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Joshua Fershee

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Joshua Fershée, JD, became the 11th dean of the Creighton University School of Law on July 1, 2019. Fershée previously served as associate dean for faculty research and development, professor of law, and director of LLM programs at West Virginia University College of Law.

Earning a bachelor’s degree in social science from Michigan State University in 1995, Fershée began his career in public relations and media outreach before attending the Tulane University School of Law, graduating magna cum laude in 2003 and serving as editor in chief of the Tulane Law Review. He worked in private practice at the firms of Davis Polk & Wardell in New York and Hogan & Hartson, LLP, in Washington, D.C., before joining the legal academy. Read More

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The SEC recently released a highly specific proposal for registered investment advisers with comments open until at least December 27th.  The proposal "would require advisers to conduct due diligence prior to engaging a service provider to perform certain services or functions. It would further require advisers to periodically monitor the performance and reassess the retention of the service provider in accordance with due diligence requirements to reasonably determine that it is appropriate to continue to outsource those services or functions to that service provider."

My immediate reaction is that I'm generally in favor of RIAs performing appropriate due diligence, but that I'm a bit skeptical about the need for specific rules in a principles-based framework.  It's certainly true that Advisers outsource a significant amount of work today.  And it is also true that, as the proposal details, problems at third party service providers have led to broader problems. 

It's easy to see how concentration risk can grow in such an environment.  If a huge swath of the market outsources to a particular third-party firm, a failure at the third party could paralyze the market. 

It'll be interesting to watch to see how RIAs react to this.

 

Eight days ago, Scottsdale Capital Advisors and Alpine Securities Corp. filed a Complaint in the Middle District of Florida arguing that FINRA's structure and operation violate the U.S. Constitution.  The firms argue that FINRA is unconstitutional under the Appointments Clause, separation of powers principles, and the nondelegation doctrine.  The case has attracted some coverage already.

The suit makes many of the arguments I previewed in Supreme Risk, which was recently published by the Florida Law Review.  When I foresaw this risk, I highlighted four doctrinal areas where the Supreme Court might invalidate or significantly limit SROs, including: (i) nondelegation doctrine; (ii) separation of powers doctrine; (iii) state action; and (iv) appointments clause issues.

While it's still very early, this type of challenge now presents a colorable risk to self-regulatory organizations.  If these arguments succeed against FINRA, it's likely to cause significant market disruption.  It also lowers the barrier to press the same arguments against any SRO with a similar structure.

I would expect a case like this to make its way through the courts and toward the Supreme Court eventually.  It would not surprise me if groups like the Pacific Legal Foundation seek to get involved as well.  As…

The SEC's investor advisory committee recently released a draft climate disclosure recommendation.  The recommendation generally supported the SEC's proposal with some suggestions changes.  The recommendation runs just 6 pages but makes a number of thoughtful points. 

It calls for eliminating a proposed requirement for the board to disclose the climate expertise of its members in favor of a requirement for management to discuss climate-related risks and opportunities.  This strikes me as a better approach.  Investors want to have a sense about how the corporation will respond to climate change.  So long as the board can get qualified expert advice, it doesn't need to have members with direct climate-risk expertise–something that will be difficult to define anyway.

I'm pleased to report that registration is now open for our third annual Corporate Governance Summit to be held on Friday September 30, at the Wynn.  Co-sponsored by the William S. Boyd School of Law and Greenberg Traurig, the event features four panels and a keynote address from Jan Jones Blackhurst. 

This is our program:

8:00 a.m.
Registration and Continental Breakfast

9:00 a.m.
Opening Remarks

• Michael J. Bonner, Managing Shareholder, Greenberg Traurig, Las Vegas
• Benjamin P. Edwards, Associate Professor of Law, The UNLV William S. Boyd School of Law
• Leah Chan Grinvald, Dean and Richard J. Morgan Professor of Law, The UNLV William S. Boyd School of Law

9:15 a.m.
“We Did What??” What No Board Wants to Hear!

• Michael J. Bonner, Managing Shareholder, Greenberg Traurig, Las Vegas
• Frank M. Placenti, Shareholder and Chair of the U.S. Corporate Governance Practice, Greenberg Traurig, Phoenix
• Nancy Rapoport, Garman Turner Gordon Professor of Law & Affiliate Professor of Business Law and Ethics, The UNLV William S. Boyd School of Law & Lee Business School

10:30 a.m.
Break

10:45 a.m.
Dealing with Activists: When the ‘Out of Office’ Greeting is Not…

At the urging of Governor DeSantis, Florida's State Board of Administration recently adopted a new resolution changing the state investment policy.  As I read the language, it either does next to nothing or pointlessly blinds Florida's asset allocators.  

Consider the language in the resolution instead of the overheated political press releases going out around it.  The resolution limits investment criteria to "pecuniary factors."  A "pecuniary factor" is  one that is"expected to have a material effect on the risk and return of an investment based on appropriate investment horizons consistent with the fund’s investment objectives and funding policy.  It expressly excludes "the consideration of the furtherance of social, political, or ideological interests." (emphasis added). The resolution also directs that its capital allocators may not "subordinate the interests of the participants and beneficiaries to other objectives and may not sacrifice investment return or take on additional investment risk to promote any non-pecuniary factors."

This resolution seemingly has no impact on the ability of Florida funds to consider ESG factors when allocating capital.  Imagine you're an asset allocator with a long time horizon and trying to evaluate between investing in different companies.  One company has critical infrastructure situated in areas highly likely…

A vanishingly small cadre of investor protection clinics now exist at law schools across the United States.  Most are on the east coast with the greatest concentration of clinics in and around New York City.  Pace’s Jill Gross wrote the leading history of the rise and possible extinction of these clinics. The major problem has always been funding.  I ran one at Michigan State before taking my first tenure-track teaching post.  We recovered hundreds of thousands for ordinary people.  It closed after I left for lack of funding.

In 2018, the SEC's Investor Advisory Committee formally recommended financial support for investor clinics.  Four years later, help sits just over the horizon.  Earlier today, Nevada's Senator Cortez Masto introduced legislation to create a sustainable funding mechanism for investor protection clinics.  Similar legislation has also been introduced in the House by Illinois Congressman Mike Quigley.

The proposed legislation would allow the SEC to administer grants roughly similar to what the IRS already does for tax clinics.  This would create sustainable support for these clinics and ensure that services remain available.

A few years back, I ran an investor clinic at UNLV.  We had some notable successes, including this $40,000 win over Wells…

The AALS Section on Securities Regulation invites submissions from junior scholars (defined as those who have been in a tenure-track position for 7 or fewer years) for its Emerging Voices session at the 2023 AALS annual meeting. The session will be held in-person on Saturday, January 7 from 3:00 – 4:40 p.m (PST). The session brings together junior and senior securities regulation scholars for the purpose of providing junior scholars feedback on their scholarship and helping them prepare their work for submission for publication. Junior scholars’ presentations of their drafts will be followed by comments from senior scholars and further audience discussion.

If you would like to present your draft as a junior scholar, by August 31, 2022, please send your draft to Professor Benjamin Edwards (Benjamin.Edwards@unlv.edu). We welcome submissions at any stage of development, although preference may be given to more fully developed papers over abstracts and paper proposals. The authors of the selected papers will be notified by mid-September 2022. 

If you would like to volunteer to provide feedback as a more senior scholar, please let Professor Edwards know, at Benjamin.Edwards@unlv.edu, by August 31, 2022. Thank you in advance for your generosity.

On behalf of the…

Earlier this year I wrote about a startling Georgia decision finding that FINRA's arbitrator selection process had been manipulated.  In response, FINRA announced that it would retain an independent firm to conduct an investigation. 

The results of that investigation are now publicly available in a Report from Christopher W. Gerold.  The report found that the outside firm "not believe that there was any agreement between Weiss and FINRA regarding the panels for Weiss’s cases."  It did not find any "documentary evidence – including any emails or other material – suggested in any way that such an agreement existed."

The Report also recommended a series of changes to improve FINRA's dispute resolution system, including:

  • Implementing ongoing, mandatory training for staff;
  • Requiring written explanations, upon a party’s request, of approval or denial of a causal challenge to the selection of an arbitrator or an arbitrator removal by the DRS Director for cause;
  • Conducting an updated external procedural review of the arbitrator selection algorithm to determine if it is still the most effective means for creating random, computer-generated arbitrator lists; and
  • Updating the DRS Manual and rules to clarify staff roles and procedures, and to ensure consistency and transparency.

Hopefully FINRA will move

FINRA recently filed a proposed rule change with the SEC to "to release information on BrokerCheck® as to whether a particular member firm or former member firm is currently designated as a 'Restricted Firm.'"  A restricted firm is one that poses "a high degree of risk to the investing public, based on numeric thresholds of firm level and individual-level disclosure events."  Essentially, these are firms with "a significant history of misconduct."

As it stands, the public does not know which firms have been designated by FINRA as "restricted firms." FINRA's proposal would release this information through BrokerCheck®. This would be a strong signal to investors to more closely monitor their accounts or move them to a different brokerage. 

Only two comment letters were filed in response to the proposal.  One letter of support came from PIABA. The other was filed by Professors Nicole G. Iannarone and Christine Lazaro.  The Professors' letter supported the proposal and urged FINRA to also "provide a plain English explanation of what restricted firm designation means on the BrokerCheck report if a firm is so designated."  The Professors are undoubtedly right that retail customers simply won't understand what "restricted firm" means without clear contextual…

 

The William S. Boyd School of Law at the University of Nevada, Las Vegas, invites applications from both entry-level and lateral candidates for two tenure-track or tenured faculty positions expected to begin July 1, 2023. For these two positions, we seek creative and productive scholars: one with relevant expertise in teaching Legal Writing and one with experience teaching a live-client Clinic. Our faculty who teach legal writing or clinical courses are full members of our unified tenure system with all of the privileges and scholarly expectations associated with tenure; faculty who teach legal writing or clinical courses may teach a podium course as part of our standard 3-course teaching load. Subject matter needs for podium courses are broad and include, but are not limited to, business and commercial law, criminal law, evidence, and property. 

The William S. Boyd School of Law at UNLV is a leading public law school founded on a commitment to public service and community engagement. With its nationally ranked Lawyering Process Program, Saltman Center for Conflict Resolution, and the Thomas & Mack Legal Clinic, Boyd offers a dynamic curriculum designed to teach students critical thinking and lawyering skills. Boyd has an LL.M. in Gaming Law…