Photo of Anne Tucker

Anne Tucker

Subscribe to Anne Tucker's Posts

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

Citing to Hobby Lobby, a U.S. District Court Judge in Utah ruled that an individual may refuse to comply with a federal subpoena in a child labor investigation because naming church leaders would violate his religious freedoms protected under RFRA.   The court found that complying with the subpoena failed the least restrictive means prong under RFRA.  The full court opinion, Perez v. Paragon Contractors, Corp., 2:13CV00281-DS, 2014 WL 4628572 (D. Utah Sept. 11, 2014),  is available here and a a brief news summary is available here.

 
-Anne Tucker
 
 
 

Practitioners and academics alike should be interested in yesterday’s announcement by that the SEC that it is bringing an insider trading enforcement action against a law firm IT employee for allegedly trading based on the firm’s merger work for clients.  The employee allegedly made over $300,000 in a several year scheme of trading based upon client information.  The U.S. Attorney’s Office filed related criminal charges against the employee.

Donna Nagy at Indiana University Maurer School of Law, in her article, Insider Trading and the Gradual Demise of Fiduciary Principles, explains the theory of liability which extends the insider trading scope to law firm employees:

Under the alternative “misappropriation” theory endorsed by the Court in United States v. O’Hagan, persons “outside” the issuing corporation can likewise violate Section 10(b) and Rule 10b-5.  Such a violation occurs when a fiduciary personally profits from a securities transaction through undisclosed use of a principal’s material nonpublic information. Thus, as the Court explained, whereas the classical theory “premis[es] liability on a fiduciary relationship between company insider and purchaser or seller of the company’s stock, the misappropriation theory premises liability on a fiduciary-turned-trader’s deception of those who entrusted him with access to confidential information.”

The SEC, in its release cautioned that “Insider trading by employees of…

Daniel K. Tarullo, the Fed governor overseeing regulatory policies, testified before the Senate Banking Committee on Tuesday and signaled the central bank’s intent to increase special capital requirements for the largest banks to 11.5 percent.  The Fed’s plans are more conservative than new international regulations that require 9.5 percent reserves.  The eight banks currently deemed globally significant and therefore subject to the requirements are: Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street and Wells Fargo.   The market reacted negatively to the news, dropping the stock price of the institutions. 

Even if banking regulations aren’t in your immediate wheel house of interest, an increase in reserves of 3% means about 17B for a bank like Goldman which would pad its reserve through measures like selling stock, holding on to profits or cutting its business operations.  The impact of these regulations could be felt all areas of business (perhaps why these particular banks are considered to be globally significant institutions). These changes will certain spark a lot of debate both in the academic and the practice worlds.

-Anne Tucker

Last week, news of the proposed Burger King & Tim Horton’s merger fueled the already raging fire on corporate inversions as the Miami-based burger chain announced plans, through the merger, to possibly relocate to Canada.  As I have written about on this blog, here and here and in the Huffington Post, inversions may offer US companies tax savings.

Stephen E. Shay, a professor of practice at Harvard Law School, provides a short article (12 pages) describing the tax issues in corporate inversions and possible regulatory fixes.  This article is very helpful in taking the debate from the headlines into a more complex legal analysis illuminating the tax consequences and offering a better understanding of the legal remedies available.  Worth the read.

-Anne Tucker

BPLB’s own Joshua Fershee, Professor of Law with the Center for Energy and Sustainable Development at West Virginia University College of Law, was quoted in a Greenwire story on the Kinder Morgan deal.  You can read an excerpt below

Kinder Morgan deal leaves questions for investors

      Mike Lee, E&E reporter  Published: Thursday, August 28, 2014

Kinder Morgan Inc. may have to do more to convince its investors that its proposed $44 billion merger with its subsidiaries is in their best interest.

The company — the nation’s biggest operator of oil and gas pipelines — took a series of steps to ensure there were no conflicts of interest during the negotiations, and the subsidiaries negotiated for a higher bid from the parent, Kinder Morgan said in a filing<http://www.sec.gov/Archives/edgar/data/1506307/000104746914007230/a2221196zs-4.htm>intended to persuade investors to vote for the merger.

The question will be: Did the company go far enough? Kinder Morgan faced similar questions when it went private in 2007 and when it bought El Paso Corp. in 2011.

…..

The market’s reaction — prices for all three companies have risen since the deal was announced — shows that investors are willing to overlook a temporary downside if a

…

Posted in M&A

As I have pointed out in earlier posts on this blog, the June decision in Hobby Lobby failed to define closely-held business for purposes of the religious exemption.  On August 22nd, the U.S. Department of Health and Human Services (HHS) issued proposed rules, open for comments for 60 days, that include a definition of closely-held under one of two approaches borrowed from state law definitions like with S corporations and from IRS regulations.

In common understanding, a closely held corporation – a term often used interchangeably with a “close” or “closed” corporation – is a corporation the stock of which is owned by a small number of persons and for which no active trading market exists. ….Under the first proposed approach, a qualifying closely held for-profit entity would be an entity where none of the ownership interests in the entity is publicly traded and where the entity has fewer than a specified number of shareholders or owners….

Under a second, alternative approach, a qualifying closely held entity would be a forprofit entity in which the ownership interests are not publicly traded, and in which a specified fraction of the ownership interest is concentrated in a limited and specified number of owners.

HHS invites…

Call for papers cosponsored by the United Nations Environment Programme (http://www.unep.org/) – abstract deadline is Aug. 31 with the event in Dec.  The emphasis is on empirical work with clear policy proposals. 

Exerpts:
“The event is a research symposium that the Canadian-based Centre for International Governance Innovation (CIGI) is co-hosting with the UNEP Inquiry into the Design of a Sustainable Financial System in early December. The Convening is intended to address key pertinent theoretical and empirical questions that support the broader applied, policy research agenda concerning the contours of a sustainable financial system.

….The symposium will be for a limited number of people, primarily those who have submitted papers. We will be in a position to provide some support to attend the symposium, which will take place from 1-3 December 2014 in Waterloo, Ontario.”

Download CIGI – Inquiry – Research Convening_call_2014 

Anne Tucker

I love a good debate and appreciate the opportunity (provided by Professor Bainbridge’s thoughtful post yesterday) to engage a bit more deeply on the thesis of Wednesday’s post suggesting an approach for how to incorporate Citizens United and Hobby Lobby into the survey BA/Corporations course. 

By way of recap and ruthless summary, Stephen Bainbridge wants nothing to do with these issues (or other constitutional law questions) in his course because of the:

  1. Existing emphasis of public law over private law and resulting imbalance in law school curriculum;
  2. False impression that constitutional law is the holy grail of law teaching and practice;
  3. These cases present a hornet’s nest of controversial and divisive topics; and
  4. Coverage constraints.  The menu options of what we can (should) teach is already more ambitious than time allows.

And to no surprise to anyone, anywhere:  Stephen Bainbridge is right on the money with all of these points.

As a survey course and one that almost every student in my law school (Georgia State) takes, I feel a responsibility to provide context for the subject matter that we teach and to do my best to “hook” students who didn’t come to my class with an…

Fellow BLPB blogers have shared on and off line their coverage scope and strategies for Business Associations/Corporations.  In thinking about how to fit in big corporate constitutional questions into a syllabus that is already jam packed with topics, this 2013 article (Teaching Citizens United v. FEC in the Introductory Business Associations Course) by Michael Guttentag at Loyola Los Angeles, provides some great suggestions.  Written in a post-Citizens United and pre-Hobby Lobby era, I think his insights are broadly applicable about how corporate constitutional rights illustrate the “costs that may arise from differences between manager interests and shareholder interests, the costs that may arise from following a shareholder primacy norm, and the distinctive nature of the role of the transactional lawyer.”  This short (8 pages) article is worth reading to identify some opportunities to discuss these important issues in a way that illustrates difficult concepts within your existing syllabus and hopefully keep students engaged throughout the semester.  

-Anne Tucker

Alternative mutual funds, with assets under management reported from $300-500 billion, mimic riskier investment strategies employed by hedge funds such as investing in commodities, private debt, shorting assets and complex derivatives.  The trading strategies, as you can guess, are funded through higher fees charged to investors.  The funds are touted as a new way for mainstream investors to diversify their assets.  Forbes ran a great, short piece back in February describing the investment advantages and disadvantages of alternative mutual funds.

These alternative mutual funds are now in the cross hairs of the SEC and FINRA, the self-regulatory branch of the securities industries.  FINRA issued an Investor Alert on “alt” funds in June, available here.  The Wall Street Journal reported yesterday that the SEC will conduct a limited scope (15-20 funds) national sweep to identify fund oversight, ready assets, and disclosure of investment strategies.  Included in the funds sweep are large investment firms such as BlackRock and AQR Capital Management, as well smaller firms that are new market entrants.

For additional information on Alternative Funds, see the 2013 report issues by SEI, available here, compiling available data on these funds.

-Anne Tucker