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
Early Thoughts on Election Impact For Financial Regulation
- Administrative agencies may focus on repealing existing rules over crafting new ones to address problems. We saw this with the last Trump Administration and I’d expect to see more of the same.
- The Trump Administration will likely move to exert more political control over civil servants. At the end of the last Trump Administration, President Trump issued an Executive Order aiming to exclude many more federal employees as outside the ordinary civil service rules. President Biden revoked it on taking office. If reinstated, Schedule F would cover “[p]ositions of a confidential, policy-determining, policy-making, or policy-advocating character not normally subject to change as a result of a Presidential transition[.]” Essentially, the Trump Administration may seek to take political control over any federal employees involved in policy work. This would cover a huge swath of federal employees.
- 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
TripAdvisor’s Supreme Court Oral Argument
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
Business Law Experiential Exercise
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
Write That Short Piece
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
Small Firm Reincorporations and Shareholder Value
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 take
Expungement Pipeline Remains Large
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
Reincorporation Returns: A Practitioner-Driven Stormlet or A Controller Cloudburst?
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
SEC Advertising Enforcement
The SEC’s ongoing sweep recently resolved potential claims against nine different SEC-registered investment advisory firms for violations of its Marketing Rule. The firms paid civil penalties ranging from $60,000 to $325,000. In total, the SEC secured about $1.2 million in civil penalties.
Marketing Rule enforcement sits in an interesting place after the Jarkesy decision. The Marketing Rule is Advisers Act Rule 206(4)-1. It’s codified at 17 C.F.R. 275.206(4)-1. Section 206 of the Advisers Act is an anti-fraud provision.
Jarkesy would seemingly apply to give respondents the right to a jury trial and a federal court proceeding. Although addressing a different portion of the securities laws, the Jarkesy majority put it this way:
According to the SEC, these are actions under the “antifraud provisions of the federal securities laws” for “fraudulent conduct.” App. to Pet. for Cert. 72a–73a (opinion of the Commission). They provide civil penalties, a punitive remedy that we have recognized “could only be enforced in courts of law.” Tull, 481 U. S., at 422. And they target the same basic conduct as common law fraud, employ the same terms of art, and operate pursuant to similar legal principles. See supra, at 10–12. In short, this action
Beckley Securities Law Writing Contest For Law Students
The Contest
The Public Investors Advocate Bar Association (PIABA) sponsors this contest for papers touching on securities law and securities arbitration and will pay over $3,000 in awards to law students with prizes at $1,500, $1,000, and $750 for the top three entrants. The PIABA Bar Journal will publish the first place paper and, in years past, has also made offers to publish other papers from the contest. Papers must be submitted by Friday, March 28, 2025.
Eligibility
The competition is open to all students attending a law school in the United States.[1] PIABA employees and externs (except for students working less than 20 hours per week) are not eligible to enter the competition.
Criteria and Judging
All entries will be judged anonymously by the Competition Judges, who will select the winning submission(s). PIABA will notify the award winner(s) in early April.
Entries will be judged based on the following criteria: quality of research and authority provided; accuracy and clarity of the analysis; compliance with legal writing standards and technical quality of writing, including organization, grammar, syntax, and form. Strong preference will be given to articles that advocate pro-investor positions, provide updates on or surveys of securities or