Readers following the benefit corporation movement may be interested to learn that Twitter co-founder, Christopher Isaac “Biz” Stone, reported on NPR’s Marketplace on that he plans on making his new web app company, Jelly, a benefit corporation. You can listen to the December 2nd interview (which is only 5 minutes) here, with the last 90 seconds devoted to the benefit corporation issue.
Writing (and grading) Exam Questions
This is the time of year when we craft exam questions and grading grids in anticipation of exams.
Aside from Teaching Law by Design (a fabulous resource that I recommend for all new teachers as a great continuing resource for even those grizzled from years in the trenches), I have used few formal resources to guide my exam writing and grading process. Fortunately, I work with creative, collaborative and generous colleagues who all shared lots of samples and tips when I first started writing exams. Before committing myself to my Corporations exam this year, I decided to see what is out there to guide exam construction and grading. Finding little that was useful on SSRN or Westlaw, I turned to a broader search, which brought me to a general test instruction guideline produced by Indiana University, aptly titled: How to Write Better Tests. It had the following information regarding essay exams that serve as a useful reminder about why we are so meticulous in constructing our grading rubrics and creating grading schemes that, to the greatest extent possible, reduce our individual biases.
Consider the limitations of the limitations of essay questions:
1. Because of the time required to answer
Writing Retreat (a subtle plea for help)
I just booked my hotel for Sunday and Monday for a mini-writing retreat before the Thanksgiving holiday. This has been an effective (although intimidating) format for me in the past to tackle big writing projects (and deadlines). The idea is that you block 24-48 hours, remove yourself from your normal world and responsibilities and dig into the big thinking to make progress. This is a popular format at Georgia State, and I know several colleagues who book a writing weekend by themselves or with a good friend. This is my first solo endeavor, and I sorely wish I had my normal writing companion heading into battle with me. No one likes to stress-eat chocolate covered almonds and wear sweat pants alone. It feels indulgent and fun with someone else; desperate when you are alone.
My current confusion and lack of direction on how to write this article (is it a short piece? a full article? a response piece?) has lead to my postponing its writing since June (!!!) and is creating a considerable amount of anxiety. I don’t know what I fear most at this point: the tailspin that will inevitably happen in that hotel room around midnight on Sunday or
Stock Drop Cases, ERISA & Securities Laws
In June 2014, the Supreme Court decided Fifth Third Bancorp v. Dudenhoeffer holding that fiduciaries of a retirement plan with required company stock holdings (an ESOP) are not entitled to any prudence presumption when deciding not to dispose of the plan’s employer stock. The presumption in question was referred to as the Moench presumption and had been adopted in several circuits. You may have heard of these cases as the stock drop cases, as in the company stock price crashed and the employee/investors sue the retirement plan fiduciaries for not selling the stock. The Supreme Court opinion didn’t throw open the courthouse doors for all jilted retirement investors, and limited recovery to complaints (1) alleging that the mispricing was based on something more than publically available information, and also (2) identifying an alternative action that the fiduciary could have taken without violating insider trading laws and that a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the fund than to help it.
The Supreme Court in Fifth Third recognized the required interplay between ERISA and securities laws stating:
[W]here a complaint faults fiduciaries for failing to decide, based on negative inside information, to
Fiduciary Status of Plan Advisors
Bear with me while I connect a loose thread between my research interests and the BLPB readership’s broader interests and talk about the legal status of plan advisors to investment accounts (think 401k). More so than with a traditional benefits plan (think pension) fiduciaries and their corresponding duties raise difficult questions in the context of self-directed retirement accounts (again, think 401k). Standing between employee/beneficiary and the investment assets are a myriad of third parties servicing the plan– like the employer sponsor, the plan administrator, the record keeper, the plan advisor, the organizational machines of the individual funds listed in the plans. Each of these parties touch the assets in some way and effect the outcome of the investment at least in some respect. Not all of these third parties, however, are fiduciaries under ERISA and even those that are, often owe diluted fiduciary duties to beneficiaries due to the “self-direction” that you and I exercise over our retirement accounts by allocating between stocks and bonds or target date funds when we were hired, or annually for those of us that actively monitor our accounts. (For those ERISA folks out there, forgive this over simplification).
A big legal issue in the
Compliance & Business Law
Compliance is a hot business law topic in and outside of the industry. JD as compliance officers is a very likely future as law schools respond to hiring market pressures and what corporate employers’ need. So what does this mean in terms of curriculum and in a future practice? A handful of law schools now offer courses focusing on compliance (see this Harvard Forum on Corporate Goverance and Financial Regulation Post from May 2014). Professors like Jenifer Arlen as the Director of the Program on Corporate Compliance and Enforcement at NYU and Mike Koehler, at Southern Illinois University School of Law with his FCPA Professor Blog, are certainly pioneers in the emerging field. At my law school–Georgia State University in Atlanta, GA–we are wondering how best to utilize the industry resources in our backyard. I am a new board member of a compliance-focused round table that draws membership from our fortune 500 corporate neighbors . With these questions at the forefront of my mind, I found today’s article on the FCPA Blog (an industry-focused resource) titled, Memo to law schools: The world needs compliance officers to be particularly interesting. In this post, law schools are encourged to:
Teach [students]
Corporate Law Professors Comment on Proposed HHS Definition of “Eligible Organization” for Hobby Lobby Accommodation
In response to the Department of Health and Human Services’ Proposed Regulation and Request for Comments regarding the definition of “eligible organization” (see earlier post here) at least two groups of law professors have weighed in on the issue.
The first comment letter, available here, was submitted by the U.C. Berkeley corporate law professors and encourages the Department to adopt a definition based upon the veil piercing theory. “We … propose that for purposes of defining an “[W]e … suggest that shareholders of a corporation should have to certify that they and the corporation have a unity in identity and interests, and therefore the corporation should be viewed as the shareholders’ alter ego.” The comments argue that utilizing the veil-piercing theory avoids the consequences of a setting an arbitrary number of shareholders thus creating a rule that would be “seriously under-and-over-inclusive, capturing corporations that meet the numerical test but for which shareholders are not the alter egos of the corporation, as well as failing to capture corporations with a relatively large number of shareholders that are all united in their interests and are alter egos of one another.”
The second comment letter on which I worked and was
Insider Trading
Whether you are teaching insider trading as part of a corporations or a securities regulation course, you practice in the area, or you like these cases because they contain some of the most interesting fact patterns….. I have a couple of gems for you.
First, the on line edition of the New Yorker features two great stories on insider trading. The first story, The Empire of Edge written by Patrick Radden Keefe, focuses on the conviction of a trader at S.A.C. capital for trades made 10 days before the release of results from clinical trials on an alzheimer’s medication. The hedge fund reversed its $.785B position in two companies testing the drug and took a short position against the companies earning the fund $275M. In classic long-form journalism at its best, the story is riveting as it unfolds. The second story, A Dirty Business by George Packer, tells the story of Raj Rajaratnam, head of the Galleon hedge fund at the heart of the 2009 informant ring scandal, the prosecution and the SEC’s stance on enforcement.
For those of you who are interested, the SEC posted a running list of insider trading enforcement actions here.
-Anne Tucker
Alibaba Presents “Current Events” Illustration of Corporate Law Principles
Alibaba dominated the September business press coverage with its record-breaking IPO last month, and news of its stock price, trading at a 30% premium, continues to dominate coverage. I have been using the headline-hogging IPO in my corporations class to discuss raising capital, which I am sure many of you are doing as well. Here are a few creative uses for the class-friendly headlines:
- I used coverage of the IPO and its short-lived halo effect on other tech IPO’s as a companion to the E-bay stock spinning case (taught under director fiduciary duties).
As we move into securities next week,
- Students will examine Alibaba’s registration statement as we look at section 11 liability.
- Students will review portions of a 2012 10b(5) lawsuit against Yahoo alleging that Yahoo! made materially false and misleading statements regarding its holdings in Alibaba.
Please add to the list of uses in the comments section if you have any new ideas or suggestions.
-Anne Tucker
Gender in the Classroom
Yesterday, I shared with my faculty during our teaching conversations* my research and thinking on gender equality in the classroom. How do we handle gender in the classroom? My guess is that most of us teaching honestly strive to achieve and believe that we create a gender-neutral, or more accurately an equally-facilitative classroom environment. You can image the horror I felt when I received voluntary, anonymous student feedback last spring that said “you may not mean to or know you are doing this, but you treat men and women differently in class.” From whose perspective was this coming? How differently? And who gets the better treatment? I was baffled. As a female law professor, I was hoping that I got a pass on thinking critically about gender because I am female, right? Wrong.
This feedback launched my research into the area and a self-audit of the ways in which I may be explicitly treating students differently, implicitly reinforcing gender norms, and unintentionally creating a classroom environment that is different from my ideal.
Below are some observations and discoveries about my own behavior and a summary of some relevant research.