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John P. Anderson

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Dean Anderson's scholarship focuses on securities enforcement, white-collar crime, and intersections of law and philosophy (e.g., business ethics, constitutionalism, problems of pluralism, and human rights).

His recent articles address the law and ethics of insider trading, the problem of how to build a just and enduring constitutional order in the face of increasing religious and cultural pluralism, and the theoretical underpinnings of our international human rights regime. Read More

Professors Jordan Neyland (George Mason, Antonin Scalia Law School), Tom Bates (Arizona State University), and Roc Lv (ANU/Jiangxi University), have recently posted their article, Who Are the Best Law Firms? Rankings from IPO Performance to SSRN. Here's the Description:

If you have ever wondered who the best law firms are (which lawyer hasn’t?), have a look at our new ranking. My co-authors—Tom Bates at ASU and Roc Lv at ANU/Jiangxi University—and I developed a ranking method based on law firms’ clients’ outcomes in securities markets. 

There is no shortage of recent scandals in rankings in law. In particular, U.S. News’ law school rankings receive criticism for focusing too much on inputs, such as student quality or acceptance rates, instead of student outcomes like job quality and success in public interest careers. Many schools even refuse to submit data or participate in the annual ranking. Similar critiques apply to law firm rankings. We propose that our methodology improves upon existing methods, which frequently use revenue, profit, or other size-related measures to proxy for quality and reputation. Instead, we focus on the most important outcomes for clients: litigation rates, disclosure, pricing, and legal costs.

By focusing on the most relevant outcomes, this…

Professor Caleb Griffin (University of Arkansas School of Law) offered testimony before the Senate Committee on Banking, Housing, and Urban Affairs in June of 2022 on problems associated with the fact that the “Big Three” index fund managers (Vanguard, BlackRock, and State Street) cast almost a quarter of the votes at S&P 500 companies. As a result, enormous power is concentrated in the hands of just a few index fund managers, whose interests and values may not align with those whose shares they are voting. Professor Griffin proposed two solutions to this problem: (1) “categorical” pass-through voting, and (2) vote outsourcing. Professor Griffin’s remarks were recently posted here, and here’s the abstract:

In recent years, index funds have assumed a new and unprecedented role as the most influential players in corporate governance. In particular, the “Big Three” index fund managers—Vanguard, BlackRock, and State Street—occupy a pivotal role. The Big Three currently cast nearly a quarter of the votes at S&P 500 companies, and that figure is expected to grow to 34% by 2028 and over 40% in the following decade.

The best solution to the current problem—where we have virtually powerless index investors and enormous, concentrated power in the…

I attended the BLPB "Connecting the Threads" symposium last week at the University of Tennessee and, as per usual, had an excellent time with the students, staff, and faculty associated with the Transactions journal.  Upon asking the regular bloggers in this space, I was assured that it was acceptable to "toot my own horn" about publications.  To that end, please allow me to mention that my article on Contracting Out of Partnership has (finally) come out in the most recent issue of the Journal of Corporation Law.  If interested, the abstract is as follows:

Can parties contract out of the general partnership form of business organization, even if their conduct would otherwise establish a partnership? Although a recent judicial decision suggests that they can, treating contractual disclaimers of partnership as dispositive is inconsistent with modern statutes. More importantly, permitting parties to contract out of partnership imposes substantial costs by undermining the protections of fiduciary duty, creating uncertainty about the operating rules for the business, and threatening to deny the rights of third parties. These costs outweigh the benefits of promoting freedom of contract and providing certainty on the partnership formation question, particularly because such benefits can largely be captured within…

Samuel Sturgis, a 2022 graduate of MC Law, was recenty honored by the Tax Law Section of the Federal Bar Association for his excellent scholarship. Sam received second place in the Donald C. Alexander Tax Law Writing Competition for his paper, "The Wealth Tax–Egalitarian Dream or Utilitarian Nightmare?" A full version of the paper, which Sam is planning to develop for submission to law reviews, is available on the FBA website (here). Sam will enter the Graduate Tax Program at the University of Florida Levin College of Law this fall; they are very lucky to have him! Here is an abstract of his article:

In the Nottingham of literary folklore, the poor starved while the wicked feasted. To survive, ordinary people needed a savior, and they found it in Robin Hood. Taking from the rich feed the poor, the green-clad yeoman emboldened the hopeless and became a hero of the proletariat for centuries to come. Today, the poor face a similar plight—castles and kings have disappeared, but an uncrossable moat seems to be widening between the “haves” and the “have nots.” Ordinary working people need a hero. Instead of Robin Hood, many are beginning to howl for a…

In August 2021, the SEC announced that it had charged Matthew Panuwat with insider trading in violation of Section 10(b) of the Securities Exchange Act of 1934. Panuwat was the head of business development at Medivation, a mid-sized biopharmaceutical company when he learned that his company was set to be acquired by Pfizer at a significant premium.

If Panuwat had purchased Medivation stock in advance of the announcement of the acquisition, it is likely he would have been liable for insider trading under the classical theory. Liability for insider trading under the classical theory arises when a firm issuing stock, its employees, or its other agents strive to benefit from trading (or tipping others who then trade) that firm’s stock based on material nonpublic information. Here the insider (or constructive insider) violates a fiduciary duty to the counterparty to the transaction (the firm’s current or prospective shareholders) by not disclosing the information advantage drawn from the firm’s material nonpublic information in advance of the trade.

If Panuwat had purchased shares of Pfizer in advance of the announcement, then it is likely he would have been liable under the misappropriation theory. Liability for insider trading under the misappropriation theory arises when…

There have been number of recent BLPB posts representing a diversity of viewpoints concerning the SEC's proposed rule to "Enhance and Standardize Climate-Related Disclosures for Investors". For example, co-blogger Joan MacLeod Heminway recently posted on a comment letter drafted by  Jill E. FIsch, George S. Georgiev, Donna Nagy, and Cynthia A. WIlliams (and signed by Joan and 24 others) that affirms the proposed rule is within the SEC's rulemaking authority. I have offered a couple posts raising concerns about the proposed rule from the standpoint of utility and legal authority (see here and here). One of the concerns I have raised is that the SEC's proposed disclosure regime may compel corporate speech in a manner that runs afoul of the First Amendment. SEC Commissioner Hester Pierce raised this same concern, and now Professor Sean J. Griffith has posted a new article, "What's 'Controversial' About ESG? A Theory of Compelled Commercial Speech under the First Amendment", which offers a more comprehensive treatment of this problem. Professor Griffith has also submitted a comment letter to the SEC raising this issue. Here's the abstract for Professor Griffith's article:

This Article uses the SEC’s recent foray into ESG…

In the fall, I posted on Professor Kevin R. Douglas's article, "How Creepy Concepts Undermine Effective Insider Trading Reform" (linked below), which is now forthcoming in the Journal of Corporation Law. The following post comes from Professor Douglas. In it, he develops one theme from that article:

Would U.S. officials imprison real people for failing to adhere to the most unrealistic assumptions in prominent economic models? Yes, if the assumption is that no one can generate risk-free profits when trading in efficient capital markets. What are risk-free profits, and why should you go to jail for trying to generate them? Relying on the ordinary dictionary definition of “risk” makes the justification for criminal penalties described above seem absurd. One dictionary defines risk as “the possibility of loss, injury, or other adverse or unwelcome circumstance,” and another simply defines risk as “the possibility of something bad happening.” Why should someone face criminal liability for attempting to generate trading profits without something bad happening—without losing money? The absurdity is especially jarring when thinking about securities markets, where hedge fund managers rely heavily on risk reduction strategies.

However, if we turn to the definition of “risk” used in prominent models…

Earlier this month, I came across a fun Wall Street Journal article, "Great Novels About Business: How Much Do You Know?" The article got me thinking about business-themed novels more generally. What are the greatest all-time novels about business? I came across another, related article from Inc.com that offers the following list of the 10 best classic novels about business:

  1. The Financier by Theodore Dreiser
  2. The Rise of David Levinsky by Abraham Cahan
  3. The Magnificent Ambersons by Both Tarkington
  4. The Old Wives' Tale by Arnold Bennett
  5. The Buddenbrooks by Thomas Mann
  6. North and South by Elizabeth Gaskell
  7. Atlas Shrugged by Ayn Rand
  8. JR by William Gaddis
  9. American Pastoral by Philip Roth
  10. Nice Work by David Lodge

I have to admit that I've yet to read a few of these books, and I plan to add them to my summer reading list. But I'm also surprised to find at least one book missing, A Christmas Carol by Charles Dickens.  How could we leave Scrooge, Marley, and old Fezziwig off the list….. 

"But you were always a good man of business, Jacob," faultered Scrooge, who now began to apply this to himself.

"Business!" cried the Ghost, wringing its hands again. "Mankind…

Earlier this month, the U.S. Senate Committee on Banking, Housing, and Urban Affairs held a hearing on the Insider Trading Prohibition Act (ITPA), which passed the house with bipartisan support in May of last year. Some prominent scholars, like Professor Stephen Bainbridge, have criticized the ITPA as ambiguous in its text and overbroad in its application, while others, like Professor John Coffee, have expressed concern that it does not go far enough (mostly because the bill retains the “personal benefit” requirement for tipper-tippee liability).

My own view is that there are some good, bad, and ugly aspects of the bill. Starting with what’s good about the bill:

  • If made law, the ITPA would end what Professor Jeanne L. Schroeder calls the “jurisprudential scandal that insider trading is largely a common law federal offense” by codifying its elements.
  • The ITPA would bring trading on stolen information that is not acquired by deception (e.g., information acquired by breaking into a file cabinet or hacking a computer) within its scope. Such conduct would not incur Section 10b insider trading liability under the current enforcement regime.
  • The ITPA at least purports (more on this below) to only proscribe “wrongful” trading, or trading

…

Shortly after President Barack Obama’s first press conference in 2009, the Huffington Post published an article, "When Did You Stop Beating Your Wife?", that challenged the false premises of many of the questions being asked of the new president. The article opens by noting:

Sooner or later every human being on the face of this planet is confronted with tough questions. One of the toughest and most common is the infamous loaded question, “when did you stop beating your wife?” which implies that you have indeed been beating your wife. How do you answer without agreeing with the implication? How do you not answer without appearing evasive?

The author’s solution is that you should refuse to answer the question by simply responding, “no,” or by challenging the false assumption imbedded in the question. But what if the question is not asked at a press conference, by opposing counsel in the courtroom, or at a cocktail party, but as part of a federally mandated disclosure regime? This is a dilemma issuers may face if the Securities and Exchange Commission’s (SEC’s) proposed rule to "Enhance and Standardize Climate-Related Disclosures for Investors" is adopted.

Existing SEC disclosure rules and guidance already require…