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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.

Matt Levine at Bloomberg continually expresses his view that private markets are the new public markets.  What he means by that is, given the availability of private capital (due to SEC rules and concentrations of private pools of capital in a relatively small number of hands), companies that need capital to expand can access the private markets; they only go for the public markets when private investors are ready to cash out.

Well, as the Case of Uber makes clear, “publicness” can exist in private markets, too.

“Publicness,” a concept first developed by Hillary Sale, refers to the general social obligations a corporation is perceived to have toward the public in terms of transparency and regularity of operations.  Companies that conduct themselves poorly may find themselves pressured to reform by consumers, investors, and regulators, in part because they are viewed as having public obligations almost akin to those of governments.  Prof. Sale explores, for example, the case of JP Morgan Chase and the London Whale scandal.

Uber is a private company, but as its various recent troubles demonstrate (and demonstrate and demonstrate and…),it is increasingly viewed through the lens of publicness – and is responding…

I watched with interest the battle at Exxon over a shareholder proposal requesting that the company provide more detailed disclosures about the risks posed by the Paris climate accord.  Last year, the same proposal won 38.1% of the vote; this year, prior to the vote at Exxon, shareholders at Occidental Petroleum approved a similar proposal.  Moreover, Blackrock and State Street have recently declared that they want to see more corporate disclosures about the impact of climate change.

As a result, things at Exxon were unusually heated.  Reportedly, Exxon was lobbying shareholders in advance of the vote.  The matter presumably was particularly sensitive because Exxon is being investigated by the NY and Mass AGs regarding the accuracy of its climate change disclosures to investors.

As this was going on, of course, it became increasingly clear that Trump was planning to withdraw the United States from the Paris accord.  Now, it’s not obvious what immediate impact that withdrawal has on companies like Exxon – after all, most other countries remain committed, and Exxon does business internationally.  Still, it raised the question:  Would shareholders decide the matter was less important, now that the US had essentially declared a…

I’m always looking for quirky evidence of market efficiency – or market inefficiency – to share with my students.  For example, there’s the Cuba Beverage thing, and the Trump tweets thing. 

And now, there’s the fake news thing:

As a video circulated that appeared to partially absolve President Donald Trump in the administration’s Russian meddling scandal on trading floors on Thursday, stocks surged for the first time in days on the apparent breaking news.

The video, it turns out, was actually two weeks old, misleadingly edited with the intention of falsely accusing former FBI director James Comey of perjury—and was initially aired by conspiracy website InfoWars on Thursday around noon.

Trump wasn’t cleared. In fact, since the video had been around since May 3rd, nothing had changed at all. But by the time traders found out, the dollar index had spiked anyway.

The fallout of the story is leaving analysts wondering how to absorb information in a market that is suddenly waiting on bated breath for the latest rumors to come out of the White House—even when those rumors are intentionally misleading or untrue.

…

In other words, the news can be fake, but the rally it

…

Joshua Fershee started a conversation about incompetent male leaders, so in keeping with that theme, here are a couple of other interesting data points.

First, a new study shows that male loan officers are more willing to lend money to other men – especially men they bond with.  (Bloomberg story here; paper here).  That doesn’t work out so well for the banks; these loans are more likely to default.  Women loan officers do not suffer from the same bias.

Second, another study shows that male analysts are biased in favor of male CEOs – again, an effect that doesn’t hold for women.  (WSJ story here; paper here).

The critical point, for me, is that these biases exist even though they are unprofitable (in short term thinking, anyway; they may be very profitable for men as a group, long term).  It’s an obvious point but it bears repeating:  prejudice resists evidence.  The market cannot cure problems that prejudice bars it from perceiving.

As for why women do not, in these studies, suffer from the same bias (or do not suffer to the same degree), it’s not that women are especially rational as compared to men; it’s…

If you’re like me, you’ve been absolutely riveted by the disaster that was Fyrefest.  For anyone who somehow missed the news, the basic recap is that a destination music festival – sold as a luxury getaway in the Bahamas featuring sandy beaches, rock stars, five-star accommodations, and gourmet meals turned out to be, well –

Instead of luxury villas, guests found soggy tents, port-o-potties, and a bank of lockers (without locks).  They had to hunt for their luggage in a large shipping container – with flashlights.  And so forth.

There have been a number of news articles attempting to deconstruct how things went so horribly wrong, but the focus of my particular interest is – incompetence or fraud?  There are already two class action lawsuits pending, so we’ll have more information soon enough, but reports so far indicate a rather stunning willful-blindness on the part of the promoter – 25-year-old Billy McFarland – coupled with the somewhat-contradictory fact that he’s still around, apologizing to disappointed ticketbuyers, and generally not, you know, running off to a country with no U.S. extradition treaty.

[More under the jump]

The internet is a wonderful thing; this week, it has brought us two powerful new tools related to business law.

First, the Center for Political Accountability has aggregated the political spending disclosures of public companies in a handy, searchable website.  Granted, it’s a limited tool: it only includes companies in the S&P 500 (or that were in the S&P 500 as of 2015) – and unfortunately the descriptions on the site are less than clear on this point.  To that extent, then, it is useful as a sample of corporate behavior, but not as useful for specific shareholder or consumer action.  In that vein, I view it as something of a pilot project, demonstrating the theoretical power of the internet to harness these kinds of disclosures.  There are already apps that make it easier for consumers to express their political preferences – Boycott Trump and Buycott.com, for example.  This new site is another weapon – or potentially one –  in the arsenal. 

Marcia has expressed doubt that these kinds of campaigns work, and certainly there’s the countermobilization problem – a campaign on one side the political aisle may motivate those on the other side – but my own…

I’m sure we’ve all been riveted by the colorful activist campaign led by Elliott Management Corp challenging the board of directors at Arconic Inc.  In some tellings, it’s a classic battle over whether companies should focus on immediate returns to shareholders (and whether activist pressure encourages short-term thinking), or whether companies should invest in innovation and research in hopes of a longer-term payoff.

This week, Elliott’s challenge netted it a scalp in the form of the forced resignation of the CEO, Klaus Kleinfeld, for sending a personal letter to the head of Elliott Management that vaguely threatened to reveal some apparently scandalous behavior undertaken during the 2006 World Cup.  While denying that any such behavior occurred, Elliot Management demanded Kleinfeld’s ouster, and the Arconic Board complied.

But the battle rages on.  Earlier this month, Arconic announced that if investors voted to seat Elliott’s board nominees, it could trigger the change-of-control provisions in Arconic’s deferred compensation and retirement plans, thus forcing Arconic to make a $500 million pay out.

Which just prompted this Section 14 lawsuit by an Arconic investor, accusing Arconic of manufacturing “fake news” because there is, in fact, no risk of a change of control.  At…

So I was looking over Snap’s S-1, and I discovered this:

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for:

  • any derivative action or proceeding brought on our behalf;
  • any action asserting a breach of fiduciary duty;
  • any action asserting a claim against us arising under the Delaware General Corporation Law, our amended and restated certificate of incorporation, or our amended and restated bylaws; and
  • any action asserting a claim against us that is governed by the internal-affairs doctrine.

Our amended and restated certificate of incorporation further provides that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.

The first provisions are a fairly unremarkable (these days) set of forum selection clauses, but in that last point, Snap has gone a step further by attempting to control the forum of federal claims in addition to state claims.  In so doing, Snap is obliquely referring to the ongoing dispute about whether SLUSA requires that Section 11 class actions be litigated in federal court, or whether, instead…

No, not that conference, although I suppose that one’s nice too.  

In (very) loose association with that other conference, Tulane hosted a corporate academic conference, made possible by the generous donation of one of our alums, Gordon Gamm, and his wife Grace.

The academic conference, which took place on Saturday, April 1 immediately following the Tulane Corporate Law Institute, was great fun, and allowed me to reconnect with old friends and make some new ones.  It was structured on the theme of Navigating Federalism in Corporate and Securities Law, and featured presentations by 11 corporate and securities scholars (including me!).  

Discussion ranged from how to encourage retail shareholders to exercise their corporate voting rights to whether to redesign the internal affairs doctrine to controlling corporate political spending to issues of SEC regulatory capture and the intensity of its enforcement efforts to – of course – how, and even whether, we should distinguish corporate law from securities law.  Most of the papers were in draft form and are not yet publicly available, but a few are up, including Ed Rock’s and Daniel Rubenfeld’s Defusing the Antitrust Threat to Institutional Involvement in Corporate Governance, Robert Jackson’s, Robert…