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Haskell Murray

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Professor Murray teaches business law, business ethics, and alternative dispute resolution courses to undergraduate and graduate students. Currently, his research focuses on corporate governance, mergers & acquisitions, sports law, and social entrepreneurship law issues.

Professor Murray is the 2018-19 President of the Southeastern Academy of Legal Studies in Business (“SEALSB”) and is a co-editor of the Business Law Professor Blog. His articles have been published in a variety of journals, including the American Business Law Journal, the Delaware Journal of Corporate Law, the Harvard Business Law Review, and the Maryland Law Review. Read More

FINRA recently posted a regulatory notice seeking information on whether it should consider changes to “rules, operations and administrative processes that may create unintended barriers to greater diversity and inclusion in the broker-dealer industry or that might have unintended disparate impacts on those within the industry.”  Drexel’s Nicole Iannarone, who is currently chair of FINRA’s National Arbitration and Mediation Committee submitted a thoughtful letter.  As her letter explains, she’s particularly well-situated consider these issues:

My interest in this issue and its application to the FINRA arbitration forum is both professional and personal. I am a law professor who teaches business and securities law courses. My recent scholarship focuses specifically on consumer investors’ experiences in FINRA arbitration.3 I previously directed a law school securities arbitration clinic and supervised law students representing investors with smaller claims against their brokers in the FINRA arbitration forum. I am the chair of FINRA’s National Arbitration and Mediation Committee (NAMC). I am also a Mexican-American woman with her own non-retirement investment accounts. These experiences provide me a unique lens through which to view FINRA’s diversity and inclusion efforts as they relate to the FINRA Dispute Resolution forum. 

She rightly highlights that arbitrator diversity has…

Yesterday, the Supreme Court released its opinion in Collins v. Yellen.  As one observer predicted, the result followed from last year’s decision in Seila Law v. CFPB.  In Seila, the Supreme Court declared that the for-cause removal protection afforded to the head of the CFPB was unconstitutional.  In Collins, the Supreme Court reached the same conclusion, also finding that the for-cause removal protection was unconstitutional.  

Writing for ScotusBlog, Amy Howe succinctly described the facts:

The Supreme Court on Wednesday had mostly bad news for shareholders of mortgage giants Fannie Mae and Freddie Mac in their lawsuit seeking to unwind a 2012 agreement that required the companies to transfer profits to the federal government. The justices unanimously agreed that one of the shareholders’ claims could not go forward. And although the court agreed, by a vote of 7-2, that the structure of the federal agency that regulates Fannie and Freddie is at least in part unconstitutional, the court stopped short of ordering that the money be returned to the shareholders as a result of that constitutional defect. Instead, the case now goes back to the lower courts, which will determine whether the shareholders are entitled to

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In my business organizations course, I usually highlight the difference between Nevada and Delaware law on fiduciary duties for LLCs.  My reading of changes to the Nevada statute in 2019 meant that Nevada LLCs do not come with default fiduciary duties.  This is the current statutory language:  

NRS 86.298  Duties of manager or managing member.  The duties of a manager or managing member of a limited-liability company to the limited-liability company, to any series of the limited-liability company, to any member or to another person that is a party to or otherwise bound by the operating agreement are only:

      1.  The implied contractual covenant of good faith and fair dealing; and

      2.  Such other duties, including, without limitation, fiduciary duties, if any, as are expressly prescribed by the articles of organization or the operating agreement.

What about Nevada LLCs formed prior to 2019?  There’s one relatively recent unpublished decision from the Nevada Supreme Court– Israyelyan v. Chavez, 466 P.3d 939 (Nev. 2020).  It involved an LLC formed prior to 2019.  The Supreme Court read the 2019 amendment as a clarification, meaning that Nevada LLCs did not have default fiduciary duties prior to 2019.  This is the…

My efforts to persuade the Nevada legislature to allow the state’s ordinary regulatory process to handle exemptions were largely unsuccessful.  For a quick refresher, the legislation placed a NASAA model regulatory exemption which was already set to go into the next round of regulatory code updates into the statute.  I previously blogged about the issue and published an oped in the Nevada Independent, hoping to change some minds.  My main points were simple: (1) there was no need to actually do anything because it would become law when the regulations went into effect; and (2) putting it into the statute would make it much harder to update when SEC regulations change.

Still, the effort did have some impact.  The bill’s sponsor reached out to talk about the issue and asked that I produce some draft language for an amendment.  I agreed and spent much of my Easter Sunday doing that.  My proposal was to have the head of the state securities division simply report on the state’s offering rules and any needs the office saw every couple of years to improve coordination and prevent confusion.  This is the draft language I suggested:

No later than August 15 of

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In a rare turn of events, FINRA has withdrawn its rule proposal for making reforms to the expungement process.  FINRA issued a statement after the withdrawal indicating that it would work with NASAA and other stakeholders to pursue “more fundamental changes to the expungement process.”

The surprising development is a bit of a mixed bag.  While it’s good that FINRA will be working to deliver a proposal addressing core problems with the existing expungement framework, the decision to withdraw the proposal leaves the status quo for the interim period.  Without a moratorium on expungements the process will continue to delete significant information about broker misconduct without any real adversarial scrutiny.  Hopefully, FINRA will move swiftly to propose some meaningful reform soon.

PIABA and the PIABA Foundation recently released a new study on stockbroker expungements within the FINRA forum. Their review of arbitration awards finds that FINRA’s arbitrators continue to recommend expungement around 90% of the time.  This doesn’t surprise me.  The entire system seems fundamentally broken and these expungement requests almost never receive any real scrutiny because there are no adversaries for most expungement requests.

FINRA has a pending proposal with the SEC which will make some changes to the process.  It’ll increase the number of arbitrators hearing these cases, eliminate the ability of parties to rank and strike arbitrators (which may reduce selection effects toward arbitrators who simply grant expungements), and create more procedural rights for non-party customers to participate in the hearings.  I’ve commented on the proposal twice and FINRA has amended it twice. 

There are different ways to look at this.  One way is that the process is gradually getting better.  There is some truth to this.  The changes will make the panels a bit more balanced and may make it easier for non-party customers to participate in these hearings.  That being said, many of the FINRA rules specify that “parties” have particular rights in these proceedings.  What…

FINRA has amended its proposal to reform the expungement process again. I’ve written about this before here and here.  The “straight-in” or “expungement-only” arbitration process can be summarized quickly.  A broker desiring to purge customer dispute information from public records can secure expungement by following an odd process.  The broker first files an arbitration against a current or former employer alleging that the customer who is not a party to the action filed a “false” claim or somehow mistakenly identified a broker who had nothing to do with the matter.  In essence, the arbitration alleges that the non-party customer told lies about the broker.  The broker will then wait until about 30 days before the hearing before sending a vague letter to the customer notifying them of their right to appear at a hearing. (If the amended proposal goes into effect, customers will get notice much earlier in the future.) In my experience, the letters often omit information you’d expect to be included, such as the name of the arbitrator for the case, the time zone for the hearing, or how the customer can dial in to participate.  The process has a lot of problems and statistical evidence indicates…

FINRA recently released a new regulatory notice seeking comments on how to support diversity and inclusion efforts in the brokerage industry.  The notice asks for commenters to identify any FINRA rules or regulations which might be having a disparate impact on certain groups within the industry.

My sense is that the diversity and inclusion struggles industry firms face may be driven more by firm and industry culture than particular FINRA rules.  Susan Antilla wrote about the challenges women face in the industry.  Brokers of color have also faced real challenges. As Forbes covered, the numbers in asset management are particularly stark:

But in one industry, diversity numbers seem like they’re straight out of the 19th century: Firms owned by white men manage a stunning 98.7% of the $69 trillion managed by the U.S. asset management industry. That’s according to a 2019 Knight Foundation analysis, and includes hedge funds, mutual funds, real estate funds, and private equity funds. 

The FINRA notice also seems consistent with the SEC initiative on ESG reporting.

The AALS Section on Business Associations has two calls for papers.  Both are below.

Call for Papers for the

Section on Business Associations Program on

Race and Teaching Business Associations

January 5-9, 2022 AALS Annual Meeting

The AALS Section on Business Associations is pleased to announce a Call for Papers for its program at the 2022 AALS Annual Meeting, which will be held virtually. The topic is Race and Teaching Business Associations. Up to two presenters will be selected for the section’s program.

Business Associations classes taught in most law schools spend little if any time on issues relating to racial discrimination and inequity. But as important social institutions, businesses have long had a significant impact on racial equity. The increasing scrutiny of the lack of diversity on public company boards is one of several fronts where businesses are facing both legal and social pressure to address racial inequity. Students are increasingly interested in understanding how the law governing business organizations reflects or contributes to racial injustice. Many law professors want to do more to cover topics relating to race in their Business Associations course and are seeking guidance on how to do so. This panel will provide a…

Christina Sautter and Sergio Alberto Gramitto Ricci recently uploaded Corporate Governance Gaming to SSRN.  This is the abstract:

The GameStop saga and meme stock frenzy have shown the pathway to the most disruptive revolution in corporate governance of the millennium. New generations of retail investors use technologies, online forums, and gaming dynamics to coordinate their actions and obtain unprecedented results. Signals indicate that these investors, whom we can dub wireless investors, are currently expanding their actions to corporate governance. Wireless investors’ generational characteristics suggest that they will use corporate governance to pursue social and environmental causes. Their engagement with corporate governance has the potential to spark a social movement. The movement would be based on disintermediation of investments and aimed at bringing business corporations to serve their original partly-private-partly-public purpose. This article discusses premises, architecture, and characteristics of the movement that would cause business corporations to re-marry their partly-private-partly-public purpose. If such a movement proves successful, the paradigm shift that finally makes corporations serve the welfare of a broader range of stakeholders would happen at the hands of shareholders.

Sautter and Gramitto are the first I know of to tackle what the new dynamics the Gamestop affair ushered in mean

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