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Anne Tucker teaches and researches contracts, corporations, securities regulations, and investment funds.

Tucker’s research focuses on three areas of business law. The first is on the regulation and administration of funds (both public and private funds) and how pooled investments can achieve significant personal and social ends, such as retirement security and private funding for social entrepreneurship. Second, she focuses on impact investing and contract terms that reinforce impact objectives alongside financial returns. Third, she studies corporate governance, including the role of institutional investors as shareholders. Read More

Prominent corporate governance, corporate finance and economics professors face off in opposing amici briefs filed in DFC Global Corp. v.  Muirfield Value Partners LP, appeal pending before the Delaware Supreme Court.   The Chancery Daily newsletter, described it, in perhaps my favorite phrasing of legal language ever:  "By WWE standards it may be a cage match of flyweight proportions, but by Delaware corporate law standards, a can of cerebral whoopass is now deemed open."   

Point #1: Master Class in Persuasive Legal Writing: Framing the Issue

Reversal Framing: "This appeal raises the question whether, in appraisal litigation challenging the acquisition price of a company, the Court of Chancery should defer to the transaction price when it was reached as a result of an arm’s-length auction process."

vs.

Affirmance Framing: "This appeal raises the question whether, in a judicial appraisal determining the fair value of dissenting stock, the Court of Chancery must automatically award the merger price where the transaction appeared to involve an arm’s length buyer in a public sale."

Point #2:  Summary of Brief Supporting Fair Market Valuation:  Why the Court of Chancery should defer to the deal price in an arm's length auction

  • It would reduce litigation and

On Monday President Trump signed an Executive Order on Reducing Regulation and Controlling Regulatory Costs. The Order uses budgeting powers to constrict agencies and the regulatory process requiring that for each new regulation, two must be eliminated and that all future regulations must have a net zero budgeting effect (or less). The Order states:

"Unless prohibited by law, whenever an executive department or agency (agency) publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed."

Two points to note here.  First, the Executive Order does not cover independent agencies like the Securities and Exchange Commission and the Commodity Futures Trading Commission, agencies that crafted many of the rules required by the 2010 Dodd-Frank Wall Street reform law–an act that President Trump describes as a "disaster" and promised to do "a big number on".  The SEC, the CFTC and Dodd-Frank are not safe, they will just have to be dealt with through even more sweeping means.   Stay tuned.  The 2-for-1 regulatory special proposed on Monday is a part of President Trump's promise to cut regulation by 75%.

Second, the Order is intended to remove regulatory obstacles to Americans

Fresh on the heels of reading several Dean search announcements come across email the last several days, the following ABA article on the rise of female Law Deans caught my eye: Cynthia L. Cooper, Women Ascend in Deanships as Law Schools Undergo Dramatic Change, ABA Perspectives Summer 2016.

The list of current deanship openings is available at The Faculty Lounge, as well as a run down of of positions filled last year.

Sorry folks…sick little one on my hands today!

-Anne Tucker

The shimmering mirage of summer has cast its spell on me, which means I am laboring under the delusion that I will have so much more time to do the thinking, learning, and writing that I want to be doing.  My work is increasingly dependent upon statistical evaluations that others do, and occasionally involves my own work in the area.   Several years ago I attended an empirical workshop for law professors at USC (something like this) taught by Lee Epstein and Andrew Martin that was an instrumental introduction and my only formal foundation in the area.  I have the bug and want to learn more!  But I don't know the best way to go about it– piecemeal or full immersion–or even what all is available.  I compiled my research below and share the list for interested readers.  Comments encouraged by anyone who wants to share their experience with a listed option, general advice,  or add to this meager list.

Empirical Skills Resources:

Blogs like: Andrew Gelman &  Empirical Legal Studies Blog

Introduction/Immersion Workshops like:

 

Free electronic

Earlier this month BLPB editor Ann Lipton wrote about the Delaware Supreme Court opinion in Sanchez regarding director independence (Delaware Supreme Court Discovers the Powers of Friendship).  On the same day as the Del. Sup. Ct. decided Sanchez, it affirmed the dismissal of KKR Financial Holdings shareholders' challenge to directors' approval of a buyout.  The transaction was a stock-for-stock merger between KKR & Co. L.P. (“KKR”) and KKR Financial Holdings LLC (“Financial Holdings”). Plaintiffs alleged that the entire fairness standard should apply because KKR was a controlling parent in Financial Holdings.  The controlling parent argument hinged on the facts that:

Financial Holdings's primary business was financing KKR's leveraged buyout activities, and instead of having employees manage the company's day-to-day operations, Financial Holdings was managed by KKR Financial Advisors, an affiliate of KKR, under a contractual management agreement that could only be terminated by Financial Holdings if it paid a termination fee.

Chief Justice Strine, writing an en banc opinion for the Court,  upheld Chancellor Bouchard's finding that KKR could not be considered a controlling parent where "KKR owned less than 1% of Financial Holdings's stock, had no right to appoint any directors, and had no contractual right to veto any

In prior BLPB posts (here and here), I have written about the proposed Department of Labor fiduciary rules changing the ERISA fiduciary definition to cover anyone who provides investment advice for a fee.  Under the current framework only registered Investment Advisers are fiduciaries, not broker-dealers.  This bifurcated legal standards and payment systems has led to confusion among the public and there is evidence that it has also cost retirement savings as a result of conflicted advice.  The proposed rules were released in April 2015 and the comment period was extended through September 2015.  The DOL received over 2800 comments and held 4 days of public hearing (transcripts available here) on the proposed changes. Earlier this month, the House held 2 committee hearings on H.R. 1090, the Retail Investor Protection Act, introduced by Rep. Ann Wagner (R-Mo) last February which would require the DOL to postpone its rule making until after the SEC issued it own standards on fiduciary duties– something the SEC is unlikely to do.  The House Financial Services Committee hearing transcript on the continued debate is available here.

-Anne Tucker

Yesterday (September 22, 2015) the SEC announced proposed rules regarding mutual funds and ETFs aimed at regulating liquidity and redemption risks as well as enhancing disclosures.  Included in the 400+ pages of proposed rules and analysis, the SEC focused on swing pricing, a practice to mitigate the impact of forward pricing required under Rule 22c-1 of the Investment Company Act. Before this feels too in the weeds of securities law, let’s discuss what this means.  Funds are required to redeem shareholders’ interests at NAV (net asset value pricing), when faced with redemption requests by shareholders wanting to exit the fund.  The fund then sells assets to pay the NAV to the departing shareholder or keeps a certain pool of assets liquid to meet such requests.  The costs of these trades or lost investment cost of the liquid assets are born by the shareholders who remain in the funds.  Additionally, shareholders who purchase new shares of the fund, do so at the daily NAV, which doesn’t reflect the liquidity cost imposed by the departing shareholders.  Similarly, when the fund receives the investment of new shareholders, the fund invests that money, but the purchase price NAV does not reflect the trading

Scott Killingsworth, a corporate attorney at Bryan Cave who specializes in compliance and technology matters and is a prolific writer (especially for one who still has billable hour constraints!) recently wrote a short and thought-provoking article: How Framing Shapes Our Conduct. The article focuses the link between framing business issues and our ethical choices and motivations noting the harm in thinking of hard choices as merely "business" decisions, viewing governing rules and regulations as a "game" or viewing business as "war."  Consider these poignant excerpts:

We know, for example, that merely framing an issue as a “business matter” can invoke narrow rules of decision that shove non-business considerations, including ethical concerns, out of the picture. Tragic examples of this 'strictly business' framing include Ford’s cost/benefit-driven decision to pay damages rather than recall explosion-prone Pintos, and the ill-fated launch of space shuttle Challenger after engineers’ safety objections were overruled with a simple 'We have to make a management decision.' (emphasis added)

Framing business as a game belittles the legitimacy of the rules, the gravity of the stakes, and the effect of violations on the lives of others. By minimizing these factors, the game metaphor takes the myopic “strictly

For those of you who teach agency (and the related concept of independent contractors) the following recent case example will make for a fun and culturally relevant example for many of your students.  

In March, 2015, the California Labor Commissioner’s Office issued an opinion finding that a  driver for the ride-hailing service mobile app company, Uber, should be classified as an employee, not an independent contractor.  The opinion details the control Uber exercised over the driver including setting the payment rates and terms, quality controls, service platforms, user communications, liability insurance requirements, and background checks all the while maintaining that drivers are independent contractors.  Citing to S. G. Borello & Sons, Inc. v. Dep't of Indus. Relations, 48 Cal. 3d 341, 350-51, 769 P.2d 399 (1989), the Commission analyzed the following elements:

(a) whether the one performing services is engaged in a distinct occupation or business;

(b) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;

(c) the skill required in the particular occupation;

(d) whether the principal or the worker supplies the instrumentalities, tools, and the place of

Last week Kent Greenfield and Adam Winkler published "The U.S. Supreme Court's Cultivation of Corporate Personhood," in the Atlantic discussing two recent Supreme Court opinions.  Greenfield and Winkler covered the ruling in Horne v. Department of Agriculture  where the Court held  "a federal program requiring raisin growers to set aside a percentage of their crops for government redistribution was an unconstitutional 'taking' under the Fifth Amendment."  The second case addressed was Los Angeles v. Patel where the Court extended Fourth Amendment privacy protections "invalidating a city ordinance (similar to laws around the country) allowing police to search [hotel] guest registries without a warrant."

While they distinguish certain rights, like political speech, that are "more appropriate for people than for corporations," Greenfield and Winkler acknowledge that some constitutional protections should be extended to corporations.  

"A corporate right to be free from government takings, for example, makes sense both as a matter of constitutional law and of economics. Government overreach is problematic whether the raisin grower is a family farm or a business corporation. And corporations left exposed to government expropriation would find investors reluctant to take that risk, undermining the basic social purpose of the corporation,