. . . are you sure I qualify?
From a spam email I recently received:
Dear Steve,
On behalf of The International Women’s Leadership Association, it is my distinct pleasure to notify you that, in consideration of your contribution to family career, and community, you have been selected as a woman of outstanding leadership.
I recently spoke at a crowdfunding conference in Germany. One of the professors there made a comment about entrepreneurship in Germany that I thought was interesting.
He indicated that small business entrepreneurs in Germany avoid hiring any employees for as long as possible, to avoid all of the (expensive) rights given to employees under German law.
Another example of the possible unintended consequences of regulation. Regulations intended to protect employees actually keep them from being hired.
The title of my talk at the conference was Regulating Investment Crowdfunding: Small Business Capital Formation and Investor Protection. I discussed how crowdfunding should be regulated, using the U.S. and German regulations as examples. The talk will eventually be posted online; I’ll supply a link when it’s available.
The Second Circuit decision in the Newman case has provoked much discussion of the Supreme Court’s opinion in Dirks and how to interpret the requirements it lays out for tippee liability. But it’s important to remember that Dirks was not writing on a clean slate. This year is the 35th anniversary of the case that preceded Dirks and laid the foundation for the Supreme Court’s insider-trading jurisprudence, Chiarella v. United States.
I realize that this was not the Supreme Court’s first look at insider trading. That honor, arguably, goes to Strong v. Repide, 213 U.S. 419 (1909). But Chiarella was the court’s first discussion of insider trading under Rule 10b-5.
The facts of the Chiarella case are relatively simple. Vincent Chiarella, the defendant in the case, was an employee of Pandick Press, a financial printer. His company was hired to print announcements of takeover bids. Although the identities of the target corporations were concealed in the announcements, Chiarella was able to figure out who they were. He bought stock in the target companies and made a profit of roughly $30,000. He was convicted of a criminal violation of Rule 10b-5, but the Supreme Court overturned his conviction.
It’s
My co-blogger Haskell Murray had an interesting post on Friday about the use of crowdfunding as a strategy to attract venture capital. He points out that many companies that had successful crowdfunding campaigns on Kickstarter or Indiegogo subsequently raised venture capital. He argues that a successful crowdfunding campaign might be a signal to venture capitalists.
If you haven’t read Haskell’s post yet, it’s well worth reading. I want to take the discussion in a slightly different direction.
I don’t think venture capitalists should be waiting to see if a company has a successful crowdfunding campaign. I think they should use crowdfunding listings as leads and try to preemptively capture those companies before they complete their crowdfunding campaigns—convince the good companies to forego crowdfunding and go the venture capital route instead.
If I were a wealthy venture capitalist, I would have someone skimming through all of the crowdfunding sites, including the equity crowdfunding sites, looking for potential investments. The venture capital business is extremely competitive. Getting to the good companies before they have a successful raise is one way to one-up the competition. Once a company has shown crowdfunding success, others will want a piece.
Many of the companies doing crowdfunding
The SEC has released an interesting statistical report on hedge funds and other private investment funds. The data is compiled from Form ADVs and Form PFs filed by the funds’ advisers. Definitely worth looking at if you’re interested in private funds. It’s available here.
Last week, I asked whether casebooks should include statutes. That post provoked a healthy debate in the comments and elsewhere. Today, I want to address another content question, this one dealing not with the content of casebooks but with the content of the Business Associations course itself. What securities law topics should be included in the basic business associations course?
The answer to that question obviously depends on whether the course is for three or four credit hours. I don’t think a comprehensive business associations course should ever be limited to three credit hours. But, if I had to teach a three-hour course, I would not cover any securities law. Agency, partnership, corporations, and LLCs are already too much to cram into a three-hour course. Adding securities topics on top of all that would, in my opinion, make the course too superficial.
Luckily, I have the hard-fought right to teach B.A. as a four-hour course. In a four-hour course, I think it’s essential to cover proxy regulation. Federal law or not, it’s mainstream corporate governance, at least for public companies, and many, perhaps most, securities regulation courses don’t cover it.
Beyond that, I’m not sure any securities coverage is
Christine Hurt has written an interesting article on limited liability partnerships in bankruptcy. It’s available here.
Here’s the abstract:
Brobeck. Dewey. Howrey. Heller. Thelen. Coudert Brothers. These brand-name law firms had many things in common at one time, but today have one: bankruptcy. Individually, these firms expanded through hiring and mergers, took on expensive lease commitments, borrowed large sums of money, and then could not meet financial obligations once markets took a downturn and practice groups scattered to other firms. The firms also had an organizational structure in common: the limited liability partnership.
In business organizations classes, professors teach that if an LLP becomes insolvent, and has no assets to pay its obligations, the creditors of the LLP will not be able to enforce those obligations against the individual partners. In other words, partners in LLPs will not have to write a check from personal funds to make up a shortfall. Creditors doing business with an LLP, just as with a corporation, take this risk and have no expectation of satisfaction of claims by individual partners, absent an express guaranty. In bankruptcy terms, creditors look solely to the capital of the entity to satisfy claims. While bankruptcy proceedings involving
The authors of the business associations casebook I use have, in their latest edition, reprinted some of the relevant statutes in the casebook. One section of the Revised Uniform Partnership Act even appears twice within a span of only eight pages. (I don’t mean citations to statutes; I mean the full language of the statute.)
The authors of the book I use (which shall remain nameless) are not alone. I’ve also seen this practice in other casebooks.
I just don’t get it.
I can understand putting a few statutes or regulations in a casebook if the students are only going to look at a couple of sections in the course. It eliminates the need for students to purchase a separate statutory supplement.
But it makes no sense in courses like Business Associations or Securities Regulation, where students will be looking at dozens, even hundreds, of pages of statutory and regulatory material. The students in those courses will still have to buy a statute book; including some of the same statutory material in the casebook just increases the size (and cost) of the casebook.
Including statutory material can also accelerate the casebook’s obsolescence. Some of the sections included come from uniform
I detest bad legal writing. (I detest bad writing of all kinds, but this is a law blog, so I’ll limit my rant to legal writing.) I don’t like to read it and I hate it when I (sometimes?) write it. I’m not a great writer, but I appreciate lawyers and legal scholars who can write clear, concise prose. Unfortunately, although writing is an essential element of legal practice, many lawyers do not write well.
If you care about legal writing, and you should, the Scribes Journal of Legal Writing recently published a short piece you might want to read: Legal-Writing Myths, by Judge Gerald Lebovits.
I knew after reading the first paragraph that I was going to like Judge Lebovits’s article. His first sentence rejects the prohibition on beginning a sentence with a conjunction. His second sentence rejects the prohibition on ending a sentence with a preposition. And [remember his first sentence?] his third sentence rejects the prohibition on splitting infinitives.
I was not disappointed as I read the rest of the article. In just a few pages, Judge Lebovits artfully rebuts ten myths of legal writing.
My favorite myths:
Regular readers of this blog know that I have chastised the SEC on several occasions for its lengthy delay in adopting rules to implement the exemption for crowdfunded securities offerings. (It has now been 1,268 days since the President signed the bill, 998 days past the statutory rulemaking deadline, and 702 days since the SEC proposed the rules.)
The long wait may soon be over. According to BNA, SEC Chair Mary Jo White said yesterday that the SEC will finish adopt its crowdfunding rules in the “very near term.”
I don’t know exactly what “very near term” means to a government official. Given my luck, it probably means immediately prior to the two crowdfunding presentations I’m scheduled to give in October. Nothing like a little last-minute juggling to keep me on my toes.