The VEBA

Stephen F. Diamond (Santa Clara) has just posted on SSRN his essay Legal Implications of Proposed GM/UAW VEBA.  Here's the abstract:

This research note provides an initial exploration of the potential securities law implications of the proposed Voluntary Employees Beneficiary Association (VEBA) of General Motors and the UAW.

And here's the conclusion:

[T]op UAW officials are campaigning to secure ratification of the decision to establish the VEBA including the sale to the VEBA of the Convertible Note.  Such efforts could be viewed as a sale and/or distribution of a security.  Because the current information made available to the UAW member/investors by the union’s top officials is not adequate, if the SEC or a federal court deemed top UAW officials to be engaged in the sale and/or distribution of a security, I believe they would be doing so in violation of federal securities laws.  This may call into question the validity of the financing of the VEBA itself.

I.e.,  UAW leadership has sold membership a lemon.

rb