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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

I write often about how courts often incorrectly treat LLCs as corporations.  Last week, I reported on a case about a court that misstated, in my view, the state of the law regarding LLCs and veil piercing.  When I do so, I often get comments about how veil piercing should go away. Prof. Bainbridge replies similarly here. 

I am on record as being open to the elimination of veil piercing (I am actually, at least in theory, working on an article tentatively called Abolishing Veil Piercing Without Abolishing Equity), and I am especially open to the idea of abolishing veil piercing with regard to contract-based claims.  (Texas largely does this by requiring “actual fraud” for cases arising out of contract. For a great explanation of Texas law on the subject, please see Elizabeth Miller’s detailed description here.)

Several courts over the years, most notably the Wyoming court in Flahive, have extended the concept of veil piercing to LLCs, even where a statute did not explicitly provide the concept of veil piercing. Although I think these courts got it wrong, now that concept of veil piercing is well established for corporations and LLCs in virtually all (if not all)…

As you may know, I have had an abiding curiosity about the line between the U.S  private and public securities markets in large part because of my work on crowdfunding.  Almost three years ago, I published a post on the topic here at the BLPB.  I posted on the referenced paper here.  That paper recently was republished in a slightly updated form by The Texas Journal of Business Law,  the official publication of the Business Law Section of the State Bar of Texas (available here).

As a result of this work, my interest was (perhaps unsurprisingly) piqued by a this paper by Amy and Bert Westbrook.  Enticingly titled “Unicorns, Guardians, and the Concentration of the U.S. Equity Markets,” the article documents concentrations in both private and public equity markets in the United States and makes a number of interesting observations.  I was especially intrigued by the article’s identification of a potential resulting peril of this market concentration: the aggregation of both corporate management and ownership in the hands of the few.

[W]ealth has concentrated and private equity markets have emerged that serve as alternatives to the public equity market. At the same time, the public equity market has become dominated by highly concentrated shareholding, in…

Most of us editors here at the Business Law Prof Blog obsess and blog in one way or another about disclosure issues.  Marcia has written passionately about conflict minerals disclosure (see a recent post here) and the SEC’s efforts to revamp–or at least reconsider–Regulation S-K (including here).  Anne also wrote about the Regulation S-K revision efforts here.  Ann wrote about mining industry disclosures here and focuses ongoing attention on securities litigation issues in the disclosure realm (including, e.g. here).  Josh wrote about the intersection of corporate governance and disclosure regulation in this post.  I have written about “disclosure creep” here and most of my research and writing has a disclosure bent to it, one way or another . . . .

Last summer, at the National Business Law Scholars Conference at The University of Chicago Law School, I listened with some fascination to the presentation of an early-stage project by Todd Henderson (whose work always makes me think–and this was no exception).  His thesis¹ was a deceptively simple one: that the age-old disclosure debate could best be solved by creating a contextual market for disclosure (rather than by, e.g., continuing its the current system of “federal government mandates and…

Later this week, I will head to Indiana to present at and attend a social enterprise law conference at The Law School at the University of Notre Dame.  The conference includes presentations by participating authors in the forthcoming Cambridge Handbook of Social Enterprise Law, edited by Ben Means and Joe Yockey.  The range of presentations/chapters is impressive.  Fellow BLPB editors Haskell Murray and Anne Tucker also are conference presenters and book contributors.

Interestingly (at least for me), my chapter relates to Haskell’s post from last Friday.  The title of my chapter is “Financing Social Enterprise: Is the Crowd the Answer?”  Set forth below is the précis I submitted for distribution to the conference participants.

Crowdfunding is an open call for financial backing: the solicitation of funding from, and the provision of funding by, an undifferentiated, unrestricted mass of individuals (the “crowd”), commonly over the Internet. Crowdfunding in its various forms (e.g., donative, reward, presale, and securities crowdfunding) may implicate many different areas of law and intersects in the business setting with choice of entity as well as business finance (comprising funding, restructuring, and investment exit considerations, including mergers and acquisitions). In operation, crowdfunding uses technology to transform…

Two weeks ago, I posted on the POTUS’s “one in, two out” executive order on executive branch agency regulations.  In that post, I used critiques of a clothing maintenance/closet cleaning system working off the same principle.  Interestingly, a CATO report was released January 31, unbeknownst to me at the time I wrote and published my post, that makes some of the same points.  Since that time, I have wondered whether there is a more wise, effective  way to simply address bloated federal agency regulations.  Here is an idea that currently holds my interest.

In a leadership training program a few years ago, I remember hearing about a technique used in institutional budgeting processes.  A unit leader who is required to submit a proposed budget to a superior or to a central budgeting office is asked to submit with the budget a proposal on what the unit would cut if the budget was cut by 5% (or another desired number) and what the unit would spend on if its budget was increased by 5% (or another desired number).  It struck me that a similar system could be employed to true up federal agency regulations.

Specifically, each agency could be required to establish reasonable, evidence-based objectives for its operations for the forthcoming fiscal year, consistent…

News on TaxJazz: The Tax Literacy Project from Tulane Law colleague Marjorie Kornhauser:

TaxJazz provides individuals with non-partisan, non-technical, accessible tax information to help people participate in discussions about tax policy and problems facing the nation. TaxJazz already addresses basic tax questions, such as: Why do we have taxes? Are there any legal constraints on taxation? What can be taxed? How do we decide what is a fair tax? It plans to add material on particular tax issues and provisions.

The readings, worksheets, dialogues and other materials are suitable for use by individuals or by groups in a variety of situations. They have already been used 7 times in different settings including high schools, a city recreation department’s after-school program, and a community senior center. They have already been used by over 350 people between the ages of 12 and 80.

For more information, please Contact Us.

Looks like I may need to spend some time over there at TaxJazz.  I certainly do not consider myself tax literate! Maybe this will help.  A quick pass over the materials on the site reveals catchy graphics and coverage of salient issues about taxing authority and tax policy.  I know a few legislators who…

This post comments on the method for managing regulation and regulatory costs in the POTUS’s Executive Order on Reducing Regulation and Controlling Regulatory Costs.

I begin by acknowledging Anne’s great post on the executive order.   She explains well in that post the overall scope/content of the order and shares information relevant to its potential impact on business start-ups.  She also makes some related observations, including one that prompts the title for her post: “Trumps 2 for 1 Special.”  In a comment to her post, I noted that I had another analogy in mind.  Here it is: closet cleaning and maintenance.

84px-Wall_Closet
You’ve no doubt heard that an oft-mentioned rule for thinning out an overly large clothing collection is “one in, one out.”  Under the rule, for every clothing item that comes in (some limit the rule’s application to purchased items, depending on the objectives desired to be served beyond keeping clothing items to a particular number), a clothing item must go out (be donated, sold, or simply tossed).  Some have expanded the rule to “one in, two out” or “one in, three out,” as needed.  The mechanics are the same.  The rule requires maintaining a status quo as to the number of items in one’s closet and, in doing so, may tend to discourage the acquisition of new items.

Articulated advantages/values of this kind of a rule for wardrobe maintenance include the following:

  • simplicity (the rule is easy to understand);
  • rigor (the rule instills discipline in the user);
  • forced awareness/consciousness (the rule must be thoughtfully addressed in taking action); and
  • experimentation encouragement (the rule invites the user to try something new rather than relying on something tried-and-true).

Disadvantages and questions about the rule include those set forth below.

  • The rule assumes that it is the number of items that is the problem, not other attributes of them (i.e., age, condition, size, suitability for current lifestyle, etc.).
  • Once new items are acquired, the rule assumes that existing ones are no longer needed or are less desirable.
  • The rule operates ex post (it assumes the introduction of a new item) rather than ex ante (allowing the root problem to be addressed before the new item is introduced).
  • The rule encourages an in/out cycle that incorporates the root of the problem (excess shopping) rather than addressing it.
  • Definitional questions require resolution (e.g., what is an item of clothing).

Internet sources from which these lists were culled and derived include the article linked to above as well as articles posted here and here.

Regulation is significantly more complex than clothing.  But let’s assume that we all agree that the list of advantages/values set forth above also applies to executive agency rule making.  Let’s also assume the validity and desirability of the core policy underlying the POTUS’s executive order on executive agency rule making, as set forth below (and excerpted from Section 1 of the executive order).

It is the policy of the executive branch to be prudent and financially responsible in the expenditure of funds, from both public and private sources. In addition to the management of the direct expenditure of taxpayer dollars through the budgeting process, it is essential to manage the costs associated with the governmental imposition of private expenditures required to comply with Federal regulations.

How do the closet organization disadvantages or questions stack up when applied in the executive agency rule-making context?  Here’s my “take.”

As readers may recall, I posted on broker fiduciary duties back at the end of December, focusing on a WaPo op ed written by friend-of-the-BLPB, Ben Edwards (currently at Barry, but lateraling later this year to UNLV).  He has a new op ed out today in the WaPo that says everything I could and would say regarding the POTUS’s recent executive order on this topic (referenced by Ann in her post earlier today), and more.  I commend it to your reading.  

It’s important to remember as you read and consider this issue what Ben’s op ed focuses in on at the end: the rule the POTUS executive order blocks is a narrow one, since it only applies to activities relating to retirement investments. A broader fiduciary duty rule for brokers has not yet been adopted.  Suitability is still the standard of conduct for brokers outside the application of any applicable fiduciary duty rule.  The central question at issue is whether a broker must recommend investments in retirement planning that are in the best interest of the client investor or whether, e.g., a broker can recommend a suitable investment to a retirement investor that makes the broker more money/costs the client more money.

I have had…

National Business Law Scholars Conference (NBLSC)

Thursday & Friday, June 8-9, 2017

Call for Papers

The National Business Law Scholars Conference (NBLSC) will be held on Thursday and Friday, June 8-9, 2017, at the University of Utah S.J. Quinney College of Law. 

This is the eighth meeting of the NBLSC, an annual conference that draws legal scholars from across the United States and around the world.  We welcome all scholarly submissions relating to business law. Junior scholars and those considering entering the legal academy are especially encouraged to participate. 

To submit a presentation, email Professor Eric C. Chaffee at eric.chaffee@utoledo.edu with an abstract or paper by February 17, 2017.  Please title the email “NBLSC Submission – {Your Name}.”  If you would like to attend, but not present, email Professor Chaffee with an email entitled “NBLSC Attendance.”  Please specify in your email whether you are willing to serve as a moderator.  We will respond to submissions with notifications of acceptance shortly after the deadline. We anticipate the conference schedule will be circulated in May. 

Keynote Speaker:

Lynn A. Stout, Distinguished Professor of Corporate & Business Law, Cornell Law School

Plenary Author-Meets-Reader Panel:

Selling Hope, Selling Risk: Corporations, Wall Street, and the Dilemmas of Investor Protection by Donald C.