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Two law scholar/teacher friends have recently published books that deserve attention.  The first is a labor of scholarly love from my Association of American Law Schools and Southeastern Association of Law Schools co-conspirator John Anderson.  The second represents the hard work of Antonio Gidi, who visited at Tennessee Law a number of years ago.  I have read neither book, but I know the quality of the work that went into both of them.

Here is the summary of John’s book, Insider Trading: Law, Ethics, and Reform:

As long as insider trading has existed, people have been fixated on it. Newspapers give it front page coverage. Cult movies romanticize it. Politicians make or break careers by pillorying, enforcing, and sometimes engaging in it. But, oddly, no one seems to know what’s really wrong with insider trading, or – because Congress has never defined it – exactly what it is. This confluence of vehemence and confusion has led to a dysfunctional enforcement regime in the United States that runs counter to its stated goals of efficiency and fairness. In this illuminating book, John P. Anderson summarizes the current state of insider trading law in the US and around the…

Last week, a district court in California denied a motion to dismiss a securities fraud lawsuit brought by Snap shareholders.  See In re Snap Inc. Secs. Litig., 2018 U.S. Dist. LEXIS 97704 (C.D. Cal. June 7, 2018).  The shareholders alleged that the Snap IPO prospectus omitted certain critical information in violation of Sections 10(b) and 11, namely, information about the effect of competition from Instagram, and information about the risks posed by a lawsuit filed by an ex-employee – a lawsuit that I previously blogged about here (prior to the IPO, it should be noted).  There was also an additional claim regarding post-IPO statements, brought only under Section 10(b).

Among other things, the defendants argued that there was sufficient information in the public domain about both the Instagram risk, and the lawsuit risk, to render any nondisclosure immaterial as a matter of law.  The district court rejected that argument because Snap’s own prospectus contained the following language:

You should rely only on statements made in this prospectus in determining whether to purchase our shares, not on information in public media that is published by third parties.

Thus, in the district court’s view, Snap’s own statements “counteracted” any contrary…

A few weeks ago, President Trump tweeted that he was “looking forward” to seeing the Labor Department’s employment report.  I put together an op-ed for The Hill arguing that this type of executive action forces the market to closely watch his Twitter feed because it sets a precedent that it may reveal significant clues about economic information before the official release.  The sudden change may impact overall confidence.  If the President selectively discloses economic information through Twitter, it raises concern that there might be selective disclosures through other channels:

Trump’s leaky administration and sudden decision to disseminate market-moving information through Twitter may cause many to fear that confidential economic information may be selectively released by the administration.

If investors fear that the president’s favored few have more information, they may hesitate to take the other side of trades or discount the amount they are willing to pay to account for the risk. Ordinary investors may not get fair value for their savings when they need to sell.

Some may discount these concerns as mere hand-wringing by pointing to numbers indicating strong job growth. Although those numbers matter, they cannot capture the value of investor confidence in our system’s integrity and

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This week, I plug my new article, Shareholder Divorce Court, available here on SSRN and forthcoming in the Journal of Corporation Law.  Here is the abstract:

Historically, shareholder power within the corporate form has been tightly constrained on the assumption that dispersed shareholders are too inexpert, and insufficiently invested in the business, to contribute positively to governance.  In recent years, however, the nature of shareholding has changed.  Whereas in the mid-twentieth century, most stock was held by individuals, today, most publicly traded stock is held by large institutions with significant stakes.  Corporate law has responded to the increasing sophistication of the shareholder base by expanding shareholder power, but doing so has created a new problem: shareholders have heterogeneous preferences, and when they conflict, the majority may exploit the minority.

The problems are particularly acute when it comes to mergers and acquisitions.  Large shareholders may have a variety of investments, and thus be conflicted in their preferences when it comes to merger terms.  Their greater influence within the corporate form may influence directors.  In this scenario, minority shareholders are left without an effective advocate for their interests, and therefore may be coerced into suboptimal transactions.

This Article proposes that if

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