Photo of Ann Lipton

Ann Lipton

Subscribe to Ann Lipton's Posts

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.

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.)

[Read more]

I am fascinated by the eyebrow-raising speech SEC Commissioner Hester Peirce delivered to the Council of Institutional Investors (CII) earlier this week.  In it, she said:

I have concerns about CII’s position with respect to the Johnson & Johnson shareholder proposal. As you know, a Johnson & Johnson shareholder submitted a proposal that, if approved, would have started the process to shift shareholder disputes with the company to mandatory arbitration…. CII also submitted a letter stating that “shareholder arbitration clauses in public company governing documents reflect a potential threat to principles of sound governance.”…

CII argues that “shareowner arbitration clauses in public company governing documents represent a potential threat to principles of sound corporate governance that balance the rights of shareowners against the responsibility of corporate managers to run the business.” Among your worries is the non-public nature of arbitration and thus the absence of a “deterrent effect.”…

The problem is that these class actions are rarely decided on the merits. Instead, the cost of litigating is so great that companies often settle to be free of the cost and hassle of the lawsuit.  Settlements are rarely public and certainly involve no publication of broadly applicable legal findings. Additionally,

…

I’ve previously posted that judges sometimes suggest that markets are efficient to a degree that borders on the mystical.*  But on the opposite end of the spectrum, it often seems as though Congress does not believe in efficient markets at all.  For example, the PSLRA’s “crash damages” provision contains the implicit assumption that when negative information comes to light, it will take 90 days for the stock to appropriately internalize it.  15 U.S.C. §78u-4(e)(1).  Dodd Frank requires all public companies to disclose information on their compliance with the Federal Mine Safety & Health Act (I amuse myself by highlighting for my class the “mine safety disclosure” in the Starbucks 10-K, for example), even though that information is public via other channels.  (Spoiler alert: the disclosures apparently make a difference, so Congress may be right!) 

And most recently, we have the Improving Corporate Governance Through Diversity Act of 2019, introduced by Representative Meeks in the House and Senator Menendez in the Senate.

These identical bills would require public companies to disclose “Data, based on voluntary self-identification, on the racial, ethnic, and gender composition of the board of directors of the issuer;  nominees for the board of directors of…

Boston University School of Law, in conjunction with the University of Illinois College of Law, UCLA School of Law, and the University of Richmond School of Law, invites submissions for the Seventh Annual Workshop for Corporate & Securities Litigation. This workshop will be held on Friday, September 27 and Saturday, September 28, 2019 at Boston University School of Law.

Overview

This annual workshop brings together scholars focused on corporate and securities litigation to present their scholarly works. Papers addressing any aspect of corporate and securities litigation or enforcement are eligible, including securities class actions, fiduciary duty litigation, and comparative approaches. We welcome scholars working in a variety of methodologies, as well as both completed papers and works-in-progress.

Authors whose papers are selected will be invited to present their work at a workshop hosted by Boston University.  Hotel costs will be covered.  Participants will pay for their own travel and other expenses.

Submissions

If you are interested in participating, please send the paper you would like to present, or an abstract of the paper, to corpandseclitigation@gmail.com by Friday, May 24, 2019. Please include your name, current position, and contact information in the e-mail accompanying the submission.  Authors of accepted papers will…

I had a great time reading Guhan Subramanian & Annie Zhao’s new paper, Go-Shops Revisited.  It follows up on Prof. Subramanian’s earlier study of their effects, Go-Shops vs. No-Shops in Private Equity Deals: Evidence & Implications, 63 Bus. Law. 729 (2008).  In the original study, Prof. Subramanian found that go-shops generally had beneficial effects for target companies: bidders would pay a little bit more for the privilege of something like exclusivity in the original negotiations, and not infrequently, a superior proposal would materialize during the go-shop period.  But in the new paper, the authors conclude that go-shops are no longer an effective tool for price discovery, in large part because changes in their design make it much less likely that a superior proposal will emerge.

There are a lot of interesting observations in the new paper, with the basic point being that deal attorneys – aware that Delaware courts focus a lot on things like the size of termination fees – instead manipulate aspects of the go-shop that tend to escape judicial notice, and that collectively function to make go-shops less effective.  One particular point that stood out: The authors note that PE firms have changed how they…

Tulane Law School invites applications for three positions: a Forrester Fellowship, a visiting assistant professorship, and a Yongxiong Fellowship.

All three positions are designed for promising scholars who plan to apply for tenure-track law school positions. All three positions are full-time faculty in the law school and are encouraged to participate in all aspects of the intellectual life of the school. The law school provides significant support, both formal and informal, including faculty mentors, a professional travel budget, and opportunities to present works-in-progress in various settings.

Tulane’s Forrester Fellows teach legal writing in the first-year curriculum to two sections of 25 to 30 first-year law students in a program coordinated by the Director of Legal Writing. Fellows are appointed to a one-year term with the possibility of a single one-year renewal. Applicants must have a JD from an ABA-accredited law school, outstanding academic credentials, and significant law-related practice and/or clerkship experience. Candidates should apply through Interfolio, at http://apply.interfolio.com/59403. If you have any questions, please contact Erin Donelon at edonelon@tulane.edu.

Tulane’s visiting assistant professor (VAP), a two-year position, is supported by the Murphy Institute at Tulane (http://murphy.tulane.edu), an interdisciplinary unit specializing in political economy and ethics that…

Where we left things, Delaware Vice Chancellor Laster had just ruled in Sciabacucci v. Salzberg that Delaware corporate charters and bylaws may only govern matters of corporate internal affairs, including litigation related to internal affairs; they may not be used to govern external matters like securities litigation.  For that reason, forum-selection provisions purporting to require that Section 11 claims be filed in federal court were invalid.  The implication – though not part of his holding – was that a similar result would obtain for charter and bylaw provisions that purport to require individualized arbitration of securities claims. 

After that, the defendants, predictably, appealed to the Delaware Supreme Court, and we were all waiting (im)patiently to see how that would unfold when – alas! – a panel consisting of Strine, Vaughn, and Seitz dismissed the appeal as prematurely filed due to a pending attorneys’ fee petition in Chancery. 

Speaking as someone who once did in fact have to litigate the issue of whether a notice of appeal was prematurely filed, thus depriving the appellate court of jurisdiction, all I can say is – oof!  Then again, in my case, the matter wasn’t raised until it was too late to file…

I’ve previously blogged about the battle to muzzle proxy advisor services with new regulations, including posting a summary of the SEC’s roundtable on the subject, a discussion of the (lack of) existing regulation, comments on the SEC’s withdrawal of two no-action letters concerning the use of such services.

This week, we have a bit of new news.  First, the SEC announced that Commisioner Elad Roisman will be spearheading efforts in this area.  That matters because, as I previously observed, Commissioner Roisman seems particularly sympathetic to the idea that firms should have an opportunity to review and comment and/or correct proxy advisor recommendations.   So I’m guessing that’s something the SEC is going to propose.

Second, NASDAQ, Inc. – along with many other public companies (not all of which are NASDAQ companies, btw) – submitted a letter to the SEC requesting various changes to the proxy rules, including more regulation of proxy advisors.  And the first thing I’ll note about the NASDAQ letter is that it’s nine pages long – 1.5 pages of text, and the rest is just a list of signatories. 

I also notice that NASDAQ’s proposals are quite similar to those that were included in…

It’s a crazy time for me right now, so this week I just offer five feature articles that I read last year, each of which did a business-related deep dive that, for one reason or another, had my jaw-dropping (and in more than one case, had me laughing out loud).

Josh Dzieza, Prime and Punishment: Dirty Dealing in the $175 Billion Amazon Marketplace. On the dirty tricks sellers use to sabotage their rivals and the quasi-court system Amazon has created to handle complaints.  Compare, by the way, to Molly Roberts on Facebook’s proposal for its own Facebook court.

Taffy Brodesser-Akner, How Goop’s Haters Made Gwyneth Paltrow’s Company Worth $250 Million.  One of the things that struck me here was where the author points out that women’s health concerns are often dismissed by doctors, which might drive them to seek help from nontraditional sources.  I’ve heard a similar explanation for the anti-vaxx movement – pregnant women are objectified and ignored by the medical establishment, which drives them to reclaim some kind of agency by rejecting that establishment entirely.

Elizabeth Evitts Dickinson, A Dress for Everyone: Claire McCardell took on the fashion industry — and revolutionized what women …

Like everyone else, it seems, I decided to watch the dueling Fyre festival documentaries on Hulu and Netflix.  (If you don’t know what I’m talking about, read this.)  At first, I had moral qualms about it because they’re each a bit skeevy, in their own way: the Hulu one paid Fyre’s organizer, Billy McFarland, to sit for an interview – so he profits from it – and the Netflix one was produced by the same media team that promoted the Fyre festival.

Then I reminded myself that I don’t, ahem, actually pay for Netflix or Hulu, and I felt much better.

I’ve read a lot of reviews of the two films and most of them seem to prefer Hulu’s.  I myself prefer Netflix’s.  The Hulu documentary was a lot lighter on the specifics of how the disaster unfolded, and a lot heavier on trying to make a broad claim about “millennials” being in thrall to social media and influencers, a claim that I found facile.

My interest was more in the technicalities of how this kind of massive fraud is perpetuated, how people go along with it, and that’s what Netflix’s documentary is about.  We get a lot of interviews with people who were involved with the project – including the residents of the Bahamian island where the festival occurred – and we get a clearer picture of what happened. 

[More under the cut]