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Benjamin P. Edwards

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Benjamin Edwards joined the faculty of the William S. Boyd School of Law in 2017. He researches and writes about business and securities law, corporate governance, arbitration, and consumer protection.

Prior to teaching, Professor Edwards practiced as a securities litigator in the New York office of Skadden, Arps, Slate, Meagher & Flom LLP. At Skadden, he represented clients in complex civil litigation, including securities class actions arising out of the Madoff Ponzi scheme and litigation arising out of the 2008 financial crisis. Read More

The D.C. Circuit issued its opinion in the Alpine case this morning. I’ve covered this case repeatedly and have links to much of the briefing. The majority opinion summarized the state of play and its holding this way:

We now reverse only to the extent the district court allowed FINRA to expel Alpine with no opportunity for SEC review. Alpine is entitled to that limited preliminary injunction because it has demonstrated that it faces irreparable harm if expelled from FINRA and the entire securities industry before the SEC reviews the merits of FINRA’s decision. Alpine has…

Earlier this year, the SEC released a rule treating significant market participants as “dealers” or “government security dealers.” The fact sheet explains the rationale was to update existing rules to capture modern electronic trading activity. The rule would apply to businesses that are:

  • Regularly expressing trading interest that is at or near the best available prices on both sides of the market for the same security and that is communicated and represented in a way that makes it accessible to other market participants; or
  • Earning revenue primarily from capturing bid-ask spreads, by buying at the bid and selling at the offer, or from capturing any incentives offered by trading venues to liquidity supplying trading interest.

At the time, I didn’t see the rule as particularly controversial. Market-makers have long been regulated. As trading technology changed, market participants began acting like market-makers without operating under the same regulatory standards. Firms subject to the rule would be required to register and possibly join an SRO if appropriate. The proposal generated a significant comment file and predictable litigation followed.

Two cases challenging the rule were filed in Texas. District Court Judge Reed O’Connor vacated the rule in both cases, one filed by the…

Bloomberg Law recently covered the volume of records litigation going on in Delaware’s Chancery Court. These paragraphs frame the rise:

Records suits, which require only preliminary suspicions, are designed to resolve narrow disagreements over how to enforce a core shareholder right. But Delaware’s judges are spending significant chunks of time policing the process, as in recent fights over Amazon.com Inc’s antitrust woes, Boeing Co.’s safety scandals, and the $8 billion Paramount Global-Skydance Media merger.

“Nobody’s happy with the state of affairs,” said Widener University law professor Lawrence Hamermesh. “It’s a mess.”

Everyone involved would rather be doing something more substantive, but they’re responding rationally to structural incentives, Chancellor Kathaleen St. J. McCormick, the court’s chief judge, said at George Washington University. Although getting inside information offers clear advantages, “complaints just get longer and longer,” she said Oct. 25. “I’m not sure I need all that at the pleading stage, but it’s not hard to see why they’re doing it, and I can’t advise against it.”

Shareholder attorneys blame the logjam on board stonewalling, while companies say the ballooning cost is affecting settlement leverage. “Shareholders aren’t in the engine room every day, so there was wisdom in

…

Like many of you, I’m still digesting the election results and mulling what it will mean for financial regulation.  At the least, here are my early expectations:

  • The independence of the SEC will be tested.  There are two ways I can see this happening.  First, Chair Gensler could decline to resign and simply serve out his term.  President-elect Trump has promised to fire him.  But
    • …

    Happy Halloween!

    The Delaware Supreme Court just heard oral argument in the TripAdvisor case. Both sides had talented lawyers representing them. Keith Bishop has also covered this here. You can watch the oral argument here:

    I’d like to offer three quick thoughts.

    The Reincorporation Premium/Discount

    At around the 28th minute, counsel for the stockholder made claims about there being a Nevada discount. This doesn’t seem to be supported by the weight of the evidence–or recent evidence. Steven Davidoff Solomon summarized the evidence in a recent memorandum that was attached to The Trade Desk Proxy. This is what he found:

    24. Professors Paul Gompers, Joy Ishii, and Andrew Metrick also examined Professor Daines’ results as part of their study of 1,500 large firms to assess how firm governance affects stock returns. Consistent with the unique nature and heterogeneity of each company, they found that the premium observed in Professor Daines’ study was attributed to various governance characteristics, such as a classified board, limited ability to call special shareholders’ meetings, and state law and charter takeover protections. After controlling for these factors, they discovered that the Delaware premium was no longer statistically significant. In other words, Professors Gompers, Ishii, and

    …

    Today, we’ve got a guest post from David Lourie at the University of Detroit Mercy School of Law. He will present the teaching exercise below at the Transactional Law and Skills Pedagogy Panel at AALS this year. Some of the other presenters may also post write ups of their teaching exercises as well. I’ll aim to link them all to each other as this goes on so readers can find interesting teaching exercises. — BPE

    On the first day of my Transactional Skills course, I have students engage in an active, experiential exercise where they apply diverse aspects of transactional skills to a relatable problem.   Later in the semester, when students have greatly enhanced their technical expertise, I assign students a related, out-of-class, multi-part exercise where they are graded.  In both exercises, students have three main tasks: thinking strategically, negotiating, and drafting. 

    In the first exercise, I use a problem from Sepinuck’s Transactional Skills textbook as a starting point, but I greatly expand what the students must do so that I can preview the entire course and showcase the broad skills the students will utilize as transactional lawyers.  First, I divide the students into groups of four.  I then provide…

    A few years ago and before I had tenure, one of my more senior UNLV colleagues asked me to write a short piece for the ABA’s Human Rights Magazine on corporate political spending. As this isn’t my primary focus, I benefited enormously from reading work from Dorothy Shapiro Lund and Leo Strine as well as Tom Lin. The format didn’t allow for citations so I try to just use their names whenever I talk about it so it’s clear their ideas influenced me.

    I made the time to write it and the essay has resulted in a decent amount of outreach to talk about the topic. Last week, a portion of an interview I gave to Marketplace ran. They reached out because of that short piece in the ABA magazine. Since then, I’ve heard from classmates I haven’t talked to for some time calling and texting to tell me they heard the interview. Apparently, I’m friends with an NPR-listening crowd.

    If you want your work to reach larger audiences, you really have to write short pieces in addition to law review articles. On a few occasions, I’ve had op-eds follow law review articles. It’s a challenge to distill…

    I’ve covered the The Trade Desk proxy here before and how controlled companies might benefit from redomesticating away from Delaware. In his memorandum accompanying the proxy statement, Steven Davidoff Solomon points out that his own analysis does not show any negative premium associated with incorporating away from Delaware. This is how he put it:

    As I noted above in Section IV, recent academic studies have found no premium associated with Delaware incorporation, and in some cases, such a premium may even be negative for controlled companies. To provide further information on this issue to the Board, I conducted case studies of the five reincorporations out of Delaware involving companies with a market capitalization of at least $200 million. These companies are Tesla, Inc., Fidelity National Financial, Inc., TripAdvisor, Inc., Cannae Holdings, Inc., and Rezolute, Inc.

    Evidence for a possible negative premium for controlled companies incorporated in Delaware comes from an article by Edward Fox, that “finds, surprisingly, that controlled Delaware firms are actually slightly less valuable than similar companies incorporated elsewhere.” (emphasis in original).

    Given that recent redomestication announcements for companies with market capitalizations of over $200 million have already been examined, I thought it might be interesting to…

    Although FINRA has changed its rules to deal with abuse of the expungement process, the new rules only apply to claims filed after October 16, 2023.  There are still claims in the pipeline that were filed before then.  For example, an award recommending expungement of twenty nine different complaints recently appeared on FINRA’s website.  That case was filed on October 13, 2023–three days before the reforms designed to stop abuse went into effect.

    Because he already had a pending expungement claim, the broker, Matthew S. Buchsbaum, may have been able to expunge a customer complaint arriving after the deadline.   The award also explains that the arbitrator, Laura Carraher, granted an unopposed Motion to Amend the Statement of Claim on July 18, 2024.  The amendment added an additional occurrence to the long list of claims being expunged.  The award itself is fairly sparse on details.  It doesn’t reveal when the additional customer complaint arrived or the details of it.  Given the ability of counsel to identify so many prior customer disputes on the broker’s record, it was probably a customer complaint that emerged after October 16, 2023.  But the award doesn’t give that level of detail, so there is no way…

    Reincorporations from Delaware to Nevada and elsewhere remain in the news with the Delaware Supreme Court awaiting oral argument in the TripAdvisor case.  I’ve covered the issue here before and written about Nevada with our Secretary of State for the Wall Street Journal.  Nevada offers an alternative to Delaware and a different litigation environment.  In that op-ed, we framed the issue this way:

    The likelihood of expensive, meritless or value-destroying litigation leads public companies in Delaware to avoid deals they would otherwise make. Another of the three public companies that recently decided to exit, Fidelity National Financial, explained in a shareholder letter that the state’s approach “may discourage pursuit of transactions the Board might otherwise believe to be in the best interests of the Company and its stockholders” because of litigation costs.

    This issue looms particularly large for corporations with significant shareholders. Although Delaware law offers a process for companies to manage transactions with conflicts outside court, Delaware jurists themselves don’t always agree about how much information corporate boards must push out to shareholders to avoid litigation. When the process becomes too costly and cumbersome, deals don’t get done.

    This brings me to the most recent reincorporation proxy…