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Ann Lipton

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Ann M. Lipton is a 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.

Northwestern Pritzker School of Law invites applications for tenured or tenure-track faculty positions with an expected start date of September 1, 2022. This is part of a multi-year strategic hiring plan, and we will consider entry-level, junior, and senior lateral candidates.

Northwestern seeks applicants with distinguished academic credentials and a record of or potential for high scholarly achievement and excellence in teaching. Specialties of particular interest include: tax, anti-discrimination law, international law (joint search with the Buffett Institute for Global Affairs), health law (joint search with the Feinberg School of Medicine), and business law. Northwestern welcomes applications from candidates who would contribute to the diversity of our faculty and community. Positions are full-time appointments with tenure or on a tenure-track.

Candidates must have a J.D., Ph.D., or equivalent degree, a distinguished academic record, and demonstrated potential to produce outstanding scholarship. Northwestern Pritzker School of Law will consider the entry level candidates in the AALS Faculty Appointments Register, as well as through application directly to our law school. Candidates applying directly should submit a cover letter, C.V., and draft work-in-progress through our online application system: https://facultyrecruiting.northwestern.edu/apply/MTE3Mw. Specific inquiries should be addressed to the chair of the Appointments Committee, Zach Clopton…

A while back, I posted about how there’s been some institutional investor support for the proposal that the SEC require not only public companies, but private companies, disclose climate change information.

Usually, of course, private companies aren’t required to disclose things – especially to institutional investors – on the theory that institutional investors can themselves bargain for the information that they need.  (Yes, yes, there are kind of exceptions, like Securities Act Section 4(a)(7), etc).  But the SEC and Congress have been gradually expanding which companies count as private, raising concerns that not only that they have assumed too much sophistication on the part of institutions (for example, institutional investors themselves have complained about opacity among the PE funds in which they invest), but also that the SEC and Congress have ignored the benefits of creating a body of public information across a wide swath of companies.

Which is why this article grabbed me: 

The California Public Employees’ Retirement System and Carlyle Group Inc. helped rally a group of more than a dozen investors to share and privately aggregate information related to emissions, diversity and the treatment of employees across closely held companies. More firms and

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Sometimes, there’s not a whole lot new to blog about – and other times you get the Slack decision, the Brookfield decision, an SEC investigation of Activision, and Aronson’s demise all in a single week.  So in this post, I am going to tackle the first three and save United Food and Commercial Workers Union v. Zuckerberg for maybe another time, but if you really want to know my immediate reaction to the Zuckerberg case, I tweeted a thread here.  Professor Bainbridge also has a long blog post on the Zuckerberg decision here.

Slack!

I previously blogged about this case here, and the short version is that Slack went public via direct listing, and filed a Securities Act registration statement for slightly fewer than half of the shares that became available to trade on the opening day, because the rest of the shares did not need to be registered in order to trade under Rule 144.  Stock purchasers claimed that the registration statement contained false statements in violation of Section 11 of the Securities Act; the question was whether they’d need to establish that theirs were the registered shares before they’d be able to bring a…

There’s been so much interest in SPACs recently, I figured everyone should be aware of this new paper by Usha R. Rodrigues and Michael Stegemoller, SPACs: Insider IPOs.  One of the main points the authors make is that de-SPAC transactions represent a kind of “empty voting” scenario, where you can both vote in favor of the deal and redeem your shares for $10 – which is in fact what overwhelmingly occurs; the actual funds for the merger typically come from the simultaneous PIPEs.  As the authors point out, the regulations and practice governing SPACs did not always allow this; when SPACs first began to list on the NYSE, only shareholders who voted against the deal could redeem, and if redemptions exceeded a certain threshold, the deal would not close.  Shortly thereafter, however, regulations and practice evolved to allow all shareholders to redeem and to eliminate the conversion threshold.  The authors argue that the new practices are damaging to markets by allowing companies to go public on major exchanges before they are ready to do so.

Anyhoo, here is the abstract:

Proponents have hailed special purpose acquisition companies (SPACs) as the democratization of capitalism. In a SPAC, a publicly

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So, Coinbase has made a lot of noise recently about the SEC’s warning that its “Lend” product may be a security and thus subject to registration under the securities laws.

Its wounded blog post, not to mention the complaints from the CEO on Twitter, have attracted a good deal of mockery, but I actually want to use this as a jumping off point for a different discussion.

The Lend product, as I understand it, would allow Coinbase to lend certain cryptocurrency held by its clients to other actors; the borrowers will pay an interest rate to Coinbase, which Coinbase will share with clients, resulting in a guaranteed minimum 4% interest payment to the client.  Essentially, Coinbase wants to be a bank, and to treat its clients as depositors, without the bother of banking regulation.  Per Coinbase’s blog post, the SEC is “assessing our Lend product through the prism of decades-old Supreme Court cases called Howey and Reves….  These two cases are from 1946 and 1990.”  Leaving aside the baffled tone (Howey? Reves? What is this sorcery?), and the language designed to make me feel old (I still wear clothes I bought in 1990)…

A couple of weeks ago, I posted about how courts are not terribly precise when evaluating allegations of corporate scienter in Section 10(b) claims.  Since then, a couple of cases were decided that provide some useful examples of the problem.

First up, there’s the Second Circuit’s Plumbers & Steamfitters Local v. Danske Bank, decided earlier this week.  Apparently, the Estonia subsidiary of Danse Bank got into trouble for money laundering, and the plaintiffs alleged this resulted in a number of false statements by Danse Bank itself.  The court dismissed all of the statement claims on various grounds, and then turned to the final allegations that, due to Estonia’s conduct, Danse Bank had engaged in a scheme to defraud.  The court rejected the claim in a few brief sentences:

At no point do [the plaintiffs] articulate with precision the contours of an alleged scheme to defraud investors, or which specific acts were conducted in furtherance of it. Instead, the claim rests upon the incorporation of the previous 140 pages of the pleading paired with the conclusory assertion that “Defendants carried out a common plan, scheme, and unlawful course of conduct that was intended to . . . deceive the investing

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Insider trading isn’t really my specialty – that’s John’s area – but everyone’s talking about SEC v. Panuwat, which means I feel like I need to weigh in.

In short: Company insider (Panuwat) obtains confidential information from his employer that the firm is to be acquired.  He immediately trades in the stock of a similar but unrelated company – recognizing, correctly, that news of the acquisition will lift the stocks of comparable firms.  Has he violated Section 10(b) and Rule 10b-5 by misappropriating confidential information from his employer?

First, I note that Panuwat’s trades took place on August 18, 2016 and the SEC filed its complaint on August 17, 2021.  Which, you know, tells you something about the SEC’s ambivalence and risk assessment for this case. (The statute of limitations for imposing a penalty is 5 years).

Second, this problem has been considered before.  Here’s Ian Ayres and Joe Bankman on the subject (h/t to the Twitter birdie who called this to my attention), and here’s a recent empirical paper by Mihir N. Mehta, David M. Reeb, and Wanli Zhao concluding that these kinds of trades are relatively common (discussed in this Law360 article).

There’s probably a lot that can…

A plaintiff alleging claims under Section 10(b) of the Securities Exchange Act must show that the defendant acted with “scienter,” which usually means either an intent to mislead investors, or reckless indifference to whether investors would be misled.

Since corporations, as well as natural persons, can be Section 10(b) defendants, there is often a question as to how a corporation’s “state of mind” can be determined for Section 10(b) purposes.  For example, the Third Circuit brushed up against this issue in Pamcah-UA Local 675 Pension Fund v. BT Group PLC, 2021 WL 3415060 (Aug. 5, 2021), and in In re Cognizant Tech. Solutions Corp. Securities Litigation, 2020 WL 3026564 (D.N.J. June 5, 2020), the court tried to develop a Section 10(b) corporate-scienter taxonomy.  My very first article, Slouching Towards Monell: The Disappearance of Vicarious Liability Under Section 10(b), was about how courts identify corporate scienter.  But I’m still finding that a lot of judicial opinions demonstrate confusion on this subject, which inspires me to post about it now.  To be sure, this is not an issue unique to 10(b) actions – it comes up in other areas of law – but Section 10(b) has some specific challenges, so I’m focusing on 10(b) here.

[More under the jump]

Entry Level Positions

Tulane University Law School invites applications from entry-level candidates for one or more tenure-track faculty positions.  We welcome applications from candidates with teaching and research interests in all topics, but we are particularly interested in candidates who focus on constitutional law, commercial law, racial justice, race and the law, and critical race theory. We especially invite applications from candidates who will enhance the diversity of the law faculty and who can demonstrate a commitment to institutional diversity, equity, and inclusion.  Applications and queries should be addressed, preferably via email, to Professor Adam Feibelman, Tulane Law School, 6329 Freret St., New Orleans, LA 70118-5670, afeibelm@tulane.edu.

Chair in Environmental Law

Tulane University Law School invites nominations and applications for a Chair in Environmental Law. We seek an academic leader with a record of distinguished scholarship, excellence in teaching, and the demonstrated capacity to direct a well-established program in environmental law. The appointment will be made at the level of tenured, full professor. 

The responsibilities of the chair holder include scholarly research and publication; classroom teaching; participation in faculty governance; serving as Director of the Center for Environmental Law; active involvement in student mentoring and counseling…

Very quick post this week just to call to your attention the recent complaint filed in Delaware Chancery by Grant & Eisenhofer, Delman v. GigAcquisitions3 LLC , No. 2021-0679.  (Bloomberg article on the case here, with links to the docket and complaint).

The complaint challenges the Lightning eMotors de-SPAC transaction on behalf of a class of investors in the SPAC shell company.  Rather than bring federal fraud claims, though – as many prior SPAC plaintiffs have – this plaintiff is alleging that the acquisition was a poor deal for the SPAC, initiated to benefit the SPAC sponsor, who had a limited time to complete a deal before liquidating.  Therefore, the directors and the SPAC’s sponsor breached their fiduciary duties to the SPAC.

Two things of note:

First, G&E seems to be self-consciously pitching the case as a bellwether challenge to the SPAC trend generally.  In the complaint, it alleges:

Gig3’s history is part of a disturbing trend of SPAC transactions in which financial conflicts of interest of sponsors and insiders override good corporate governance and the interests of SPAC stockholders….

This Court should take this opportunity to affirm that the boards and controllers of SPACs incorporated in Delaware owe

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