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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.

Today I’m plugging my colleague Elisabeth de Fontenay’s new article, despite the existential threat it poses to my specialty. 

InDo the Securities Laws Matter?, de Fontenay compares the market for syndicated loans, which are not treated as securities, to the market for bonds, which are.  She finds that the market for syndicated loans is as deep and as liquid as the market for bonds, suggesting that the mandatory disclosure regime that governs bonds, but not loans, is unnecessary.

As she puts it in her abstract:

One of the enduring principles of federal securities regulation is the
mantra that bonds are securities, while commercial loans are not. Yet the
corporate bond and loan markets in the U.S. are rapidly converging,
putting significant pressure on the disparity in their regulatory treatment.
As securities, corporate bonds are subject to onerous public disclosure
obligations and liability regimes, which corporate loans avoid entirely. This
longstanding regulatory distinction between loans and bonds is based on
the traditional conception of a commercial loan as a long-term relationship
between the borrowing company and a single bank, in contrast to bonds,
which may be issued to widely dispersed retail investors and are traded in a
liquid market.

…

Well, it’s almost exam time at most law schools, and by the end of this week, I have to turn in my first exam to the registrar.  I’m teaching Securities Litigation, and it’s mostly a lecture course – the first time I’ve ever taught.  I knew writing an exam would be difficult, but I didn’t anticipate all of the types of issues I would experience. 

Mostly, I’m trying to develop one or two solid issue-spotter-type questions for them to examine. 

The first and most obvious concern is making sure that it has varying levels of difficulty, so that it distinguishes between students who are better and less-well prepared.

Additionally, since I haven’t done this before, I need to make sure that it takes the right amount of time to complete – it’s an 8 hour take home; I’m guessing that erring on the shorter side is preferable to longer, since I’m likely to underestimate the difficulty of the material.

I also find, as I develop the fact pattern, that it really forces me to confront which areas we did not cover extensively, and which areas we did (thus perhaps offering a guide for edits to the syllabus in the future)…

As I write this on Friday night (to be posted automatically on Saturday morning, during which time I will be in transit), ILEP’s latest symposium, Business Litigation and Regulatory Agency Review in the Era of the Roberts Court, is just concluding (you can see a list of the papers presented here, which I believe will all eventually be published in the Arizona Law review).

The biggest subject for discussion was basically the future of the securities class action – or any kind of business litigation, really – given not only the potential of Halliburton to eliminate or severely restrict securities class actions, but given recent decisions like this one upholding a mandatory arbitration provision unilaterally adopted into a REIT’s bylaw. 

The final panel, and thus the one freshest in my mind, explored whether states have the ability under the Federal Arbitration Act to limit the power of corporations to impose mandatory arbitration to resolve shareholder disputes.  I think that’s a really interesting question – whether either states can, as a function of their ability to regulate corporations, flatly forbid the adoption of mandatory arbitration agreements in corporate charters and bylaws, in the same way they otherwise regulate corporate…

This semester, I’m teaching Securities Litigation at Duke Law.  It’s my first time teaching, so I’ve had to construct a syllabus (relying in part on syllabi provided to me by instructors at other law schools who teach similar courses).

There is a casebook, Securities Litigation and Enforcement, that I’ve been relying upon.  However, in my class, I plan to deal not only with federal law claims, but also claims brought under state law.  State law isn’t a part of this casebook, and I haven’t found anyone else who has taught it.  So, for this part of the class, I’m on my own.

[More under the cut]

Professors Lucian Bebchuk and Robert Jackson have recently posted a paper to SSRN, Toward a Constitutional Review of the Poison Pill.  In the paper, they argue that state laws that facilitate the use of “poison pills” are unconstitutional in the sense that they are in conflict with the Williams Act, because they have the potential to introduce undue delay into the tender offer process.  To the extent Profs. Bebchuk and Jackson purport to be summarizing existing doctrine, I have my doubts….

[More after the jump]

On Monday, the Supreme Court agreed to hear Public Employees’ Retirement System of Mississippi v. IndyMac MBS, Inc., No. 13-640, concerning American Pipe tolling of statutes of repose.  Depending on how the Court chooses to frame the issues, the holding could extend to countless class actions, or it could even be securities-specific, based solely on the PSLRA.

[Read more after the jump]

On Wednesday, the Supreme Court heard oral arguments in Halliburton Co. v. Erica P. John Fund, Inc., 13-317 (Halliburton II), where it was being urged to overturn, or curtail, the fraud on the market presumption approved in Basic, Inc. v. Levinson (1988).  Judging by the transcript, and as numerous reports indicated, it seems as though the Justices were attracted to the idea of tweaking Basic to require that plaintiffs prove the “market impact” of a particular false statement.  Most surprisingly, although this was the fallback position urged by the defendants, it was also endorsed by Malcolm Stewart of the Solicitor General’s office, who was nominally arguing on the plaintiff’s side.  Though one can never tell what will happen in the end, it does seem like this may be the direction in which the Court is headed – and if so, it could have significant implications for fraud-on-the-market cases in the future.

[More under the cut]

On Wednesday, the Supreme Court decided 7-2 that the victims of Allen Stanford’s Ponzi scheme could pursue state law class action claims against those who allegedly aided and abetted him (.pdf) – most notably, the law firms of Chadbourne & Park and Proskauer Rose.  But the opinion still leaves several questions unanswered, and it’s impossible not to read Troice without trying to tea leaf the Justices’ inclinations in Halliburton.

[Read more after the jump]

At its Friday conference, the Supreme Court considered the cert petition filed in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, concerning the definition of “falsity” under the securities laws when the relevant statement expresses a matter of opinion, rather than objective fact.  I think the Court will likely deny this particular petition, but the issue is a critical one that will have to be resolved sooner or later.

[More discussion under the cut – click to read]

Hello, everyone.  Stefan put out a call for reasonable facsimiles of business law professors, and I figured I fit the bill.  I’m a Visiting Assistant Professor at Duke Law, currently teaching Securities Litigation.  I’ve arrived here directly from practice: For the past 11 years, I’ve worked as a plaintiff-side securities litigator.

(On my first day of class, I asked how many of my students had done securities litigation work, perhaps as summer associates.  Almost every hand went up.  Then I asked how many had worked plaintiff-side.  The hands went down so quickly I swear I heard whooshing noises.  To be fair, there was one student who’d done plaintiffs’ work – outside the US.)

Anyway, like anyone teaching securities litigation these days, there’s one thing on my mind: Halliburton, where the Supreme Court is being asked to overrule Basic Inc v. Levinson, the case where it endorsed the fraud on the market presumption of reliance for claims brought under Section 10(b) of the Securities Exchange Act.

There’s been a lot of chatter about the possibility that if Basic is overruled, plaintiffs may, in some instances, still be able to obtain a presumption of reliance under Affiliated Ute Citizens v. United States, 406 U.S. 128 (1972) – many of the Halliburton parties and amici seem to assume this is the case, and it’s come up in the blogosphere.

Affiliated Ute holds that when a fraud consists of material omissions rather than affirmative misstatements, reliance may be presumed.

The problem that often seems to be overlooked, though, is that the Affiliated Ute presumption is rebuttable – and specifically, it’s rebuttable upon a showing that disclosure would not have made a difference, because the plaintiff never read the document in which the omission is contained.  See Eckstein v. Balcor Film Investors, 58 F.3d 1162 (7th Cir. 1995); Shores v. Sklar, 647 F.2d 462 (5th Cir. 1981).

Given that, I don’t see how much of a role it can play with respect to substituting for Basic.  Defendants’ obvious ability to rebut the presumption with respect to wide swaths of the class should be enough to defeat class certification.  This is not to say that defendants’ rebuttal arguments should be entertained at class certification; the point is that there will be so many individualized differences among class members regarding what they read or did not read that class certification would usually be inappropriate, just as in any other non-fraud-on-the-market case where a defense applies differently to a significant number of class members (though there is authority the other way, see In re Smith Barney Transfer Agent Litig., 290 F.R.D. 42 (S.D.N.Y. 2013)).

But then I have a long train of speculation as I imagine how this might play out….

[More after the break]