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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

This is my second post in a series of blog posts on the “Study on Directors’ Duties and Sustainable Corporate Governance (“Study on Directors’ Duties”) prepared by Ernst & Young for the European Commission.

In 2015, the world gathered at the United Nations Sustainable Development Summit for the adoption of the Post-2015 development agenda. That Summit was convened as a high-level plenary meeting of the United Nations General Assembly. At this meeting, Resolution A/70/L.1, Transforming our World: The 2030 Agenda for Sustainable Development, was adopted by the General Assembly. In 2016, the Paris Agreement was signed. In my last post, I called both the United Nations 2030 Agenda and the Paris Agreement trendsetters because they kicked-off a global discussion on sustainable development at so many levels, including at the financial level.

During the 2015 United Nations Sustainable Development Summit, I recall that the Civil Society representatives called for a UN resolution on sustainable capital markets to tackle the absence of concrete actions regarding global financial sustainability following the 2008 Great Recession.

At the end of 2016, the European Commission (Commission) created the High-Level Expert Group on Sustainable Finance (HLEG). In early 2018, the HLEG published its report…

Sarah Haan recently posted a new detailed and meticulously documented draft article that we’ll likely be talking about for years to come.  In it, she presents a forgotten history of an era when women came to outnumber men as the stockholders of public corporations.  At the time, many corporations disclosed the gender breakdowns for their stockholders.  Early on, the Wall Street Journal covered the rise of women as shareholders, revealing that more women than men held stock in American Express, Western Union, and Eastman Kodak as of 1916.  Women bought stock at a robust clip for years afterward as well and gained clear per capita majorities at many public companies.

Haan points out that women likely sought stock ownership and participation earnestly because it allowed them a much greater measure of equality than the labor market.  Each share received the same dividend, regardless of the owner’s gender.  In contrast, the labor markets reduced (and continue to reduce) women’s returns.

Women began to outnumber men as shareholders around the time Berle and Means shaped the course of corporate law and theory with their distinction between dispersed, uninformed, and passive shareholders and active management.  Haan explains that modern scholars have largely forgotten…

Pfizers’s CEO sold about 60% of his stake in the company on the same day that Pfizer announced vaccine trial results.  These sales reportedly occurred pursuant to a pre-arranged 10b5-1 plan, which Pfizer adopted on August 19, 2020.  Pfizers’s stock rallied over 14% on the release of vaccine trial information on the day the CEO liquidated nearly two-thirds of his holding.

Of course, Pfizer is not the only company to release curiously positive results in periods coinciding with their pre-arranged 10b5-1 plans.  Moderna also released positive information on a similar schedule.  Wharton’s Daniel Taylor provided context:  

Taylor, of the Wharton business school, said the stock sales by Pfizer’s CEO brought to mind similar concerns with another coronavirus vaccine-maker, Moderna. As NPR reported in September, multiple executives at Moderna adopted or modified their stock-trading plans just before key announcements about the company’s vaccine. Those executives have sold tens of millions of dollars in Moderna stock, even though the company has not completed its vaccine trials.

“It’s troubling to me that the general counsel or the internal controls of these companies would consider it legitimate to adopt a 10b5-1 plan one day before a major vaccine announcement,” said Taylor. “If this isn’t

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Cathy Hwang, Carliss Chatman, and I put together this statement recognizing that race and racism are important to the study of business law. The statement focuses on business law, but all law faculty are welcome to sign. If you agree, you can sign on here:  https://forms.gle/5rvj24XMs4xSBRTV9. Signatures will be published here on the Business Law Prof Blog on Tuesday, September 1, and periodically updated with additional signatures thereafter.

We are law professors, and many of us write and teach about business law.

 

We think race and racism are important to the study of business law, just as they are important to the study of any area of law. From slavery and redlining to lack of opportunity in the workplace and limited access to capital, race and racism have always been part of business and business law.

 

To our colleagues and our students: we welcome the opportunity to engage in these discussions and commit to thinking hard about how to incorporate them into our research and our teaching.

My recent article with Anthony Rickey, Uncovering Hidden Conflicts in Securities Class Action Litigation, discussed how a court-appointed special master investigating a securities class action settlement discovered a $4.1 million “referral fee” paid by Labaton Sucharow LLP (“Labaton”) to an attorney who did no work on the case but purportedly secured the Arkansas Teacher Retirement System (“ATRS”) as a client.  The bombshell revelation in Arkansas Teacher Retirement System v. State Street Bank and Trust Co. (“State Street”) undoubtedly stemmed from an email by Texas attorney Damon Chargois, who wrote:

We got you ATRS as a client after considerable favors, political activity, money spent and time dedicated in Arkansas, and Labaton would use ATRS to seek lead counsel appointments in institutional investor fraud and misrepresentation cases.  Where Labaton is successful in getting appointed lead counsel and obtains a settlement or judgment award, we split Labaton’s attorney fee award 80/20, period.

The State Street payment was not the first:  Labaton had paid a percentage of its total fee awards in at least seven other cases.  While scholars had discussed the role of “pay to play” in securities class actions for years, State Street revealed a referral agreement and raised questions about the extent of favors and political influence brought to bear.

Shortly after we published Uncovering Hidden Conflicts, Judge Wolf issued a blistering opinion in State Street, finding that “the submissions of Labaton and [the Thornton Law Firm] in support of the request for an award of $75,000,000 were replete with material false and misleading statements” and that the firms “in many respects violated Federal Rule of Civil Procedure 11(b) and related Massachusetts Rules of Professional Conduct.”  The opinion also described, in explicit detail, the origin of the relationship between Labaton, Chargois, and ATRS.  Ultimately, Judge Wolf cut the fee from approximately $75 million to $60 million (the lower end of the “presumptive reasonable range”) and referred his opinion to the Massachusetts Board of Bar Overseers.  An appeal is pending.

The State Street case prompted an exposé in the New York Law Journal, including extensive comments from Chargois’ former (now retired) law partner, Tim Herron, and a deep-dive into the history of the ATRS/Labaton relationship.  Some Arkansas lawmakers questioned ATRS’ decision to rehire Labaton during a public hearing in May.  As Professor Coffee put it, “The practices [the special master] uncovered is like turning over a rock in the field and finding some ugly things crawling around.” 

More, after the jump.

The CFPB recently proposed a whistleblower bounty program to enhance its enforcement efforts. Last week, Senator Cortez Masto introduced legislation to make it a reality.  Although the Bill’s text is not yet available, the press release explains its scope:

Specifically, the Financial Compensation for CFPB Whistleblowers Act would allow the Consumer Financial Protection Bureau to reward whistleblowers from the Civil Penalty Fund for between 10 – 30% of settlement awards. In cases involving monetary penalties of less than $1 million, the CFPB would be able to award any single whistleblower 10% of the amount collected or $50,000, whichever is greater. The proposal allows for a whistleblower to retain independent counsel, does not require the whistleblower to enter a contract with the Consumer Bureau and protects a whistleblower’s identity.

Interestingly, CFPB’s proposed text does not include any reference to an anti-retaliation cause of action.  If we really want whistleblowers to come forward, it may make sense to offer more than just a carrot.  Employees may also need real protection from an employer’s stick.  Other existing and proposed whistleblower bounty statutes also include anti-retaliation provisions and causes of action for whistleblowers.  Enhancing a cause of action here might cause trim…

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It’s been 11 weeks since the WHO declared the coronavirus outbreak a pandemic, and the NBA cancelled games. As of this writing, the NY Post reports: Total cases globally = 5,589,626; Deaths = 350,453.

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I’ve written about the expungement process stockbrokers now use to suppress public information before.   We know that brokers who receive expungements are statistically more likely to cause harm than the average broker–about 3.3 times as likely to cause harm.  We also know that customers usually don’t get much notice before an expungement hearing will held.  We also know that brokers have used claims for nominal damages to cut costs and ensure that only a single arbitrator will hear the matter.

But I had not yet realized another problem with the system.  Brokers often succeed at expunging information after more than six years have passed.  Generally, a broker should not be able to secure an arbitration award recommending expungement after more than six years from the occurrence or event giving rise to the claim has passed.  I suppose some arbitrators might buy an argument that the presence of the information in the public record creates a type of continuing harm and that the claim continues to arise.  It’s a bit like arguing that a scar from a twenty-year old injury means you should be able to sue about it because seeing the scar continues to harm you.  Of course, many brokerage…

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It’s been ten weeks since the WHO declared the coronavirus outbreak a pandemic, and the NBA cancelled games. As of this writing, the NY Post reports: Total cases globally = 4,897,492; Deaths = 323,285.

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It’s been eight weeks since the WHO declared the coronavirus outbreak a pandemic, and the NBA cancelled games. As of this writing, the NY Post reports: Total cases globally = 3,662,691; Deaths = 257,239.

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