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I’ve become interested in the proposal to require auditing firms to disclose the names of engagement partners, and other firms, involved in an audit of a public company. Though I can’t pretend to have waded through all the comments that have been submitted on this issue, I gather one of the concerns is that disclosure will increase potential liability under Section 10(b). I actually think that it will and it won’t, and as someone who feels that auditors should be held to more stringent standards than the law currently allows, I have mixed feelings about the proposal.

[More under the jump]

Let Feeling, Passion, Reason, Sense appear—
But mark you! Let us have some Nonsense too!
    -Goethe

Whatever happened to humor in law reviews?

In the past, leading law reviews had no qualms about including legal humor. Yale, for example, published Jim Gordon’s How Not to Succeed in Law School, 100 YALE L. J. 1679 (1991). Northwestern published my The Gettysburg Address as Written by Law Students Taking an Exam, 86 Nw. U. L. REV. 1094 (1992). Michigan published Dennis Arrow’s incredible tome, Pomobabble: Postmodern Newspeak and Constitutional “Meaning” for the Uninitiated, 96 MICH. L. REV. 461 (1997).

At least two law reviews in the nineties published symposia on legal humor: BYU (Symposium on Humor and the Law, 1992 B.Y.U. L. REV. 313-558) and Nova (Nova [Humor in the] Law Review, 17 NOVA l. REV. 661-1001 (1993)). The BYU symposium even includes an excellent bibliography of legal humor: James D. Gordon, III, A Bibliography of Humor and the Law, 1992 B.Y.U. L. REV. 427.

The era of law review humor seems to have passed. There isn’t much legal humor in law reviews anymore. There are exceptions: Green Bag and the Journal of Legal…

The Wall Street Journal reports on a growing phenomenon – in the wake of cases like RBC Capital Mkts., LLC v. Jervis, 2015 Del. LEXIS 629 (Del. Nov. 30, 2015), corporate boards considering M&A deals are rooting out investment banking conflicts by turning to smaller boutique firms to advise them.

My off the cuff reactions –

First, I find this notable if only because board directors are shielded from personal liability both by exculpatory clauses in corporate charters, and by D&O insurance. Scholars frequently argue that the lack of personal liability blunts the potential deterrent effects of shareholder lawsuits; I am fascinated to see a real-world demonstration that the lawsuit threat remains potent. It’s particularly striking in this instance because ultimately it is the conflicted banks – not the directors – who risk liability, and yet the directors are the ones who are exhibiting concern. This is a salutary result: the directors, of course, are the ones who have a fiduciary duty to protect shareholders. (But cf. Andrew F. Tuch, Banker Loyalty in Mergers and Acquisitions) But it’s not necessarily what one would have expected given the liability regime. The WSJ piece suggests that boards’ concerns…

“Why don’t conservative activists use SEC Rule 14a-8 (the so-called shareholder proposal rule) to put proposals on corporate proxy statements?” and speculates that to the extent conservatives do submit such proposals, they are likely to be excluded as ordinary business matters.

Well, I don’t know if this represents a new trend or anything, but at least one conservative group was recently successful under 14a-8.  The National Center for Public Policy Research submitted a proposal to have Deere & Co provide a yearly report to stockholders on whether its political spending was in line with the company’s stated values.  According to the proposal, Deere & Co has stated that it advocates for a free marketplace, and that it only supports candidates who share its “pro-business” outlook and commitment to “free enterprise,” but at the same time, it has joined the Climate Action Partnership, withdrawn its support for the conservative ALEC, and has donated to politicians who voted for the Affordable Care Act and Dodd-Frank.  The proposal asks that the Board develop a policy for ensuring congruency between the company’s corporate values and its political activity, and report to shareholders on the company’s compliance with that policy.

The…