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Stefan J. Padfield

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Director of the NCPPR's Free Enterprise Project. Prior experience includes 15+ years as a law professor, two federal judicial clerkships, private practice at Cravath, Swaine & Moore, LLP, and 6 years enlisted active duty (US Army). Immigrant (naturalized).

The New York Times Dealbook Blog reports that France is opposing GE’s attempt to acquire a large portion of Alstom:

“While it is natural that G.E. would be interested in Alstom’s energy business,” France’s economy minister, Arnaud Montebourg, said in a letter to Jeffrey R. Immelt, the G.E. chairman and chief executive, “the government would like to examine with you the means of achieving a balanced partnership, rejecting a pure and simple acquisition, which would lead to Alstom’s disappearing and being broken up.”

The government’s legal means for stopping a deal would appear to be limited, though it could refuse to approve such an investment on national security grounds. The government does not hold Alstom shares, but the company is considered important enough to have received a 2.2 billion euro bailout in 2005. And Mr. Montebourg noted in the letter on Monday that the government was Alstom’s most important customer.

Alstom’s energy units, which make turbines for nuclear, coal and gas power plants, as well as the grid infrastructure to deliver electricity, contribute about three-quarters of the company’s 20 billion euros, or about $30 billion, in annual sales.

Alstom is France’s largest industrial entity, and the government says the deal…

A little more than six weeks ago The Lego Movie hit theaters. Without getting into too much detail for those of you who have not yet seen the movie or who will never get around to seeing the movie, in essence it’s about an ordinary guy who’s mistakenly identified as an extraordinary “MasterBuilder”. He is recruited to fight against a Lego villain (President Business-we can call him P.B.) who is intent on gluing everything together. The anti-PB crusaders like having the freedom to dismantle, break, and re-make their Lego creations and shudder at the thought of having everything permanently fixed in place. PB, on the other hand, is intent on perma-gluing the Lego bricks together because he likes the certainty and control of knowing where everything is, and he is wary of innovation or change. Hence, his admonition- “EVERYTHING MUST STAY IN PLACE.”

Now as I watched this battle unfold between President Business’ pro-gluing supporters on one hand, and the pro-change supporters on the other, I could not help but see some similarities between the Lego people’s contested views on the purpose of Legos and our society’s contested views on the purpose of corporations. In The Lego Movie…

Thanks for inviting me to guest blog. As Stefan said, my area is corporate governance with particular interests in the rights and responsibilities of corporations in society, and how changing market dynamics impact corporations. In that vein, I had the pleasure of moderating a panel discussion yesterday at New York Law School on High Frequency Traders (HFTs). The panel immediately followed an announcement by New York Attorney General Eric Schneiderman on new proposals targeted at HFT firms (part of what his office terms their “Insider Trading 2.0” initiative).We certainly had a lively discourse and a link to the full panel discussion will be available shortly— I’ll be sure to post at that time. But in short, here are the highlights:

High frequency traders use a fully automated trading system to move in and out of securities at a rapid speed, often just in milliseconds. To get a sense of what is at stake, consider that by constructing a high-speed fiber optic cable, round-trip communication time between New York and Chicago was reduced from 16ms to 13ms, and now using microwave technology, the round-trip transmission time was further reduced to 10ms, then to 9ms, and most recently to 8.5ms. What can…

This is a “thinking out loud” post, which means I’m not sure
I’ve got the analysis correct, but feel it’s worth floating by readers in
draft form in an attempt to generate some discussion (which may include the
comment: “you are obviously wrong, and here’s why”).  I realize not all academic bloggers agree
this is an appropriate use of the blogosphere, but you now know my current
position on that issue.  (By the way, if
you do post a comment, please consider also emailing me directly at
spadfie@uakron.edu because I’m not clear on what sort of comment alerts we get
when comments are posted and I’d hate to miss one.)  So, with disclaimers firmly in place:

A few weeks ago, The CLS Blue Sky Blog posted a piece by
Pepper Hamilton on Round Two of Shareholder Say-on-Pay Litigation. Here is a relevant excerpt:

The third proxy season of the Dodd-Frank Act’s mandatory shareholder
“say-on-pay” advisory votes is well underway, and “round two” of shareholder
say-on-pay litigation is in full swing. Unlike the first round of say-on-pay
lawsuits, which were based on negative advisory votes that had already
occurred, this second wave of shareholder litigation, which began

…

As I mentioned in my opening post, I’m a big fan of Jay
Brown.  So, I plan on routinely passing
on what he’s blogging about.  This week,
I’ve got two items:

In Corporate Governance, the SEC, and the Declining
Importance of Delaware Law, Jay suggests that “the SEC, rather than Delaware,
may increasingly be the driving force behind the development of substantive
duties for directors.”  Here’s an
excerpt:

[In] In re Alderman … the Commission settled an action
against directors of a mutual fund.  The
Commission first found a duty — 
“Under the Investment Company Act, directors had an obligation to
make good faith efforts to ensure that certain below-investment grade debt
securities for which market quotations were not readily available were valued at fair
value.”  The Commission then
concluded that this duty had not been fulfilled…. Likewise, the Commission has
sanctioned companies and boards for failing to adequately disclose the process
used in reaching a decision…. Unlike the law in Delaware where less board
involvement usually reduces the risk of liability (and encourages the ostrich
approach to governance), these cases suggest that greater involvement by
directors will in fact reduce the risk

…

Ronald Coase died this past Monday, and Stephen Bainbridge posted some related commentary here, as well as an excerpt of his review of Coase’s book The Firm, the Market, and the Law (here).  What follows are two of my favorite Coase quotes, taken from pages 3-4 of that book:

  • The rational utility maximizer of economic theory bears no resemblance
    to the man on the Clapham bus or, indeed, to any man (or woman) on any
    bus. There is no reason to suppose that most human beings are engaged in
    maximizing anything unless it be unhappiness, and even this with
    incomplete success.
  • In mainstream economic theory, the firm and the market are, for the most part, assumed to exist and are not themselves the subject of investigation.  One result has been that the crucial role of the law in determining the activities carried out by the firm and in the market has been largely ignored.

Following a hiatus of almost 2 years, Steve Bradford, Josh Fershee, Anne Tucker, and I are pleased to announce the grand re-opening of the BLPB.  We are excited to be joined by Marcia Narine, and also expect Eric Chaffee to be stopping by occasionally with contributions.  All the relevant profiles (except for Eric’s, which we hope to have available soon) can be found at the bottom of this blog.  I will leave it to each of my co-bloggers to provide additional information about themselves as they see fit.

Personally, I’d like to thank Jay Brown for allowing me to blog over at the Race to the Bottom these past two years.  While I am excited about returning here to “get the band back together,” I regret having to leave the RTTB (though I may still occasionally pop in over there, time permitting).  Jay is one of the true stars in corporate law, and I consider him a friend, mentor, and inspiration.

I’d also like to thank Paul Caron for welcoming us back, and note the updates to the Law Prof Network look great.

Finally, please drop me a line directly at spadfie@uakron.edu if you have any interest in guest-blogging, or…