition Unfairly Limits Investment Access for the Non-wealthy and the Need for Reform."  It considered a range of bills which would eat away at the accredited investor standard and allow broader access to private markets.

The U.S. Congress isn't the only legislative body considering whether to allow ordinary retail investors to buy private offerings.  Nevada has introduced legislation which would create an intrastate offering exemption which would allow Nevadans making about $65,000 a year (Nevada's median income) to be sold illiquid, private placements.  The Nevada proposal would create "Nevada certified investors" as an intrastate offering category.  The proposal describes it this way:

“Nevada certified investor” means a natural person who is, or a married couple who each are, a resident of this State  and who, at the time an offer to sell or sale of a security is made to the person or couple: 1. Holds an ownership interest of more than 50 percent in a  business that has reported a gross revenue of more than $200,000 on each federal income tax return filed for the 2 immediately preceding calendar years; or 2. Has reported an income on the federal income tax return of the person or couple filed for the immediately preceding calendar year that exceeds the median household income in this State, as identified in the most recent data from the American Community Survey published by the Bureau of the Census of the United States Department of Commerce or as determined by the Administrator based on another source of data specified by  the Administrator by regulation.

The Nevada proposal would allow investors to put up to 10% of their net-work per transaction into illiquid private offerings.  Curiously, it deviates further from the federal accredited investor standard by including up to 50% of the investor's primary residence in the net worth calculation.  I agree with Gina-Gail Fletcher that this sort of proposal is a bad idea.  She wrote in to the Nevada legislature to highlight the same concerns as she did with the slate of pending federal legislation.  

In my view, the legislation risks creating an intrastate highway for fraud. Private placements do not have any price discovery or real process for accurately valuing the securities.  A Vegas bartender pulling in $80,000 a year would qualify.  If the bartender had $100,000 in savings and $200,000 in home equity, the first transaction could take $30,000.  When it comes time for the second transaction, how do you value the prior investment now held by the bartender?  It isn't going to be a market price--because there won't be any market.  That minor hurdle might stop a bank from lending on it, but it wouldn't stop a second transaction taking just as much or more of the bartender's investible assets. 

Opening the door to fleecing retail investors with illiquid private offerings no one else would buy isn't going to move us closer to solving the retirement savings crisis.  It's going to dissipate wealth in ill-considered ventures, scams, and general capital misallocation.

Correctly seeing the moment before us, the SEC's Investor Advisory Committee also tackled this issue today.  The IAC heard from four panelists:

  • Steven Neil Kaplan, Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance and Kessenich E.P. Faculty Director at the Polsky Center for Entrepreneurship and Innovation. Presentation
  • Elisabeth de Fontenay, Professor of Law, Duke University. Presentation
  • Tyler Gellasch, President and CEO of the Healthy Markets Association; Author of In the Public Interest: Why Policymakers and Regulators Must Restore the Public Capital Markets
  • Faith Anderson, Chief of Registration & Regulatory Affairs, Washington Department of Financial Institutions, Securities Division; and Chair of the NASAA Corporation Finance Section’s Small Business/Limited Offerings project group, Written Statement

You can find much of their testimony or presentations echoing many of the same points.

When I think about this issue, the adverse selection issue for low-dollar private placements seems to almost entirely ensure that any offerings made to retail investors under lowered standards will be the dregs of the private markets.  This could do real harm to real people.

If you're the sort that cares less about harm to particular individuals and more about overall efficiency, you would probably also prefer steering capital to public markets.  As a society, our ability to effectively allocate capital depends on our ability to see the market.  Allocators can't allocate if they can't see the market.  When dark markets grow larger than public markets, it's going to become impossible to make reasonable choices between alternatives because you cannot see any of the alternatives.  

March 2, 2023 | Permalink | Comments (0)

Wednesday, March 1, 2023

The Hoover Institution on "Markets vs. Mandates: Promoting Environmental Quality and Economic Prosperity"

On January 30, 2023, the Hoover Institution hosted a one-day conference on Markets vs. Mandates: Promoting Environmental Quality and Economic Prosperity. You can find an overview of the program (including speaker bios) here, and recordings of the seven sessions here. What follows are some excerpts from the session descriptions.

Sanjai Bhagat explained that ESG investing principles and new standards of corporate social responsibility are not based on the fiduciary duty to maximize shareholder value.


John Cochrane asserted that the Security and Exchange Commission’s plan to enforce ESG investment practices isn’t based on “saving the planet” but on bending corporations to serve a particular political agenda. Echoing Bhagat, Cochrane said the ESG mandates would not maximize shareholder value. It would instead deny capital to companies, lower their asset prices, and curb returns to investors. ESG mandates would also pervert markets, destroy competition, and encourage some companies to rent-seek from the government.


Mark Mills argued that ambitious goals to achieve zero carbon emissions in the coming decades are delusional. He said that over the past 20 years, after $5 trillion spent worldwide, there hasn’t been any significant movement toward transitions to renewables. Today, global energy derived from wood exceeds that of solar and wind power combined (which make up just 3 percent of all fuels). Moreover, a rapid transition to these other renewable sources, including batteries, would require a level of mineral extraction never seen in history.


Steven Koonin argued that many advocates of sweeping mandates for climate change frequently peddle misinformation, promote extreme scenarios as the consequence of global temperature rises, and smear critics of their arguments as “deniers” and with other detractions. Koonin then presented several examples from his research that provide context for environmental trends that are usually omitted from the prevailing literature on the subject.

March 1, 2023 in Stefan J. Padfield | Permalink | Comments (1)

Monday, February 27, 2023

Teaching Question of the Day

I teach business law courses that involve planning and drafting in connection with business transactions. I know many of you do, too.  My question is, how do you teach your students to find drafting precedents (if that is part of your teaching) for transactional business law projects/tasks?  Do you advise students to use forms or to walk back provisions in fully negotiated agreements?

In our capstone 3L planning and drafting course at UT Law, Representing Enterprises, I let students take their own path in finding drafting precedents and ask them to report out their process to the class.   We talk through the pros and cons of their individual approaches, which I capture on the whiteboard.  My board notes from a recent class (during which we talked through how students located precedent bylaws for a closely held--preferably Tennessee--corporation) are included below.



Although Bloomberg Law was a popular resource for students who shared their process in this particular class meeting, the Securities and Exchange Commission's website and Google also got some love.  In the ensuing discussions, a student also mentioned Westlaw's Practical Law as a resource, although that's not reflected in this picture.

In other advanced business law planning/drafting courses, I invite representatives from Bloomberg Law, Lexis, and Westlaw into my classroom to train my students in how to find precedent documents (and other transactional resources) using their database's search tools.  One student involved in the discussion reflected in the photo above was enrolled in one of those advanced courses with me in the fall (and also had been a student in our transactional business law clinic).  He was among the folks who started his search process with Bloomberg Law.  His classmates told me he had been teaching them some of what he had learned in my course and the law clinic!  #peerteaching--loved it!

How do you help students find drafting precedents (and in what business law and legal education contexts)?  I am always willing to learn new methods and tricks.

February 27, 2023 in Joan Heminway, Law School, Teaching | Permalink | Comments (5)

Sunday, February 26, 2023

Baylor Law: Transactional Drafting & Other Legal Writing/Drafting Openings

The following came to me from Patricia Wilson, Associate Dean and Professor of Law, Chair of the Faculty Appointments Committee at Baylor Law:

Baylor Law is accepting applications for two lecturer positions in our Legal Analysis, Research and Communication (LARC) program, as described below, to begin no later than August 1, 2023.  Please share with anyone you believe may be interested.

Lecturer (Transactional Drafting)

Candidates must possess a juris doctor. You will be asked to provide a letter of interest; curriculum vitae; transcripts, a list of three references in the application process, and two writing samples demonstrating the candidate's writing style.  Salary is commensurate with experience and qualifications.

The selected individual will have responsibility for teaching in the Legal Analysis, Research & Communications (LARC) program. Responsibilities include working collaboratively with other faculty members of the Baylor Law Writing Program to create, teach and grade assignments for the LARC 4 course (Transactional Drafting) and coordinating all of the writing efforts across all three years of the curriculum to ensure consistency and best management of resources. The ideal candidate will have at least three years of transactional legal writing experience, including drafting and analyzing a variety of different contracts and business entity governing documents. For more information about the Baylor Law Legal Writing Program, please visit

Lecturer (Persuasive Writing; Litigation Drafting)

Candidates must possess a juris doctor. You will be asked to provide a letter of interest; curriculum vitae; transcripts, a list of three references in the application process, and two writing samples demonstrating the candidate's writing style.  Salary is commensurate with experience and qualifications.

The candidate should have substantial experience in persuasive writing and litigation drafting, including drafting appellate briefs and a variety of different pleadings, trial motions, and similar work product.  The selected individual will have responsibility for teaching in the Legal Analysis, Research & Communications (LARC) program, specifically LARC 3, our required persuasive writing course, and LARC 5, our litigation drafting course. He or she will teach several sections of both courses each year.  He or she will be one of several LARC 3 instructors. With respect to the LARC 5 course, the candidate will be expected to collaborate and coordinate project planning with instructors for the LARC 4 (transactional drafting). Thus, the ideal candidate will also have experience in analyzing and drafting a variety of contracts. The candidate will share additional responsibilities as well, such as periodically serving as a judge in the Practice Court program and collaborating with other legal writing faculty members to create problems for writing competitions. For more information about the Baylor Law Legal Writing Program, please visit

General Information

Both positions entail renewable one-year contracts, with the possibility of promotion to senior lecturer status after seven years.

We are especially interested in candidates who will enhance the diversity of our faculty.  Our search includes both entry-level and junior lateral candidates.  

Additional information for these two positions and other open positions at Baylor Law is available at:

February 26, 2023 in Joan Heminway, Jobs, Writing | Permalink | Comments (0)

Saturday, February 25, 2023

I did a podcast!

Quick post today to mention that I did a podcast!  Evan Epstein of UC Law San Francisco hosts a regular podcast called "Boardroom Governance" for which he's interviewed everyone who has anything to do with corporate issues - academics, practitioners, board members, you name it.  Recently, he was kind enough to invite me for an interview.  It was a great discussion, covering everything from Twitter v. Musk (of course), to the McDonald's decision, to Sam Bankman-Fried, to public benefit corporations, to Domino's pizza.

You can give it a listen here (and at that link there's a handy index, if you want to jump to particular points).

February 25, 2023 in Ann Lipton | Permalink | Comments (0)

Friday, February 24, 2023

Catholic Law Seeks Business (and Other) Faculty!

Screenshot 2023-02-24 at 5.47.18 PM

Catholic Law seeks to fill several faculty positions to begin in Fall 2023. We are seeking candidates for entry-level and lateral positions, tenure-track or contract, in a wide variety of subjects, including Clinical Education, Lawyering Skills, Civil Procedure, Family Law, Trusts and Estates, Criminal Law and Procedure, Evidence, Corporate and Securities Law, International Law, and Contracts and Commercial Law.

Candidates in Clinical Education may have opportunities to teach in our existing clinics but also may propose new clinical areas. We are particularly interested in clinical offerings compatible with participation by our evening students.

We are also seeking candidates whose teaching and research interests may be in any of the above subject matter areas (or others) who are also interested in participating in our University’s Institute for Latin American and Iberian Studies.

Catholic Law is a national leader in preparing students of all faiths for the practice of law and is an integral part of The Catholic University of America, the national university of the Catholic Church, located on a beautiful residential campus in the heart of the nation’s capital.

Candidates must possess a J.D. or equivalent, superior academic credentials, and relevant professional experience, such as teaching, legal practice, or judicial clerkships. The application should include a letter of interest, CV, references, sample publications, and a personal statement addressing how your research, teaching, and service would make a distinctive contribution to the mission of our University and law school and the vision of Catholic education outlined in the Apostolic Constitution on Catholic Universities, Ex Corde Ecclesiae.

Interested applicants should email their materials to the attention of Dean Stephen Payne at [email protected].

As a Catholic institution, our mission commits us to respecting the “dignity of each human person,” and to welcoming scholars who will bring a “diversity of backgrounds, religious affiliations, viewpoints, and contributions” to the law school’s vibrant intellectual community. We recognize the importance of diversity in our faculty and encourage applications from those with diverse backgrounds.

The Catholic University of America is an Equal Opportunity Employer.

February 24, 2023 in Joan Heminway, Jobs | Permalink | Comments (0)

Wednesday, February 22, 2023

Professor Wilmarth's We Must Protect Investors and Our Banking System from the Crypto Industry

Professor Emeritus Arthur E. Wilmarth recently posted a new article, We Must Protect Investors and Our Banking System from the Crypto Industry.  I always learn a ton in reading his work, so I'm looking forward to the opportunity to review this paper.  Here's the abstract:

"The crypto boom and crash of 2020-22 demonstrated that (i) cryptocurrencies with fluctuating values are extremely risky and highly volatile assets, and (ii) cryptocurrencies known as “stablecoins” are vulnerable to systemic runs whenever there are serious doubts about the adequacy of reserves backing those stablecoins. Crypto firms amplified the crypto boom with aggressive and deceptive marketing campaigns that targeted unsophisticated retail investors. Scandalous failures of prominent crypto firms accelerated the crypto crash by inflicting devastating losses on investors and undermining public confidence in crypto-assets.

Federal and state regulators have allowed banks to become significantly involved in crypto-related activities. Several FDIC-insured banks that provided financial services to crypto firms suffered substantial losses and incurred extensive legal, operational, and reputational risks during the crypto crash. Meanwhile, stablecoins issued by nonbanks and uninsured depository institutions threaten to become a new form of “shadow deposits” that could undermine the integrity of our banking system and require costly future bailouts.

This article presents a three-part plan for responding to the risks posed by fluctuating- value cryptocurrencies and stablecoins. First, policymakers must protect investors by recognizing the Securities and Exchange Commission (SEC) as the primary federal regulator of most fluctuating-value cryptocurrencies. Federal securities laws provide a superior regime for regulating such cryptocurrencies. In particular, the SEC has broader powers (including a more robust investor protection mandate) and a stronger enforcement record than the Commodity Futures Trading Commission (CFTC).

Second, federal bank regulators must protect the banking system by prohibiting all FDIC- insured banks and their affiliates from investing and trading in fluctuating-value cryptocurrencies, either on their own behalf or on behalf of others. In addition, federal bank regulators should bar FDIC-insured banks and their affiliates from providing financial services to crypto firms unless those firms are registered with and regulated by the SEC and/or the CFTC.

Third, Congress should mandate that all issuers and distributors of stablecoins must be FDIC-insured banks. That mandate would ensure that all providers of stablecoins must comply with the regulatory safeguards governing FDIC-insured banks and their parent companies and affiliates. Those safeguards provide crucial protections for our banking system, our economy, and our society."



February 22, 2023 in Colleen Baker, Financial Markets | Permalink | Comments (0)

Tuesday, February 21, 2023

Belmont University - Nashville, TN - Assistant Professor and Program Director of Legal Studies

Health Sciences at Belmont University | Professional Graduate &  Undergraduate Degree Programs

Belmont University (my employer) is seeking an Assistant Professor and Program Director of Legal Studies.

This professor will sit across campus from me, in our College of Liberal Arts and Social Sciences ("CLASS"), but I will likely interact with them because my Business Law 1 and 2 classes feature in the legal studies major, in addition to the business majors on campus. Happy to discuss Belmont University with anyone who may be interested. 

You can apply for the position (by March 15) here.  

February 21, 2023 in Haskell Murray, Jobs, Teaching | Permalink | Comments (0)

Monday, February 20, 2023

2023 Emory Law Transactional Law and Skills Conference & Tennessee's Business Law Journal

For those of you who may have been wondering about Emory Law's biennial Conference on the Teaching of Transactional Law and Skills, I have posted current information below.  I am pleased to see that our business law journal, Transactions: The Tennessee Journal of Business Law, is again publishing the proceedings.  This has been a great partnership between Emory Law and Tennessee Law over the years.  The proceedings of the 2021 Emory Law conference can be found here.

Just as I was ready to post this, I heard from the 2023-24 Editor-in-Chief of the journal, Bethany Wilson, that we are currently accepting articles for the Fall 2023 edition of Transactions. The articles published by Transactions typically focus on transitional business law issues and topics, including agency, antitrust, arbitration, bankruptcy, business associations, contracts, insurance, intellectual property, labor and employment, property, real estate, secured transactions, securities regulation, shareholder litigation, and tax. If you have any articles that you would be interested in having published by Transactions, please send them our way. Articles can be submitted via Scholastica or by emailing an abstract and copy of the article to [email protected].


image from

February 20, 2023 in Conferences, Joan Heminway, Law Reviews, Research/Scholarhip | Permalink | Comments (0)

Sunday, February 19, 2023

Corporate Speech and the Omnipresent Specter of Political Bias

This post was originally intended to be submitted as a comment to Ann Lipton’s recent “Don’t Say Anything” post – so please read that post first before continuing. I ultimately decided to publish this as a free-standing post because it got a bit long for a comment and I’ll be better able to follow any subsequent comments here. As always, I remain open to changing my mind in the light of convincing feedback.

Ann’s post starts by referencing “Florida’s ‘Don’t Say Gay’ law, HB 1557.” For context, the following from Heritage Action's Executive Director Jessica Anderson (here) may be helpful:

While the Left and the corporate media continue to lie about Florida’s Parental Rights in Education bill, HB 1557, Florida Republicans haven’t stopped working to protect parents and children. Nothing in the bill bans the word ‘gay’ or censors schools — it simply protects grades K-3 from sexualized instruction and bolsters parents’ rights to know what’s going on in their children’s lives at school.

As for the substance of the case, I predict that Chancery will not dismiss the request. Why? Because it does not have to dismiss it in order to discourage “bullying” because this is not properly dismissed as bullying (i.e., an improper purpose). Simeone is certainly not the only shareholder to be concerned about Disney’s decision possibly being tainted by political bias – and this request is a proper way to try to get at the truth on that issue. What’s the most likely form of circumstantial evidence of political bias in a case like this? I believe it is failures of information-gathering that conveniently tilt in only one partisan direction. For example, if the decision-makers utterly failed to even consider simply firing the disruptive employees as a way to restore order at the company, or if they utterly failed to account for the completely foreseeable costs of backlash – in the form of state action or an even bigger PR nightmare – for trying to undermine the decisions of a democratically elected governor arguably doing precisely what he was democratically elected to do (cf. "Nikki Haley Says Florida’s Parental-Rights Law Doesn’t Go ‘Far Enough'"), then we start to get smoke suggesting a fire of politically biased willful blindness. Phrased more conventionally, if the corporate decision-makers failed to properly inform themselves in the course of reaching their decision, then they breached their duty of care, and if their information-processing failures rose to the level of consciously disregarding their known duty to become fully informed, then they engaged in non-exculpable bad faith. Given the highly politicized nature of this dispute, and the specter of political bias it raises, granting the request here seems perfectly in line with Section 220’s purpose and precedents. FWIW, I have previously written about the need for enhanced scrutiny in cases like this here, here, and here; Senator Marco Rubio has linked to some of that work here.

As for the concern that granting this request will somehow sanction improper or illegal “bullying” of corporations by political actors, I don’t think corporate decision-makers can ignore likely material impacts of political actions simply because they believe those actions may ultimately be deemed illegal. For example, should corporate decision-makers ignore the potential costs/benefits of President Biden’s loan forgiveness program because it may ultimately be ruled illegal? I think not.

February 19, 2023 in Stefan J. Padfield | Permalink | Comments (4)

Saturday, February 18, 2023

Lawyers, Law Students, and Mental Health

Warning: this post addresses suicide.

I was supposed to post yesterday about a different topic but I'm posting today and not next week because someone needs to read this today.

Maybe it's you. Maybe it's your "strong" friend or colleague.

I found out yesterday that I lost a former student to suicide. She lit up every room she walked into and inspired me, her classmates, and everyone she met. I had no idea she was living in such darkness. Lawyers, law students, compliance professionals, and others in high stress roles are conditioned to be on top of everything. We are the strong ones that clients and colleagues rely on. We worry so much about the stigma of not being completely in control at all times, that we don't get help. We worry that clients won't trust us with sensitive or important matters. We worry that we won't pass the character and fitness assessments to get admitted to the bar. 

The CDC released a report this week showing an alarming rise in depression, suicidal thoughts, and anxiety among our youth. The report noted that:

  • Female students and LGBQ+ students are experiencing alarming rates of violence, poor mental health, and suicidal thoughts and behaviors.
  • The rates of experiencing bullying, sexual violence, poor mental health, and suicidal thoughts and behaviors indicate a need for urgent intervention.

According to, one of the most respected organizations on the mental health:

1 in 5 U.S. adults experience mental illness each year
1 in 20 U.S. adults experience serious mental illness each year
1 in 6 U.S. youth aged 6-17 experience a mental health disorder each year
50% of all lifetime mental illness begins by age 14, and 75% by age 24
Suicide is the 2nd leading cause of death among people aged 10-14 

Those statistics don't surprise me. I have a family member who lost his first friend to suicide at age 12 and has lost almost ten others in the past ten years to suicide or overdoses. I have other family members who have been hospitalized repeatedly for mental health crises and others who refused to get help and were homeless. When people ask my why I care so much about my students and coaching clients, this is why. It's personal for me.

It's why I got mental health first aid certified when the University of Miami offered the training to staff and professors and why I'm often the only lawyer in the room at conferences and trainings with social workers, neuroscientists, and therapists who are getting their certifications. I stay in my lane, of course. But I want to understand more and I want to do my part to help change the profession because lawyers are in the top 10 for rates of suicide. We have disproportionately higher rates of depression, anxiety, and substance use disorders. Although I've been a happy lawyer for over thirty years, I know I'm a unicorn.

So here are some resources. This list could be pages long so I've compiled links that also refer to other resources:

988 Suicide & Crisis Lifeline

American Bar Association Mental Health Resources

Mental Health First Aid Training (I highly recommend this training and have completed it myself through my law school)

National Alliance on Mental Illness Resource Directory

Institute for Well Being in Law

Lawyer Assistance Programs by State

ABA Substance Use and Mental Health Toolkit for Law School Students and Those Who Care About Them

If you are a parent, especially of young children, get educated as soon as you can so that you can spot the signs early and support your children so they don't end up in these statistics. Ask your school administrators if they are familiar with the CDC's What Works in Schools Program.  Tell your school board and elected officials that mental health is a priority and vote for candidates who understand this as the public health crisis that it is. Sit down with your kids and watch The Social Dilemma. It may not change their addiction to social media, but it will help you understand why this generation is suffering so much that school districts have filed suit about the mental health impacts.

If you're a law student, check out the resources above. Don't get your health advice from TikTok or Instagram unless it's from a trained professional  (although I did do a TikTok video telling people to get help).

If you're a law professor, do you know where to send your students if they come to you seeking help? I have the cell phone number of our Dean of Students and I know I can reach out to her at any time if I'm worried about a student. I also share my family's story with my students so they feel safe asking for my guidance. I don't act as their therapist, but it's my job to prepare the students for the difficulties of the profession, and not just how to redline a document or argue a motion. 

If you're a law firm partner, consider investing in real training for your lawyers and your staff.  Don't just bring in someone to talk about mindfulness or diversity, equity, and inclusion once a year so you can check that box off. Invest in long-term, consistent, evidence-based training and coaching for your staff and lawyers at all levels (yes, managing partners too). Look at and reconfigure your billable hours requirements and layoff plans. Are they realistic? Are they really necessary? If you're comfortable, share your personal story of dealing with mental health challenges with your associates so they know you're human and have some empathy even as you have them billing over 2000 hours to get a bonus. 

If you're a general counsel, ask your firms about what they do to protect and preserve mental health, just like you ask about DEI initiatives. 

This is resource list is clearly just a start. What resources or tips do you have for those who are struggling in the profession? What will you today? If you do nothing else, share this message with others. It could be a matter of life or death for someone you know. 

February 18, 2023 in Current Affairs, Family, Law Firms, Law School, Lawyering, Marcia Narine Weldon, Teaching, Wellness | Permalink | Comments (0)

Don't Say Anything

As you may be aware, a Disney shareholder, Kenneth Simeone, has filed a Section 220 action in Delaware Chancery seeking books and records pertaining to Disney’s announcement in early 2022 that it opposed Florida’s “Don’t Say Gay” law, HB 1557. 

Before the law was passed, Disney’s CEO, Robert Chapek, told employees that the company would not take a public position on the law.  That decision infuriated Disney employees, who, among other things, began staging walkouts in protest.  Ultimately, Chapek reversed course and publicly stated that Disney opposed the law.

In the wake of that announcement, Governor Ron DeSantis and the Florida legislature voted to dissolve Disney’s self-governed Reedy Creek Improvement District, although they later walked back their actions by maintaining the district but transferring control to Florida political appointees.  Chapek was fired by the board (likely for a host of reasons), and former CEO Robert Iger was restored to his old role.

Anyway, Simeone claims that he has a credible basis to suspect that Disney’s public opposition to the law was the result of mismanagement and breach of fiduciary duty.  In particular, he claims that Disney’s officers and directors may have put their personal political preferences ahead of shareholder interests, and that therefore he is entitled to further information to investigate.  Among other things, he seeks information about whether any of the directors are beholden to LGBTQ+ rights organizations, or whether they are beholden to directors who are.  The case is set for trial in Delaware, Simeone v. The Walt Disney Co., No. 2022-1120-LWW.

So, first, let’s just state the obvious: Disney facially had a legitimate business reason for its opposition to the law.  The company had become ungovernable, and silence was becoming a public relations nightmare.  That doesn’t mean Chapek handled things well or even competently, nor is it a statement about anyone’s true motivation; it’s simply that there was a patently legitimate reason for the about-face. 

What’s also obvious is that this 220 action was undertaken to punish Disney for expressing a (liberal) political opinion, and to deter other corporations from doing the same.   The difficulty from Delaware’s perspective is that, especially after AmerisourceBergen v. Lebanon County Employees’ Retirement Fund, the bar for obtaining books and records is very low.  The shareholder does not have to establish a viable claim for breach of fiduciary duty; investigating mismanagement is enough, if only because evidence of mismanagement might be used to run a proxy contest or otherwise communicate with other shareholders about further courses of action.  The shareholder does not have to articulate any particular plan of action after obtaining such evidence; in a mismanagement investigation, Section 220 does not require that shareholders identify the “ends” to which they might apply the materials.  And though courts have rejected demands in the past when there was reason to suspect the shareholders’ motivations were pretextual or based on personal political beliefs, the fact that a petitioner might harbor such beliefs does not itself undermine an otherwise-legitimate request for materials.  Therefore, it seems that Delaware Chancery will be in the difficult position of having to do three things simultaneously: Dismiss the action, without setting new standards that make legitimate claims difficult to bring, while also making clear that Delaware is not a forum for bullying companies that make political statements with which some segment of the public disagrees.

But there’s another insidious aspect to this dispute.  Simeone’s brief lays out a truly convincing case that DeSantis’s actions against Disney were explicit retaliation for its speech, in violation of the First Amendment.  And yet the legal argument Simeone makes is, to comply with their fiduciary duties and otherwise properly manage the company, Disney’s officers and directors should have anticipated unconstitutional action by the governor of Florida and modified their behavior accordingly.

And it gets worse.  Simeone is not, as far as I know, in any way affiliated with the State of Florida, but other investors are.  DeSantis has already implied he would manipulate Florida’s public pension funds into initiating litigation against any portfolio companies that anger him; imagine if he retaliated against a company for expressing opposition to him and then caused Florida’s own fund (or even funds sponsored by sympathetic states) to bring lawsuits claiming the company was at fault for bringing about the very harm his own administration inflicted.

That said, from a pure shareholder primacy/wealth maximization point of view, I’m not sure Simeone is wrong; Disney has no right even to stand up for its own freedom of speech, unless there is a business purpose for doing so.  Unless, of course, there’s a general public policy principle that corporate directors are not obligated to manage the company in anticipation of overtly unconstitutional action by U.S. government officials.

February 18, 2023 in Ann Lipton | Permalink | Comments (1)