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Joan Heminway

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Professor Heminway brought nearly 15 years of corporate practice experience to the University of Tennessee College of Law when she joined the faculty in 2000. She practiced transactional business law (working in the areas of public offerings, private placements, mergers, acquisitions, dispositions, and restructurings) in the Boston office of Skadden, Arps, Slate, Meagher & Flom LLP from 1985 through 2000.

She has served as an expert witness and consultant on business entity and finance and federal and state securities law matters and is a frequent academic and continuing legal education presenter on business law issues. Professor Heminway also has represented pro bono clients on political asylum applications, landlord/tenant appeals, social security/disability cases, and not-for-profit incorporations and related business law issues. Read More

Harumph.  Business as usual at the SCOTUS . . . .  As a student and teacher of Basic v. Levinson and its progeny, I guess I had hoped for more from the U.S. Supreme Court’s opinion in Halliburton, released two days ago.  I haven’t yet read all the articles on the case that were published since the release of the opinion (as usual, quite a number), so my thoughts here represent my personal reflections.

After engaging in some self-analysis, I have determined that my disappointment with the Court’s opinion stems from the fact that I am a transactional lawyer . . . and the Court’s opinion is about procedure.  Not that civil and criminal procedure do not impact transactional law.  Au contraire.  The procedure and substance of Section 10(b)/Rule 10b-5 claims are intertwined in many fascinating ways.  I will come back to that somewhat in a minute.  But the Court’s opinion in Halliburton just doesn’t satisfy the transactional lawyer in me.

This also is somewhat true of the SCOTUS opinions in both Dura Pharmaceuticals and Tellabs, which deal with pleading (in)sufficiencies in Section 10(b)/Rule 10b-5 litigation rather than (as in Halliburton) class certification questions.  In its class certification focus, Halliburton is much more the sibling of Amgen, which I find infinitely more satisfying because it (like Basic and Matrixx) focuses on materiality, which infuses all disclosure decisions.  All of these cases, however, center on a defendant’s ability to get dismissal of an action at an early stage, something that defendants in Section 10(b)/Rule 10b-5 cases desperately want to do.  The longer the case goes on, the more incentive defendants have to settle–oftentimes (in my experience) foregoing the opportunity to defend themselves against specious claims because of the ongoing drain on financial and human resources.

This past week, I joined a group of our business law prof colleagues at the National Business Law Scholars Conference out at Loyola Law School in Los Angeles.  Headlined by a keynote presentation on “the audience” for business law scholarship from Frank Partnoy and an author-meets-reader session on Michael Dorff‘s new book, Indispensable and Other Myths: The True Story of CEO Pay, the conference featured a staggeringly interesting array of panels on everything from standard corporate governance to financial regulation.  Kudos to the planning committee.

Steve Bainbridge presented Must Salmon Love Meinhard? Agape and Partnership Fiduciary Duties in an opening concurrent panel. If you haven’t read it yet, I recommend it.  Admittedly (as I told Steve), I have an especial interest in the Meinhard case and in the expressive function of decisional law.  But most of us in the business law professor group teach the case in one course or another, and his paper is relevant to many in that context.

I have been working on a draft article for the University of Cincinnati Law Review based on a presentation that I gave this spring at the annual Corporate Law Symposium.  This year’s topic was “Crowdfunding Regulations and Their Implications.”  My draft article addresses the public-private divide in the context of the Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure Act–more commonly known as the CROWDFUND Act.  I am using two pieces coauthored by Don Langevoort and Bob Thompson (here and here), as well as three works written by Hillary Sale (here, here, and here) to engage my analysis.

I also will be participating in a discussion group at the Southeastern Association of Law Schools annual conference in August on the publicness theme.  That session is entitled “Does The Public/Private Divide In Federal Securities Regulation Make Sense?” and is scheduled for 3:00 pm on Augut 6th, for those attending the conference.  Michael Guttentag was good enough to recruit the group for this discussion.

All this work on publicness has my head spinning!  There are a number of unique conceptions of pubicness, some overlapping or otherwise interconnected, with different conceptions being useful in different…

Today, we finished two days of amazingly rich discourse on business law issues at the Association of American Law Schools (AALS) Workshop on Blurring Boundaries in Financial and Corporate Law in Washington, DC.  (Full disclosure:  I chaired the planning committee for this AALS midyear meeting.)  All of the proceedings have been phenomenally interesting.  I have learned so many things and been forced to think about so much . . . .  For those of you who couldn’t be there, I tried to faithfully pick up a bunch of salient points from the talks and discussions on Twitter using #AALSBB2014.  Moreover, some of the meeting was recorded.  I will try to remember to let you know when, to whom, and how those recordings are being made available. (Feel free to remind me if I forget . . . .)

One idea shared at the workshop that I am particularly intrigued by is the use of a new standard in federal securities regulation, suggested by Tom Lin in his talk as part of this morning’s plenary panel on “Complexity”.  He argues for an “algorithmic investor” standard (working off/refining the concept of the reasonable investor) in light of the growth of algorithmic trading.  It’s  predictable that I would be interested in this idea, given that I write about materiality in securities regulation (especially insider trading law, in articles posted here and here), in which the reasonable investor standard is central.  (In fact, Tom was kind enough to mention my work on  the resonable investor standard in his talk.)

Tom is not the first to argue for a securities regulation standard that better serves specific investor populations.  Memorable in this regard, at least for me, is Maggie Sachs’s paper arguing for a standard focused on the “least sophisticated investor”.  But many other fine works contending with materiality or the concept of the reasonable investor in securities regulation also question (among other things) the clarity and efficacy of the reasonable investor standard in specific contexts.

Thanks for the warm welcome to the Business Law Prof Blog, Stefan et al.  Having avoided a regular blogging gig for many years now (little known fact: I was the first guest blogger on The Conglomerate – or at least the first one formally listed as a guest – back in 2005), I recently determined that I should sign on to work with this band of thieves scholars on a regular basis.  I appreciate the invitation to do so.

I already feel right at home, given that my post for today, like Steve Bradford’s, is on mandatory disclosure.  Unlike Steve, however, my focus is on the creep of mandatory disclosure rules in U.S. securities regulation into policy areas outside the scope of securities regulation.  I think we all know what “creep” means in this context.  But just to clarify, my definition of “creep” for these purposes is: “to move slowly and quietly especially in order to not be noticed.”  I participated in a discussion roundtable in which I raised this subject at the Law and Society Association annual meeting and conference last week.

My concerns about this issue were well expressed by Securities and Exchange Commission Chair Mary Jo White back in early October 2013 in her remarks at the 14th Annual A.A. Sommer, Jr. Corporate Securities and Financial Law Lecture at Fordham Law School:

When disclosure gets to be too much or strays from its core purposes, it can lead to “information overload” – a phenomenon in which ever-increasing amounts of disclosure make it difficult for investors to focus on the information that is material and most relevant to their decision-making as investors in our financial markets.

To safeguard the benefits of this “signature mandate,” the SEC needs to maintain the ability to exercise its own independent judgment and expertise when deciding whether and how best to impose new disclosure requirements.

For, it is the SEC that is best able to shape disclosure rules consistent with the federal securities laws and its core mission.  But from time to time, the SEC is directed by Congress or asked by interest groups to issue rules requiring disclosure that does not fit within our core mission.

She goes on to note that some recent disclosure rules mandated by Congress:

. . . seem more directed at exerting societal pressure on companies to change behavior, rather than to disclose financial information that primarily informs investment decisions.

That is not to say that the goals of such mandates are not laudable.  Indeed, most are.  Seeking to improve safety in mines for workers or to end horrible human rights atrocities in the Democratic Republic of the Congo are compelling objectives, which, as a citizen, I wholeheartedly share.

But, as the Chair of the SEC, I must question, as a policy matter, using the federal securities laws and the SEC’s powers of mandatory disclosure to accomplish these goals.  

Parts of these remarks—those on information overload—were echoed in a speech that Chair White gave to the National Association of Corporate Directors Leadership Conference.  

Chair White’s words ring true to me.  I derive from them two main contestable points for thought and commentary.

[The following post comes to us from Lawrence E. Mitchell, Joseph C. Hostetler – Baker & Hostetler Professor of Law at Case Western Reserve University School of Law.  All formatting errors should be attributed to me, Stefan Padfield.]

The March 5, 2014 oral argument in Halliburton Co. v. Erica P. John Fund, Inc.1 made clear that one of the issues being considered by the Supreme Court is whether to supplant the “market efficiency” analysis currently required at the class certification stage in securities fraud class action cases with a “price impact” analysis instead. Our purpose is not to debate the relative merits of that potential change. Rather, it is to identify a critical point that seemed to get lost in the argument: neither the Justices nor the advocates addressed what a price impact analysis would look like in the context of the most common securities fraud scenario—the making of false statements designed to mask bad news. While some of the briefing before the Court touches on the issue, the authors of a working paper cited by proponents of both sides have supplemented their views with a recent blog post that, while brief, discusses potential approaches to measuring the …

My Akron colleague Bernadette Bollas Genetin recently posted “The Supreme Court’s New Approach to Personal Jurisdiction” on SSRN, and I believe it may be of interest to readers of this blog.  Here is the abstract:     

This article provides an analysis of the Court’s two recent personal jurisdiction opinions, Daimler AG v. Bauman, 134 S. Ct. 746 (2014), and Walden v. Fiore, 134 S. Ct. 1115 (2014), and concludes that these cases suggest a new doctrinal approach to personal jurisdiction.

In Daimler AG v. Bauman, the Supreme Court narrowed the scope of general jurisdiction, making it available primarily in a corporation’s states of incorporation and principal place of business and rejecting, in most instances, the prior approach of permitting general jurisdiction based on a defendant’s “continuous and systematic” forum contacts. In Walden v. Fiore, the Court used an interest balancing approach to resolve the specific jurisdiction question at issue, turning away from its longstanding purposeful availment approach.

Together, these cases can be interpreted to reinvigorate the reasonableness analysis of International Shoe, in which the Court focused on the “relation among the defendant, the forum, and the litigation.” The Supreme Court has, famously, reversed course…

Over at the Harvard LSFOCGAFR, Stephen Cooke, partner and head of the Mergers and Acquisitions practice at Slaughter and May, has posted a fascinating review of “10 Surprises for a US Bidder on a UK Takeover.”  It’s a bit long for a blog post (16 printed pages on my end), but well worth the time if you have any interest at all in the subject matter.  What follows is a very brief excerpt, which is really just a teaser in light of the excellent depth of treatment the post provides.  Given my latest project, “Corporate Social Responsibility & Concession Theory,” I find # 7 to be of particular interest.

Takeovers in the UK are in broad terms decided by the Target’s shareholders, with the Target Board rarely having decisive influence …. Unlike in the US, the Target Board is not the gatekeeper for offers. A Bidder may take its offer direct to shareholders and the Board has no power to block or delay an offer …. The Takeover Code (the “Code”) reflects this environment and, although changes were made post-Cadbury to reflect the interests of non-shareholder stakeholders, it remains a body of rules embodying the pre-eminence…