December 2016

U.S. Securities and Exchange Commission Chair Mary Jo White has vowed to press on in her efforts to adopt new rules related to derivatives and mutual funds, among other issues, says a Reuters report.  The Senate Banking Committee’s top two Republicans, Chairman Richard Shelby and Mike Crapo of Idaho, sent a letter asking her to stop the rule making process while the Trump administration reviews the SEC’s agenda. She declined. 

Chair White replied that the SEC must “exhibit a spirit of firm independence” in continuing its work “without fear or favor.” She further wrote,  “I am not insensitive to the issues raised by your letter and have carefully considered what impact, if any, the election should have on the current work of the Commission.” (Reuters saw the letter, but I have not found a copy.) 

I am on record as saying (e.g., here and here) I’d like to see the SEC and Congress take a break from new regulations and focus on enforcement, though I know some of the proposed rules are (at least in some form) required by Dodd-Frank. Still, even where I disagree with some of the proposals, I think it’s right for independent agencies to continue on with their work. Each such agency can be respectful…

It used to be that Friday night was Domino’s Pizza night in our house . . . .  My, how things change if one lets 15-20 years slip by unnoticed.  No more of that in our house!

I guess Domino’s is doing OK without us, however.  Third quarter 2016 financial results for Domino’s Pizza, Inc., a Delaware corporation with common stock listed on the New York Stock Exchange, were favorable as compared to the firm’s 2015 results, accordingly to the most recent quarterly earnings release.  Somebody’s eating a lot of Domino’s pizza, even if it isn’t the Heminway family.

Apparently, Domino’s wants to share the wealth–with its customers.  Co-blogger Haskell Murray pointed this recent press item out to me and co-blogger Ann Lipton in an email message last week, knowing full well that we both were or would be interested.  He was right.  Ann may have more to say on this in a later post.  (She also noted that other firms are adopting consumer benefit plans similar to the Domino’s plan I describe here today.)

Of course, as a corporate finance/securities lawyer, I immediately had visions of Ralston Purina dancing in my head.  (Not quite like visions of sugarplums, in this holiday…

As part of my ongoing effort to sample most pop cultural representations of corporate/business life, I’ve started watching SyFy’s Incorporated.  Incorporated envisions a dystopian future where, due to global warming and related environmental catastrophes, the world’s governments have become bankrupt, and in their place, “multinational corporations have risen in power and now control 90% of the globe.”

We learn in the first episode that formal governments still exist, but in almost vestigial form; as a practical matter, multinational corporations are in charge.  These corporations compete with each other for resources and market share.  They target each other with espionage and sabotage; when one’s stock price falls, the others’ stock prices rise.  Employees lead a comfortable life within the corporate compound, so long as they adhere to the rules set by their employers; outside of corporate compounds, life is poverty and anarchy.

I get where this show is coming from; I mean, fear of corporate control of government represents a particularly timely anxiety.  And there are lots of sly jokes about today’s political environment – a television news report, for example, tells us that the “Canadian Prime Minister is constructing a fence after 2073 became a record year…

Below are some resources related to the integration of faith and work stemming from businesses or business people.

Companies 

Organizations

Presentations 

Books and Articles

A friend of mine is considering teaching his constitutional law seminar based almost entirely on current and future decisions by the President-elect. I would love to take that class. I thought of that when I saw this article about Mr. Trump’s creative use of Delaware LLCs for real estate and aircraft. Here in South Florida, we have a number of very wealthy residents, and my Business Associations students could value from learning about this real-life entity selection/jurisdictional exercise. Alas, I probably can’t squeeze a whole course out of his business interests. However, I am sure that using some examples from the headlines related to Trump and many of his appointees for key regulatory agencies will help bring some of the material to life.

Happy Grading!

If you’re a college football fan it’s hard to forget the beginning of the 2013 season when star quarterbacks Johnny Manziel (Texas A&M) and Tajh Boyd (Clemson) took the Internet by storm after rubbing their fingers together in the air – prompting “Show Me the Money!”, Jerry Maguire type hype across the nation – following touchdown plays.  That season Manziel even donned the cover of Time Magazine with the accompanied headline: “It’s Time to Pay College Athletes”.

Not six months later, Region 13 of the National Labor Relations Board (NLRB) held that Northwestern University football players qualified as employees and could unionize and bargain collectively.  Although the national level NLRB ultimately overturned this decision – denying players at private universities the ability to form unions – these highly-broadcast events reignited the historic debate about whether student-athletes should be paid to play.

As a tax aficionado and amateur sports fanatic, I can’t help but ponder the various tax consequences associated with paying student-athletes.  Such intrigue ultimately led to the first of three papers I’ve written thus far addressing the tax issues surrounding the pay-for-play model.  ‘Show Me the Money!’ – Analyzing the Potential State Tax Implications of Paying Student Athletes evaluates…

Do you love charts? Do you need/want a break from grading/procrastinating/writing frantically on a deadline real or self-imposed?  All of these things at once?  Welcome to the month of December– the time of year that should be a break from our schedules, but which always (and I mean ALWAYS) is my busiest time when I try to fit 6 weeks of work into 2.  

My December gift to you?  The Investment Company Factbook.  The Investment Company Institute (ICI), is an association of regulated funds that collects and distributes data from its members.  The full text of the Factbook (an annual publication) is available here, and the charts (and underlying data) are available here.  I wept when I first discovered this source while writing years ago.  ICI information is widely used in legal research.  A quick search produced 3,265 law reviews and journal articles.  For critiques of ICI’s information and framing, see John C. Bogle, Mutual Funds at the Millennium: Fund Directors and Fund Myths, at http://www.vanguard.com/bogle_site/may152000/ (May 15, 2000); John P. Freeman & Stewart L. Brown, Mutual Fund Advisory Fees: The Cost of Conflicts of Interest, 26 J. Corp. L. 609, 625/26 (2001); and yours truly…

The political discourse of this election cycle, and the respective postures of the two main political parties, suggest that social justice and economic prosperity are in opposition to one another. At times, it seems that some believe pursuing racial and gender equality are (at best) distractions from “real problems” like jobs and the economy. Others seem to think any form of business or industrial development is essentially sanctioning the destruction of the Earth and its people. Both are wrong.

Equity and fairness are not anathema to economic progress. In fact, in the big picture, they are essential. There is nothing inconsistent about being pro-business and supporting social justice. One can believe in social justice and still think there are too many regulations that hamper businesses. There are, for example, regulations that disproportionately keep women and minorities from opening their own businesses. And there are laws and regulations that create barriers to entry and help maintain market power businesses where competition is both warranted and necessary..

My colleague, Haskell Murray recently posted Faith and Work in Universities, which lists some resources related to religion and scholarly activity, particularly as it related to business. This is a worthwhile discussion, and far too…

In a relatively brief opinion released this morning, the U.S. Supreme Court affirmed the Ninth Circuit’s judgment in Salman v. United States.  The decision of the Court was unanimous.  The big take-aways include:

  • doctrinally, the Court’s complete, unquestioning reliance on the language in Dirks v. Sec’s Exch. Comm’n, 463 U. S. 646 (1983), as to when the sharing of information through a tip is improper, and therefore a basis for insider trading liability (quoting from the text on page 662 of the Dirks opinion: “'[T]he test,’ we explained, ‘is whether the insider personally will benefit, directly or indirectly, from his disclosure.’”);
  • factually, the emphasis placed by the Court on the value proposition represented by the information-sharing between the close brothers, Maher and Michael–that information passed on with the knowledge that it will be traded on was effectively a substitute for a monetary gift (“In one of their tipper-tippee interactions, Michael asked Maher for a favor, declined Maher’s offer of money, and instead requested and received lucrative trading information.”), noting “[a]s Salman’s counsel acknowledged at oral argument, Maher would have breached his duty had he personally traded on the information here himself then given the proceeds as a gift to his

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