We’ve talked about Uber and its tribulations a few times here at BLPB, including what I feel is one of the remarkable aspects of the saga – the fact that a private company is being treated as public in the general imagination.

In keeping with that theme, Renee Jones just posted The Unicorn Governance Trap to SSRN, with the basic thesis that Uber and companies like it (Theranos, Zenefits, etc) are experiencing governance pathologies precisely because they inhabit a hybrid space between public and private.  (George Georgiev made an abbreviated version of the same argument in a column for The Hill several months ago.)  Jones contends that these unicorn companies feature the separation of ownership and control typical of a public company, but they are not subject to the same disciplining mechanisms from investors of voice (due to dual-class shares), exit (due to the limits on liquidity inherent in private status), and litigation (due to lack of public reporting obligations, and potential securities fraud claims – though on that last point, but see Theranos and Uber litigation).  She distinguishes private companies that grew large in an earlier era, where ownership and control are unified (typically, family-owned businesses).  She also…

Readers of this blog know about the case of Leidos, Inc. v. Indiana Public Retirement System, currently pending before the Supreme Court, which will decide whether an omission of required information can give rise to private liability under Rule 10b-5.  In Leidos, the corporate defendant engaged in a scheme of overbilling on a New York City contract, which ultimately resulted in a deferred prosecution agreement and significant monetary penalties.  The plaintiffs alleged that the company violated Rule 10b-5 by failing to disclose the conduct and associated potential penalties as a “known trend”  in its SEC filings, as required by Item 303.  The Second Circuit allowed the claim to proceed; Leidos now argues before the Supreme Court that its failure to disclose required information cannot satisfy the element of falsity in a private claim brought under Rule 10b-5.  In other words, the question is whether – assuming all the other elements of a fraud claim are established (materiality, scienter, loss causation, etc) – can the omission of required information count as a false statement?

Joan Heminway co-authored an amicus brief arguing that Rule 10b-5 does provide for omissions liability, and this is an issue I’ve blogged about a…

Earlier this week, the Wall Street Journal reported that many institutional investors – including large mutual fund complexes like BlackRock and State Street – have become concerned about “overboarding,” namely, the phenomenon where corporate directors sit on multiple boards.

There are good reasons to be concerned.  Researchers have found that in many, though perhaps not all, cases when corporate directors are “overboarded” – and thus presumably unable to devote their full attention to governance at particular companies – companies are less profitable and have a lower market to book ratio.  (Similarly effects are found for distracted directors.)

That said, there’s a particular irony in seeing mutual fund companies, of all investors, leading the charge.  Most mutual fund companies employ a single board – or a few clusters of boards – to oversee all of the funds in the complex.  This can result in directors serving on over 100 boards in extreme cases.  State Street’s Equity 500 Index Fund, for example, reports trustees who serve on 72 or 78 boards within the complex.  BlackRock’s Target Allocation Funds have trustees who serve on either 28 and 98 different boards (depending on how you count).

I’ll admit this…

States frequently compete with each other to attract businesses.  They’ll offer tax credits, subsidies, and regulatory waivers to persuade corporations to set up shop locally.  (Right now, Amazon is asking cities to compete to host its second headquarters.)  These incentives may or may not work out well for the state; it’s not uncommon for the promised jobs to disappear.  Meanwhile, competition among states can promote a race to the bottom, with states offering increasingly generous – and unaffordable – financial packages in exchange for a temporary boost in economic activity.

Wisconsin’s new deal with Foxconn represents a striking new frontier in these wars between the states.  Foxconn is a Taiwanese company with a history of reneging on its promises to establish manufacturing plants in exchange for rich government incentives.  Nonetheless, Wisconsin has promised it $2.85 billion over 15 years if it will build a $10 billion plant and hire 13,000 workers.   And to sweeten the deal, Wisconsin has also promised Foxconn preferential treatment in the Wisconsin court system.

Apparently concerned that its grant of certain environmental waivers may prompt local lawsuits, Wisconsin has promised Foxconn an expedited litigation process, including automatic stays of trial…

Here at BLPB, Joan Heminway has written a couple of posts discussing comparisons between norms in corporate theory, and norms in democratic theory.   A few months ago, she discussed the potential conflicts between Donald Trump’s private business interests, and his role as a “fiduciary” for the United States.  As she pointed out, in corporate law, we have procedures to address potential conflicts, which include fully informed approval by the principal or unconflicted fiduciaries, and external review to determine fairness.  But there is no similar procedure to address conflicts in the political realm.

Well, it appears that Joan’s not the only one thinking along these lines.  I read with interest this amicus brief submitted in the Supreme Court case of Gill v. Whitford, posted by Professor D. Theodore Rave at the University of Houston.  The case itself is about political redistricting, but Prof. Rave makes the intriguing argument that redistricting should be addressed the same way we address conflicts of interest in business law.  Specifically – and drawing on his earlier article in the Harvard Law Review, Politicians as Fiduciaries – he proposes that districts drawn by independent commissions receive a lower level of scrutiny than districts drawn by…

It’s Saturday morning, and I’m guessing a lot of us are watching apprehensively as Irma heads for Florida (others of us are probably trying desperately to escape the storm’s path, possibly receiving an impromptu lesson in dynamic pricing).  Meanwhile, Jose and Katia are close behind, even as Houston faces years-long recovery efforts from Harvey, and then there’s, well:

It’s impossible to consider these events – which, in addition to the human toll, will inflict billions if not trillions of dollars of damage – without thinking that this is what climate change looks like.

The reason I mention it on this blog is that climate change is an increasingly popular subject for shareholder proposals.  More and more, shareholders are seeking information from companies about how they are responding to climate change, including the precautions being taken, and the expected costs of disasters. 

Considering that we are now being treated to a dramatic demonstration of just how climate change can have a devastating impact on economies generally and individual companies in particular, isn’t it time for critics of the shareholder proposal mechanism to at least admit that climate change proposals belong in the “corporate governance” category, and not the…

So last week I posted about the problem of buyer/customer discrimination; we have laws to deal with discrimination by employers, by businesses that sell to the public, by landlords – but there isn’t much to address discrimination that runs in the other direction.

It was timely, then, that this article has been making the internet rounds:

When Penelope Gazin and Kate Dwyer decided to start their own online marketplace for weird art, they didn’t expect it to be easy. After all, the L.A.-based duo of artists were bootstrapping the project with a few thousand dollars of their own money and minimal tech skills. But it wasn’t just a tight budget that added friction to the slow crawl toward launching; the pair also faced their share of doubt from outsiders, spanning from the condescending to the outright sexist.

…  After setting out to build Witchsy, it didn’t take long for them to notice a pattern: In many cases, the outside developers and graphic designers they enlisted to help often took a condescending tone over email. These collaborators, who were almost always male, were often short, slow to respond, and vaguely disrespectful in correspondence. In response to one request, a developer

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