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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.

In 2014, the Supreme Court decided Burwell v. Hobby Lobby Stores, where it held that it is possible for a for-profit corporation to have a religious identity, derived from the religious commitments of “the humans who own and control those companies.”  In so holding, the Court relied in part on state laws that permit even for-profit corporations to pursue purposes beyond stockholder wealth maximization.  As the Court put it:

Not all corporations that decline to organize as nonprofits do so in order to maximize profit. For example, organizations with religious and charitable aims might organize as for-profit corporations because of the potential advantages of that corporate form, such as the freedom to participate in lobbying for legislation or campaigning for political candidates who promote their religious or charitable goals.  In fact, recognizing the inherent compatibility between establishing a for-profit corporation and pursuing nonprofit goals, States have increasingly adopted laws formally recognizing hybrid corporate forms. Over half of the States, for instance, now recognize the “benefit corporation,” a dual-purpose entity that seeks to achieve both a benefit for the public and a profit for its owners.

In any event, the objectives that may properly be pursued by the companies in

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Vanguard recently announced that it will no longer centralize proxy voting across all of its funds; instead, its externally managed funds will set their own proxy voting policies.  Although these represent only around 9% of Vanguard’s assets under management, they include almost all of Vanguard’s actively managed funds and actively managed equity assets. 

I haven’t really seen much explanation for the shift from Vanguard itself – its own statement on the matter is quite vague – but I suspect they may have made the change for the same reason that Fidelity separates active and passive voting authority, namely, to avoid having the active funds grouped with the passive for the purposes of Section 13(d) of the Securities Exchange Act.  Fidelity’s policy is longstanding because historically, it specializes in active funds.  Vanguard, by contrast, is nearly synonymous with index funds, so my guess is that it reached a point where the active assets under management were becoming a regulatory risk, especially if those funds wanted to take positions with a view toward influencing – or supporting those who influence – management.  As John Morley points out, Section 13(d) limits the ability of large fund providers to take…

I’m basically buried in exam-grading right now, and that leads me to the perennial question of how best to design a law school exam.  Up until now, I’ve pretty much stuck to a single format: short essays (such as issue-spotters), in-class (3-3.5 hours), limited open book (they can use assigned materials and their own notes).  I’m wondering whether next year I should mix that up a bit.  For instance, Securities Regulation seems especially well-suited to multiple choice, at least partially; I also wonder whether a take-home exam would allow students to craft more thoughtful answers.

So, consider this a call for commentary: Especially if you teach in the business space, what kind of exam do you find works best, and why? Joan, I know, actually gives oral midterms – which I think is amazing, but I’m not quite ready for – so of the other options, in-class or take home?  Open book or closed?  Multiple choice or something else?  Why do you choose what you choose?

Last year, I had the privilege of participating in ILEP’s 24th Annual Symposium, Deconstructing the Regulatory State, where I served as a discussant on papers presented by Jill Fisch and Hillary Sale regarding the role of disclosure in the securities regulatory landscape.  Those papers, Making Sustainability Disclosure Sustainable and Disclosure’s Purpose have now been published by the Georgetown Law Journal. 

Georgetown has also published my remarks on the two papers as part of their online series.  The title for my commentary is Mixed Company: The Audience for Sustainability Disclosure, and there’s no formal abstract, but this is the introduction:

In their symposium articles, Professors Sale and Fisch offer mirror-image visions of the role of mandated disclosure. Professor Sale addresses information that is typically relevant to an investing audience and recognizes its importance to the wider public. Professor Fisch, by contrast, addresses information that is most relevant to a noninvestor audience but only contemplates its importance to corporate financial performance. The gulf between their approaches highlights one of the significant tensions in our system of securities regulation: the distance between its intended purpose and its current function.

Close readers of this blog will recognize that my comments follow a…

It’s no secret to anyone paying attention to Delaware law that the Aruba decisions – both at the Chancery and Supreme Court levels – involved some apparently personal clashes, which have already been the subject of speculation from several quarters, and I can only assume there is more analysis to come.

I was going to weigh in on that as well but upon further reflection, I decided that it’s … boring.  And I’d rather talk about the substance of the law, because what we’re seeing here is the inevitable breakdown in appraisal actions given that no one knows why we even have them.

As a warning, I’ll say that reading over what I wrote on this, I realize it’s probably pretty impenetrable unless you already are versed in Delaware appraisal jurisprudence.  I’ve previously posted about recent developments in Delaware appraisal litigation here, here, here, and here, so that might provide some background, but otherwise – you know, read at your own risk:

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Every year, when we get to the section on shareholder voting in my Business Associations class, I assign this article about Netflix.  As it describes, Netflix has a staggered board and plurality voting and it takes a two-thirds vote of the stockholders to amend the bylaws.  Every year, shareholders submit proposals to change these matters; every year, a majority vote in favor, and every year, Netflix just ignores the vote and keeps on keeping on.

But now it seems there are some cracks in the wall. 

Last year, Netflix went on what I can only interpret as something of a charm offensive, publicizing what it claimed was unusually strong board oversight and transparency between the board and the management team.  I take this to mean that their shareholders had become sufficiently restive that the company felt it needed to respond.

But that apparently did not work as well as hoped.  This year, shareholders again submitted a series of governance reform proposals, seeking the right to call meetings, proxy access, the ability to act by written consent, the ability to amend bylaws by majority vote, and a bylaw amendment that would provide for director elections by majority rather than…

Where we last left off in our saga, Professor Hal Scott of Harvard Law School, as trustee for the Doris Behr 2012 Irrevocable Trust, sought to introduce a shareholder proposal at Johnson & Johnson to amend the corporation’s bylaws to require arbitration of federal securities claims by any J&J stockholder, on an individual basis.  (You can read a full accounting of all of this, with links, here)

J&J sought to exclude the proposal on two grounds.  First, that the proposal would cause the company to violate federal law because an arbitration bylaw of this sort would act as a prohibited waiver of rights under the Exchange Act, and second, that the proposal would violate state law because – as Delaware Chancery’s decision in Sciabacucci v. Salzberg made clear – corporate bylaws and charters only govern claims pertaining to corporate internal affairs, and cannot impose limits on non-internal affairs claims, like federal securities claims.  J&J was boosted in this latter effort by an opinion letter from the NJ Attorney General agreeing that NJ law would be in accordance with Delaware on this issue.  In light of the NJ AG letter, the SEC granted J&J’s request for no-action relief.

Undaunted, the…

Earlier this week, the Supreme Court issued its opinion in Lorenzo v. SEC, and the thing that strikes me the most about it is that the dissenters do more to undermine Janus Capital Group, Inc. v. First Derivative Traders, 564 U.S. 135 (2011), than the majority does.

I previously posted about Lorenzo here; the remainder of this post assumes you’re familiar with the problem posed by Lorenzo and its relationship to the earlier Janus decision.

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A few months ago, I read John Carreyrou’s Bad Blood: Secrets and Lies in a Silicon Valley Startup about Elizabeth Holmes and the Theranos fraud, and I was very curious to see how the same story would play out in the new documentary The Inventor: Out for Blood in Silicon Valley.  (Sidebar: I am truly on the edge of my seat for the forthcoming Adam McKay adaptation starring Jennifer Lawrence – but that’s a whole ‘nother thing).  In general, I preferred the book: it has far more detail, and the documentary has little new information to contribute. That said, there was power in the immediacy of actually watching Elizabeth Holmes, hearing her speak, and seeing how people reacted to her.  So, below are some of my general thoughts.

Tulane just held its 31st Annual Corporate Law Institute, and though I was not able to attend the full event, I was there for part of it.  Though the panels were very interesting and I took copious notes, as a matter of personal satisfaction, the single most important thing I learned is that it is pronounced Shah-bah-cookie.  You’re welcome.

That said, below are some takeaways from the Hot Topics in M&A Practice panel, and to be clear, this isn’t even remotely a comprehensive account of everything interesting; it’s just stuff that I personally hadn’t heard before.  (And thus, the exact contours of my ignorance are revealed.)

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