This Article argues that, in some ways, the critics are correct: Delaware law is on a path toward politicization.  But it is not because of any particular bias of its judges or its law; to the contrary, the pressures

They find that a variety of institutional investors make these filings, including public pension funds (38%), union funds (26%), and other institutions, including hedge funds (22%). 

David Lourie has a new paper out considering what standard the SEC should use when deciding whether to impose personal liability on Chief Compliance Officers (CCOs) for compliance failures at their firms.

The SEC now requires financial services firms to have CCOs. Exactly when they do or should face personal liability appears unclear. One SEC Staff member told CCOs that they would face personal liability in three circumstances: (1) when the CCO is affirmatively involved in misconduct; (2)
when the CCO engages in efforts to obstruct or mislead the SEC; or (3) when
the CCO exhibits “a wholesale failure to carry out his or her responsibilities.” What does “wholesale failure” mean here? It’s not totally clear. In the past, the SEC has sought to impose personal liability on CCOs for compliance failures and proceeded under a negligence standard–exposing a CCO to liability if they negligently performed their duties.

Figuring out when you should and shouldn’t hold CCOs personally liable is challenging. I’ll confess that my initial instinct is to lean toward personal liability so that someone at these financial services firms will take compliance seriously. Lourie makes a compelling case that putting too much liability on CCOs may turn them…

Sometimes you come across a case so clean, so pure, with respect to first principles, it’s actually quite charming. So it is with Caribbean Sun Airlines v. Halevi International, decided this week by the Delaware Supreme Court.

Alan Boyer was hired as a financial advisor to Caribbean Sun Airlines and a related entity, and in that capacity, was given a significant amount of access to the premises. At some point, he offered to buy the whole company, and as part of the transaction, sought a loan from Halevi, to be taken out in Caribbean’s name. Except when he approached Halevi, he represented that he was president of the company and a significant shareholder. He forged some documents to that effect, though the paperwork he provided to Halevi contained significant inconsistencies. As part of the due diligence process, one of Halevi’s representatives accompanied Boyer for a site visit, where Boyer was treated respectfully by the employees and permitted to access the computers, but he refused to take the representative to see the airplanes.

Boyer then signed a loan agreement on behalf of Caribbean Sun, including a confession-of-judgment affidavit. Halevi wired the company about $4 million.

Meanwhile, the principals of…

This Bloomberg article about insurance disputes over “bump ups” caught my attention, so it’s another moment for me to step outside my (corporate) lane and pretend I know something about contracts (or insurance).

The issue is, lots of corporate managers have D&O coverage, and that coverage includes standard exclusions.  Like, D&O insurance won’t cover willful acts of misconduct, that kind of thing, but it will cover settlement of such claims.

And it also includes an exclusion for “bump up” claims.  That kind of claim is when the company sells itself to an acquirer, and the former shareholders sue alleging the consideration was inadequate.  If there’s a settlement – or I guess an adjudication that doesn’t fall into the willful category – for bumping up the consideration paid to shareholders in an acquisition, the insurer is not obligated to cover it.

That’s led to a lot of litigation over what kinds of settlements/claims are excluded, and what are not, and insurers come out on the short end of the stick.  For example, in Harman Int’l Indus. Inc. v. Ill. Nat’l Ins. Co., a Delaware Superior court held that Section 14 claims for a false proxy statement issued in connection…

Increasingly, it seems like not a day goes by without my reading some story in the financial press about the growth of and developments in private capital markets. For example, earlier this week, the WSJ ran a story about Goldman Sachs’ plans for a new “Capital Solutions Group,” an institutional development seemingly related to the surge of private credit markets. And the private company market is also hot! So, Professor Christina Sautter and I wrote a short paper called “Democratization of the Private Markets?” for Transactions: The Tennessee Journal of Business Law. In this paper, we explore the market for private company equity with a particular focus on closed-end funds (CEFs) like ARK Venture Fund and Destiny Tech100. It’s a piece related to Transactions’ yearly Connecting the Threads Symposium, which is always a fabulous event and one of my favorite conferences of the year!