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Colleen Baker

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PhD (Wharton) Professor Baker is an expert in banking and financial institutions law and regulation, with extensive knowledge of over-the-counter derivatives, clearing, the Dodd-Frank Act, and bankruptcy, in addition to being a mediator and arbitrator.

Previously, she spent time at the U. of Illinois Urbana-Champaign College of Business, the U. of Notre Dame Law School, and Villanova University Law School. She has consulted for the Federal Reserve Bank of Chicago, and for The Volcker Alliance.  Prior to academia, Professor Baker worked as a legal professional and as an information technology associate. She is a member of the State Bars of NY and TX. Read More

OK, where were we before the disruption of the blog?

Howard Wasserman at PrawfsBlawg has posted a comment on Justice Scalia’s recent commencement address at William & Mary. Justice Scalia argued against the proposals many have made for a two-year law degree, and argued in favor of more required courses in the second and third years. (Professor Wasserman links to the full text of Scalia’s address, if you want to read it.)

Professor Wasserman supports the general idea, but argues that enacting such reforms would put schools at a competitive disadvantage. A school with upper-level requirements would lose out to a school that offered students more flexibility. All else being equal, prospective students would choose flexibility over rigid requirements.

Professor Wasserman is probably correct. At least at the margin, students would probably prefer fewer requirements. I’m not sure how much this would affect law schools with stricter requirements, given the many other factors students consider in choosing a law school. But assume for the sake of argument that stricter curriculum requirements would put a law school at a competitive disadvantage. I don’t think that’s a legitimate reason to oppose upper-level requirements or any other reform of the curriculum.…

Our apologies to those of you who were unable to access the blog yesterday. Our blog is hosted by Typepad, and Typepad was down all day yesterday. This had absolutely nothing to do with an alien invasion force from another galaxy. To repeat, they want us to tell you that THIS HAD ABSOLUTELY NOTHING TO DO WITH AN ALIEN INVASION FORCE FROM ANOTHER GALAXY. Please return to your daily business, earthlings.

As a student, I hated exam review sessions. I considered them coercive. I felt compelled to attend even if I had no questions, lest I miss something important the professor might say.

Because of that, I have always been reluctant to hold exam review sessions in my own classes. But I recently realized that technology can eliminate the coercion. As long as I record the review session and make it available to all students, no one is compelled to attend. Students who skip the voluntary review session can check the recording to make sure they didn’t miss anything of interest.

I have been making recordings of my classes available to students for several years, so I should have thought of this much sooner. I usually blame my spouse for my failures, so I’ll try to think of some way to blame this on her as well.

I’m not sure why students still want exam review sessions. In this era of ubiquitous email, you don’t need to have the professor in the room to ask questions. And my email responses are probably better than off-the-cuff answers in class. But, for whatever reason, students still like review sessions and, now that the…

Aaron George at Under30CEO has a nice post on the top five legal mistakes made by startups. Not much new to those of us who are lawyers, but it’s a nice summary of some of the mistakes startups can make.

I could quibble with his list. I think selling securities without complying with securities law ought to be there somewhere, and I think his No. 5–not hiring a lawyer–ought to be No. 1. But his list does include some of the common legal mistakes made by budding entrepreneurs.

Late last month, the SEC released its Report on Review of Disclosure Requirements in Regulation S-K. This report is in response to section 108(a) of the JOBS Act, which provides that

The Securities and Exchange Commission shall conduct a review of its Regulation S-K . . . to

(1) comprehensively analyze the current registration requirements of such regulation; and

(2) determine how such requirements can be updated to modernize and simplify the registration process and reduce the costs and other burdens associated with these requirements for issuers who are emerging growth companies.

The SEC is required by section 108(b) to transmit the report to Congress, including “the specific recommendations of the Commission on how to streamline the registration process in order to make it more efficient and less burdensome for the Commission and for prospective issuers who are emerging growth companies.”

This report was supposed to be submitted by October 2, 2012, 180 days after the passage of the JOBS Act. It was actually released on December 20, 2013, more than a year after that deadline.

The SEC apparently believes this report satisfies the requirements of section 108. The first page of the report includes a label “As Required…

I have spent a great deal of my academic life in the relative obscurity of Securities Act registration exemptions. It’s an important area of the law, especially for startups and other small businesses, but not one that has attracted a great deal of academic attention until recently. I could count the academics who specialize in the area on one hand.

From Obscurity to Slightly Less Obscurity

The JOBS Act, and the debate about crowdfunding that preceded the JOBS Act, have brought my academic specialty into the limelight. Dozens of papers and countless blog posts have appeared in the last couple of years discussing crowdfunding, general solicitation, Regulation A and Regulation A+, and a number of other aspects of exempted securities offerings. People have finally become interested in issues I have been writing about for over twenty years.

The Benefits (and Costs) of Being Less Obscure

In some ways, that’s great. People are reading my scholarship more and citations to my articles are increasing. I have been invited to speak at a number of seminars and webinars. I even got to testify before a Congressional subcommittee. It’s nice to know that people care what you think. (That’s not an unmitigated good.

Stephen Bainbridge has an excellent post on the need for academics to disclose conflicts of interest–specifically, who’s funding their research. I agree with Steve 100%. If someone’s paying an academic for research or for consulting related to the research, I want to know about it.

A conflict of interest does not mean the research is unreliable. (I’m sick of both the left and the right dismissing research out of hand because it was funded by the right-wing [Fill-in-the-blank] Foundation or the left wing [Fill-in-the-blank] Institute.) But, if someone’s paying an author for the work, I am going to pay much closer attention to the methodology and the analysis, even if the author otherwise has a good reputation.

Adi Osovsky, an S.J.D. candidate at Harvard Law School, has posted an interesting new article on SSRN, The Curious Case of the Secondary Market with Respect to Investor Protection.

Here’s the abstract:

The primary mission of the U.S. Securities and Exchange Commission is to protect investors. However, current securities regulation clearly separates between public markets and private markets with respect to investor protection. While the federal securities laws impose strict and costly disclosure and anti-fraud requirements on issuers that offer their securities to the public, they exempt private offerings from such rigid regime. The liberal approach toward private offerings is based on the assumption that investors in private markets are sophisticated and thus can “fend for themselves”.

This Article explores the validity of such traditional dichotomy between the public market and the private market in a relatively new, organized secondary market for ownership interests in private companies with retail investor access (the “Secondary Market”). The Secondary Market provides investors and employees with an opportunity to sell their holdings even before the first exit event. It also allows greater flexibility in capital formation, which may enhance productivity and job growth. However, the Secondary Market raises serious problems with regard to…

For those of you interested in crowdfunding and the new federal exemption for crowdfunded securities offerings, the University of Cincinnati College of Law is planning a symposium on crowdfunding, to be held on March 28. I and several leading crowdfunding scholars will be presenting papers, and those papers will eventually be published in the University of Cincinnati Law Review.

I will post more details when the official conference announcement is released.

My favorite Christmas movie is It’s a Wonderful Life. I have watched it at least 50 times, but the final scene never fails to bring a tear to the eye of this hopelessly sentimental romantic.

The basic premise, for those of you who have never seen the movie, is how much the good deeds we do affect those around us. George Bailey, on the brink of suicide, is shown by his guardian angel Clarence how Bedford Falls, George’s community, would have changed if George had never been born.

As much as I like the movie, I have always been a little bothered by its portrayal of Bailey’s nemesis, Henry F. Potter, played brilliantly by Lionel Barrymore. Potter is the personification of “heartless capitalism.” He mistreats people, eschews charity of any kind, and has only one goal in life: the accumulation of wealth. The idea of sacrificing profit to help others is foreign to him.

I wouldn’t want to be Potter and I wouldn’t want to work for Potter. But is the picture the movie paints totally fair to Potter or, more generally, to profit-seeking capitalism? The best way to answer the question is to ask same question the movie…