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Ann Lipton

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Ann M. Lipton is an incoming Professor of Law and Laurence W. DeMuth Chair of Business Law at the University of Colorado Law School.  An experienced securities and corporate litigator who has handled class actions involving some of the world’s largest companies, she joined the Tulane Law faculty in 2015 after two years as a visiting assistant professor at Duke University School of Law.

As a scholar, Lipton explores corporate governance, the relationships between corporations and investors, and the role of corporations in society.  Read more.

Just checking in on NCPPR v. SEC, which I previously blogged about here.

In that case, the SEC issued Kroger a no-action letter allowing it to exclude a conservative shareholder proposal from its proxy materials.  The shareholders sued, claiming that the SEC had engaged in unconstitutional viewpoint discrimination against conservatives; meanwhile, intervenors National Association of Manufacturers argued that Rule 14a-8 itself was unconstitutional.  The SEC argued that its no-action decisions are not final orders subject to review.

A Dem-majority panel held that the issue was moot – not because the meeting date had passed, but because Kroger had voluntarily agreed to include the proposal in its materials, and the shareholders had soundly rejected it, which meant that should NCPPR seek to advance the proposal again in the near future, it would be excludable for failure to meet resubmission thresholds.  But the panel also held that no-action letters are not final orders and cannot be reviewed.

Judge Jones dissented on both points, and further wrote that she would have reversed the no-action decision on the ground that the SEC had engaged in viewpoint discrimination.  Since the Fifth Circuit tends to holistically lean more toward Jones than toward the Democrats…

Texas, Nevada, and Delaware have been competing to relieve corporate managers of liability for breach of fiduciary duty (the interesting question is not the race so much as why none feels sufficiently emboldened to say what they mean – shareholders can’t sue – they all feel it necessary to dress up their legislation in a lot of conditions so as to obscure the practical effect), but what if they could compete to eliminate other shareholder rights?

That’s the innovation currently being advanced by the Texas Legislature, with HB 4115 – just passed the House. 

The legislation tackles the scourge of nonbinding shareholder proposals.  Corporations that meet certain criteria can amend their governing documents – and I can’t tell whether that means bylaws, the certificate, or either, though I suspect the latter – to block shareholder proposals unless the shareholder holds the lesser of $1 million worth of securities or 3% of the securities entitled to vote, and solicits at least 67% of the corporation’s voting power (again, not sure if that means sending proxy materials or if 14a-8 inclusion in the corporation’s proxy materials is sufficient).

The conditions to take advantage of this provision are that the…

I recently published a piece with FT Alphaville arguing that, after a brief experiment with democratization, corporate and securities law were taking on a distinct authoritarian turn.  (See also Christine Hurt, Texas, Delaware, and the New Controller Primacy).

Further to that, I doubt anyone was surprised when the Business Roundtable came out with its wish list for SEC/congressional rulemaking, which essentially is designed to minimize shareholder voice by attacking both shareholder proposals and proxy advisors.

They want to ban ESG proposals, for example and, hilariously, they cite a survey – with a pie chart! – showing that 91% of their own members agree that shareholder proposals are more focused on special interests than increasing company value.  Next, you’ll tell me that 91% of Business Roundtable members agree that income taxes are too high, employees are too entitled, and Gstaad lets just anyone in these days.

They also want to codify a policy I earlier blogged about, namely, to bar the use of Rule 14a-6 to distribute solicitation material by anyone holding less than $5 million.

But most aggressively, they want to ban the use of the universal proxy for shareholder proposals.  This use of universal proxy is…

New decision out from a California appellate court enforcing Rivian’s charter provision requiring that federal Securities Act cases be brought in federal, rather than state, court.

I realize the ship has pretty much sailed on this issue, but I wrote a whole paper about why this trend is problematic both from a doctrinal and a policy perspective.

My issue doctrinally, of course, is that I do not think charters are contracts, and I also believe the question of contract formation is not part of the internal affairs doctrine, and therefore is not dependent on the law of the chartering state. On that latter point, at least, Delaware agrees with me; in Salzberg v. Sciabacucchi, the Delaware Supreme Court conceded that forum provisions governing federal law claims are not, strictly, governed by the internal affairs doctrine, although the court argued that other states should respect them nonetheless.

These doctrinal points, however, tend to be lost when the issue reaches non-Delaware courts, and Bullock v. Rivian is no exception. There, the California court not only situated the dispute squarely within the internal affairs doctrine, but also assumed that charter-based forum provisions are in fact contractual agreements, without even attempting…

Interesting opinion out of the Delaware Court of Chancery this week by Vice Chancellor Cook. Short version: Company adopted advance notice bylaws; shareholders challenged them as a breach of fiduciary duty; in Siegel v. Morse, VC Cook held the dispute was not ripe for review because the shareholders had not proposed to mount their own proxy contest.

Following Kellner v. AIM Immunoctech, VC Cook distinguished between facial challenges, which claim that the bylaws cannot be enforced under any set of circumstances, and as-applied challenges, which depend on a particular set of facts. Facial challenges, per Kellner, are only appropriate when the bylaw is unauthorized under Delaware statutory law or the corporate charter, and here, the shareholders conceded that theirs was an as-applied challenge, rooted in what they claimed was an improper motive by the board to chill all shareholder activism by imposing excessive disclosure requirements. For as-applied challenges, VC Cook held, ripeness requires a plaintiff who is actually contemplating a proxy contest; here, the plaintiffs disclaimed any such intention; therefore, the claim was not ripe.

The difficulty is, defensive measures have previously been the subject of challenges outside the context of active contests for control. For example…

This week, in Defeo v. IonQ, the Fourth Circuit headed down a path of holding that short seller reports categorically can never reveal the truth of a fraud to the market – and therefore cannot establish loss causation in a Section 10(b) case – before pulling up at the last minute and concluding maybe they can, if the report is backed up by empirical facts.  In general, though, according to the court, since the reports often rely on anonymous sources that they admit are selected and paraphrased to paint a
negative narrative, they cannot support the element of loss causation in the usual course.

We’ve been here before. It is bizarre to me that courts would look at actual market movement in response to an accusation of fraud and decide, on the pleadings, that no reasonable investor would take the accusation seriously.  They did!  They did take it seriously, right there. You can tell because the stock price went down.

The concern that is transparently motivating the court is that the short seller may be misrepresenting the evidence of fraud.  But if that’s the case, there’s an element for that – falsity.  If the plaintiffs cannot…

This week, I offer miscellaneous collection of things that caught my attention recently….

In Connection With.  I’ve been keeping track of cases involving a pattern where, roughly, company A and company B are somehow related; company B makes fraudulent statements that affect company A’s price; and shareholders of company A sue company B.  Blog posts here and here and here and here and here and here – also, Mike Levin and I discussed the issue in a Shareholder Primacy podcast (here at Apple, here at Spotify, here at YouTube).

Anyhoo, the latest entry in this series is In re General Motors Co. Securities Litigation, 2025 WL 952479 (E.D. Mich. Mar. 28, 2025), where shareholders of GM brought Section 10(b) claims against both GM and its majority-owned subsidiary, Cruise, alleging that both companies made false statements about the state of Cruise’s autonomous vehicle technology, and that the truth was disclosed when a Cruise car struck and dragged a pedestrian in San Francisco.  Though the court concluded that plaintiffs failed to identify any false statements made by GM or its officers, Cruise officers – and the Cruise company, on its blog – had falsely described the…

Private company share trading seems to be the theme of the week.  The WSJ reported on it Tuesday, and on Wednesday, Mike Levin and I posted a new episode of Shareholder Primacy – where we talk about “withhold the vote” and “vote no” campaigns for corporate directors – but we also talk about the phenomenon of private company share trading.  (Here on Apple, here on Spotify, here on YouTube). 

The WSJ focuses on how accredited investors – which is a relatively low bar, for individuals, it just means someone who earns $200K per year, or has $1 million net worth (minus the primary residence) – are increasingly able to trade shares of pre-IPO companies on sites like EquityZen and Forge Global.

But the WSJ only glancingly references the point that Mike and I focused on in the podcast: The investors aren’t trading shares of the operating company; they’re trading shares of SPVs, which themselves own shares of the operating company.  This is something I posted about before, here – it’s a way to avoid the securities law requirement that companies begin public reporting if they have 2,000 investors holding a single class of equity.

Except…

Is a question I get asked a lot, especially after Musk offered an enthusiastic gesture that absolutely, positively, in no way resembled a Nazi salute pleasedon’tsueme. 

And the answer is – no. 

Even under the law of Delaware-before-SB-21 (and before Texas’s “hold my beer” alternative, which would among other things, prevent not only shareholders, but the corporation’s own board, unprompted, from suing a director or officer in the right of the corporation for anything other than fraud, intentional misconduct, ultra vires acts, or knowing violations of law), this cannot be the basis for a claim by Tesla’s shareholders against Elon Musk.

As Tesla’s CEO and a member of the board, Elon Musk owes Tesla a duty of care, and a duty of loyalty.  That means he cannot run Tesla with gross negligence – which, under Delaware law (let’s assume Texas law is no more strict), would be defined as akin to recklessness – and he cannot be disloyal, which means acting under a conflict of interest, intentionally trying to harm the company, or intentionally failing to take action to benefit Tesla when he knows he has a duty to take such action.

Let’s start with loyalty.  Whatever…

Meredith Ervine at Deallawyers highlights this blog by Milbank on Advance Notice Bylaws. Two things stand out to me.

First, apparently companies are now requiring nominating activists to vote only their long positions, not borrowed shares:

While lending shares of the corporation to cover short sales may provide income for large fund complexes, it is unlikely that these fund complexes (or other long-term holders) wish to promote empty voting in a contested corporate election.  Permitting the voting of borrowed shares by an activist – amplifying the activist’s voting power when there is no meaningful economic stake in the shares being voted – misaligns voting power with the economic consequences of the vote and does not promote good long-term decision making. The Alignment ANB accordingly requires the nominating stockholder and allied participants in the solicitation to waive their right to vote shares in excess of their collective net long position – in other words, to waive the right to vote shares that were borrowed or otherwise subject to an offsetting sale or delivery obligation.

I didn’t know you could do that by bylaw! Do similar requirements apply to incumbents (a la Kiani at Masimo?).

Second, Milbank recommends questionnaires…