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     The first Business Law Prof Blog conference was held in Knoxville back in September.  Learned a lot, and had a great time.  Looking forward to future ones!

     My contribution to the conference was an article on “Judicial Dissolution of the Limited Liability Company:  A Statutory Analysis,” 19 Tennessee Journal of Business Law 81 (2017).  I took a look at the judicial dissolution statutes in all 50 states as well as the major model acts, and provided commentary on some of the more interesting differences.  The article is complete with two charts (not one, but TWO), and who doesn’t love charts in a law review article?  If you are interested, please click on the link LLC Judicial Dissolution. I summarize the descriptive findings in the article below, but you’ll have to take a look for the analysis/commentary:

     The most common judicial dissolution ground in the sample is when the court decides that it is not reasonably practicable to carry on the business in conformity with the LLC’s governing documents.  Fifty-four statutes include some version of this language.  Interestingly, this ground is articulated in several different ways.  Twenty-three of the fifty-four statutes allow for judicial…

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George Geis at the University of Virginia has just posted Traceable Shares and Corporate Law, exploring the implications that blockchain technology will have on various aspects of corporate law that – until now – hinged on the presumption that when one person buys a share of stock in the open market, there is no prior owner who can be identified.  The ownership history of a particular share cannot, in other words, be traced.

That lack of traceability has a lot of important effects.  For example, it means that if a company issued stock pursuant to a false registration statement, but also issued additional stock in another manner, plaintiffs may not be able to bring Section 11 claims because they cannot establish that their specific shares were traceable to the deficient registration.  In the context of appraisal, it has led to questions of whether petitioners who obtained their shares after the record date have an obligation to show that the prior owners of the shares did not vote in favor of the merger (an impossible task).  If blockchain technology makes it possible to trace the owners of a share from one transfer to another, these areas of law may be…

Yesterday, the SEC announced a settlement with Ameriprise.  The SEC’s order explains that Ameriprise disadvantaged retirement plan customers by “selling them more expensive share classes in certain [mutual funds] when less expensive share classes were” also available through Ameriprise.  Although not a defense, Ameriprise’s spokesperson correctly pointed out that this issue has been “a long-standing industry topic and numerous firms have settled with the SEC and Finra on similar matters.”

Many open-ended mutual funds offer multiple share classes.  Investors purchasing class A shares typically pay an up-front commission or sales load.  The amount of the commission paid varies by fund.  Class B and Class C shares generally charge no up-front fees, but hit investors with higher fees over time or with contingent-deferred sales charges if the investors redeem their mutual fund shares before a certain amount of time.  In many instances, investors placing large orders can receive bulk discounts (called “breakpoints”) on Class A shares.  Ameriprise ran into trouble because it did not steer its customers into lower-fee shares when they were available and because it did not disclose that it was steering customers into expensive share classes that paid Ameriprise more money.  Overall, investors paid an extra $1.7 million in…

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At this point, drawing inferences from corporate jet usage is its own mini-genre in the business literature.  There was David Yermack’s famous Flights of Fancy, which found that companies underperform when the CEO makes use of the company jet for personal business (often, apparently, golfing-related business); other studies have found that corporate jet use can enhance firm value, or detract from it, depending on whether the company has weak corporate governance, and that public firms have larger jet fleets than firms owned by private equity funds, suggesting the excessive fleet size is due to agency costs in public firms.

(And these studies, naturally, were conducted before everyone knew about GE’s now-discontinued practice of having its CEO travel with a jet and a spare.)

Now there’s a new contribution to the genre: Corporate Jets and Private Meetings with Investors, by Brian J. Bushee, Joseph J. Gerakos, and Lian Fen Lee. 

The authors begin with the previously-documented phenomenon that when investors have the opportunity to engage in private meetings with corporate management, their trading improves.   Regulation FD prohibits management from providing these investors with nonpublic material information, but somehow – whether through outright violations of…

The Supreme Court just released its opinion in Digital Realty Trust, Inc. v. Somers.  The case resolves a controversy over whether employees making internal reports of securities law violations qualify for Dodd-Frank’s whistleblower protections. The Court ruled that internal reporters do not qualify because they are not “whistleblowers” under the statutory definition.  Writing for the Court, Justice Ginsberg focused on the the statutory provision specifically defining whistleblowers as persons that provide “information relating to a violation of the securities laws to the Commission.”  Under this strict reading, a person that called a company’s ethics hotline to blow the whistle on misconduct in their office would not qualify as a whistleblower unless she also went to the SEC with the information.

The Court read the definition and the Dodd-Frank provision in light of existing whistleblower protections.  Sarbanes-Oxley already protects internal reporters from retaliation.  Yet pursuing a Sarbanes-Oxley claim requires a whistleblower to jump through some quick procedural hoops.  The first step is filing a complaint with the Department of Labor within 180 days of the retaliation.  If Labor does not issue a decision within 180 days of the whistleblower’s filing, the whistleblower can go to court for reinstatement, backpay with…