The United States Postal Service (USPS) has been in the news a lot more than usual lately. Amid controversies over the summer appointment of Louis DeJoy (a former corporate executive with no previous experience in the agency) as the Postmaster General, and more recent coverage of the Postal Service’s role in the upcoming election (and their ability to handle the uptick in mail-in voting) this widely-lauded government service has been the target of increasing calls for privatization. Given President Trump’s open disdain for USPS, the results of the November election may well determine the future trajectory of this agency. Specifically, votes this November will likely determine whether USPS will remain within the ambit of its original intention: as a public trust for the citizens of the United States or become a privatized corporation where a profit making purpose is imposed on the new incarnation of the Postal Service in a way that will likely lead to disaster for all. In a longer essay, (that will be published in the Texas Law Review Online) we provide an in-depth look into the Postal Service’s history and mission. Here, we would like to take a moment to truly unpack the implications of placing a corporate veneer on a public service agency.
Teaching Through the Pandemic – Part IX: Students Teaching Themselves, Each Other, and Us
On Friday night, I finished five days of group oral midterm exam appointments with my Business Associations students. (I wrote a law review article on these group oral midterms five years ago, in case you are interested in background and general information.) It is an exhausting week: twenty-one 90-minute meetings with groups of three students based on a specific set of facts. And this year, of course, the examinations were hosted on Zoom, like everything else. Especially given social distancing, mask-wearing, and the overall hybrid instructional method for the course (about which I wrote here), I admit that I headed into the week a bit concerned about how it all would go . . . .
The examination is conducted as a simulated meeting of lawyers in the same law office–three junior lawyers assisting in preparing a senior colleague for a meeting with a new client. The student teams are graded on their identification and use of the applicable substantive law. I was pleased to find that the teams scored at least as well overall and individually as they typically do. That was a major relief. I had truly wondered whether students would be less well prepared in
A Terrible Injustice Has Been Corrected
The Ninth Circuit just issued a loss causation opinion in In re BofI Securities Litigation, and it’s so beautiful, it gets so much right, it’s like staring at the sun, or the face of God. Birds sang, angels wept, my sinuses have been cleared, my freezer is defrosted, and all that’s left for me to do before I depart from this Earth is see Wonder Woman 1984 in theaters.
The background is a bit complex. BofI is the subject of two 10(b) securities class actions, covering different time periods. The first alleges that the Bank lied about its lending practices, and the second alleges that the Bank lied about investigations into those lending practices. Both cases were heard before the same district court judge, and the court dismissed both sets of claims on loss causation grounds, employing a particularly vigorous – nay, implausible – view of market efficiency.
I blogged about second of those dismissals here, where I explained that the plaintiffs in that action had alleged that the fraud was revealed when a reporter for the New York Post filed a FOIA request and wrote an article about his findings. The court rejected plaintiffs’ allegations of loss
How Are You Doing?
How are you doing? I’m exhausted between teaching, grading, consulting, writing, and living through a pandemic. I actually wasn’t planning to post today because I post every other Friday, as a way to maintain some balance. I may not post next Friday because I’ll be participating in Connecting the Threads, IV, our business law professor blog annual conference. It’s virtual and you may get up to 8 CLE credits, including an ethics credit. If you love our posts, you’ll get to see us up close and personal, and you won’t even need a mask.
I decided to do this short post today because it may help some of you, whether you’re professors or practitioners. Several years ago, Haskell Murray wrote that he does a mid-semester survey. He asks his students what they like and don’t like. I love this idea … in theory. How many of us really want to know how we’re doing? I’ve done it a couple of times when I knew that the class was going great, but I don’t do it consistently. I decided to do it this year because we are piloting a new program modeled after Emory’s Transactional Law Program. I used
Securities Financing and Derivatives Markets Interconnections and Potentials for Greater Transactional Efficiencies
I just did a quick read through ISDA’s new whitepaper, Collaboration and Standardization Opportunities in Derivatives and SFT Markets. “SFT” stands for securities financing transactions. I encourage anyone studying these markets to at least review its Executive Summary. As it states “This paper explains and illustrates how and why two large, important and interconnected markets – derivatives and securities financing transactions (SFTs) – could collaborate to achieve greater standardization and improved efficiency.” (p. 3)
It’s divided into two parts: 1) an overview of the relevant markets (repo, stock loan, and derivatives), their interconnectedness, and possibilities for and benefits of greater transactional efficiencies, and 2) a proposal for implementing these objectives.
Much of the paper focuses on market interconnections, which strongly argue for the possibility of improved transactional efficiencies. I kept thinking about interconnections from a systemic risk/financial stability perspective, and how (if at all) promoting greater transactional efficiencies (which, at least at first glance, seems like a good idea) might impact such considerations.
I encourage more of us in the banking and financial institutions area to give additional thought to systemic risk and financial stability issues related to securities lending, including due to its interconnections with derivatives
October 14 – Systemic Risk Council Webinar
BLPB Readers,
Exciting news! On the morning of October 14, 2020, the Systemic Risk Council is offering a webinar on Ensuring Financial Stability: Relaunching the Reform Debate After Pandemic Dislocation. The Agenda looks fantastic! A brief summary of the program is below:
The stimulus response to the global pandemic has surfaced new debates and highlighted lingering questions about the role of central banks, accountability, reform, and the roles of levered markets and shadow banking. This Systemic Risk Council program brings together leading voices to explore how the financial industry, regulators, and policy makers can address key issues around bank stability, resolution, and the mounting leverage in the global economic system.
The Business Law Prof Blog Symposium Goes Virtual!
The fourth annual Business Law Prof Blog symposium, Connecting the Threads, is happening, despite the pandemic. We are proceeding in a virtual format, hosted on Zoom on Friday, October 16. More information is available here.
The line-up includes an impressive majority of our bloggers speaking on a wide range of topics from shareholder proposals to social enterprise, opting out of partnership, and much more. Most papers will have a faculty and student discussant. My submission, “Business Law and Lawyering in the Wake of COVID-19,” is coauthored with two students and carries one hour of Tennessee ethics credit. While I wish we could host everyone in person in Knoxville, it always is an amazing day when we all get together. I look forward to learning more about what everyone is working on and hearing what everyone has to say.
In Which I Play a Contracts Professor Again
I usually leave the arcana of contract interpretation principles to the specialists, but every now and then I apparently dip my toe in, and this is another of those weeks.
VC Laster’s opinion in In re Anthem-Cigna Merger Litigation tells a truly wild tale. In brief, Anthem and Cigna agreed to merge, but Cigna’s CEO, David Cordani, wanted to helm the combined entity. When it became clear he wouldn’t get the CEO spot, he began a campaign of sabotage, assisted by Cigna executives who supported his ambitions. Thus, Cigna’s top leadership hired a PR firm to trash talk the merger while concealing the firm’s involvement from Cigna’s Board. At one point, Cigna’s General Counsel personally leaked certain letters so they would be disclosed publicly, then tasked her head of litigation with conducting an internal investigation to discover the source of the leak. Cigna’s foot-dragging with respect to integration planning and responding to regulators was so profoundly passive-aggressive that I felt my blood pressure rising – and this is despite the fact that Anthem was not exactly an angel: it lied in federal court proceedings, and the overall merger would certainly have reduced competition in an already-consolidated industry.
In any
Sex, Lies, and M&A- Part II
No. You didn’t miss Part 1. I wrote about Weinstein clauses last July. Last Wednesday, I spoke with a reporter who had read that blog post. Acquirors use these #MeToo/Weinstein clauses to require target companies to represent that there have been no allegations of, or settlement related to, sexual misconduct or harassment. I look at these clauses through the lens of a management-side employment lawyer/compliance officer/transactional drafting professor. It’s almost impossible to write these in a way that’s precise enough to provide the assurances that the acquiror wants or needs.
Specifically, the reporter wanted to know whether it was unusual that Chevron had added this clause into its merger documents with Noble Energy. As per the Prospectus:
Since January 1, 2018, to the knowledge of the Company, (i), no allegations of sexual harassment or other sexual misconduct have been made against any employee of the Company with the title of director, vice president or above through the Company’s anonymous employee hotline or any formal human resources communication channels at the Company, and (ii) there are no actions, suits, investigations or proceedings pending or, to the Company’s knowledge, threatened related to any allegations of sexual harassment or other sexual misconduct by any