Every year the Corporate Practice Commentator releases its annual annual poll of best corporate and securities law articles.  I had the pleasure of seeing earlier stages for some of these papers at conferences over the past few years.    

These are the results this year:

The Corporate Practice Commentator is pleased to announce the results of its twenty-fifth annual poll to select the ten best corporate and securities articles.  Teachers in corporate and securities law were asked to select the best corporate and securities articles from a list of articles published and indexed in legal journals during 2018.  Just short of 400 articles were on this year’s list.  Because of the vagaries of publication, indexing, and mailing, some articles published in 2018 have a 2017 date, and not all articles containing a 2018 date were published and indexed in time to be included in this year’s list.

The articles, listed in alphabetical order of the initial author, are:

Yakov Amihud, Markus Schmid & Steven Davidoff Solomon.  Settling the Staggered Board Debate.  166 U. Pa. L. Rev. 1475-1510 (2018).

Tamara Belinfanti & Lynn Stout.  Contested Visions: The Value of Systems Theory for Corporate Law.  166 U. Pa. L. Rev.

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FINRA recently announced a new regulatory notice aimed at addressing the unpaid awards problem. In recent years, about a third of arbitration awards rendered in the FINRA forum have gone unpaid.  

The proposal calls for particular firms to set aside additional capital to pay possible awards.  FINRA described the idea:

As part of FINRA’s ongoing initiatives to protect investors from misconduct, FINRA is requesting comment on proposed new Rule 4111 (Restricted Firm Obligations) that would impose tailored obligations, including possible financial requirements, on designated member firms that cross specified numeric disclosure-event thresholds. These thresholds were developed through a thorough analysis and are based on the number of events at similarly sized peers. The member firms that could be subject to these obligations, while small in number, present heightened risk of harm to investors and their activities may undermine confidence in the securities markets as a whole. The proposal would further promote investor protection and market integrity and give FINRA another tool to incentivize member firms to comply with regulatory requirements and to pay arbitration awards.

On the whole, this seems like a step in the right direction.  It remains to be seen how significantly this proposal could reduce total unpaid…

After soliciting initial comments, New Jersey has issued its draft fiduciary regulation.  The draft proposal makes clear that financial advisers will have duties of care and loyalty to clients and that mere disclosure may not be sufficient to satisfy the duty of loyalty.  This matters because many registered investment advisers now attempt to satisfy their fiduciary duties simply by disclosing conflicts and instances where they will act against client interests.

Consider the SEC’s recent share class disclosure settlement.  Firms had been steering client assets into more expensive share classes because those classes paid the firms more money than less expensive share classes.  The SEC deemed these practices “fair” so long as they were disclosed to clients:

“An adviser’s failure to disclose these types of financial conflicts of interest harms retail investors by unfairly exposing them to fees that chip away at the value of their investments,” said Stephanie Avakian, co-director of the SEC’s enforcement division.

The words “unfairly exposed” strain under their burden there.  It’s an odd notion of fairness which allows a fiduciary to fleece clients so long as some document contains the disclosure.  

New Jersey now looks to take a different approach.  Although disclosure makes sense…

I want to follow in Haskell’s wake and also plug Ipse Dixit, a podcast on legal scholarship.  It recently featured the BLPB’s own Joshua Fershee.  It’s perfect for hearing authors that you’ve only read in the past.  Hearing them set out their ideas in their own voices is wonderful.  It’s also available on iTunes and a number of other streaming platforms.  It’s now up to about 212 episodes, and covers a broad range of ideas and scholars.  There should be something for everyone.

The podcast continues to evolve and expand.  It’s begun adding additional co-hosts to the podcast to help produce new episodes.  I’m one of them and suspect I’ll have a hard time keeping up with another new co-host, Luce Nguyen, a student at Oberlin College.  Luce interviewed Joshua for that episode and has already taken the lead in terms of co-host production.  Luce is the co-founder of the Oberlin Policy Research Institute, an undergraduate public policy organization based at Oberlin College.  You can also follow both Joshua and Luce on Twitter:

Thank you for a great interview (at least from your end). I appreciate your thoughtful questions and for your interest in my work. You were

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Financial Planning’s Ann Marsh recently published an article detailing how a registered investment adviser’s chief operating officer allegedly stole $6 million from the firm and clients.  As often happens, the alleged thefts started small and gradually escalated over time, becoming more and more daring.  The COO allegedly first began by meddling with the firm’s payroll to increase his own pay.  When a client later raised questions about charges to his account with the CEO, the SEC’s complaint alleges that the CEO took the concern to the COO who “confessed to overbilling clients in order to personally profit himself.”

Although nothing in the report indicates that the CEO had any idea any of this was going on, there are some lessons.  Despite managing nearly half a billion dollars, the CEO held three different roles simultaneously:  CEO, Chief Compliance Officer, and Chief Investment Officer. When the same person occupies all three roles, it necessarily means that they cannot devote themselves entirely to any one role.  Although there is no guarantee that a full-time chief compliance officer or CEO would have caught this earlier, it’s hard to imagine that they would have stood a worse chance than someone overburdened with three simultaneous roles.…

The University of Richmond School of Law will host the Third Annual Junior Faculty Forum on Tuesday, May 21 and Wednesday, May 22, 2019 in Richmond, Virginia.  More information is available here.  This is Richmond’s description of the event:

This annual workshop brings together junior law scholars to present their scholarship in an informal collegial atmosphere. The workshop is timed to allow participants to incorporate feedback on early ideas or projects before the summer, and papers and works-in-progress are welcome at any stage of completion. To maximize discussion and feedback, the author will provide a brief introduction to the paper, but the majority of the individual sessions will be devoted to collective discussion of the papers. We will also have plenty of opportunities for networking and more casual discussions.  

Richmond Law will provide all meals for those attending the workshop, but attendees will cover their own travel and lodging costs.