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BU LAW TO BECOME FIRST U.S. LAW SCHOOL TO OFFER A MOOC IN COMPLIANCE

Course series will focus on legal risk management for companies doing businesses overseas

(APRIL 23, 2015) -­‐ Boston University School of Law will launch a massive open online course, Legal Risk Management Strategies for Multinational Enterprises, in October, becoming the first U.S. law school to offer a MOOC in the fast-­‐growing field of compliance.  In a partnership with BU’s Digital Learning Initiative, the School of Law will deliver the four-­‐part series on the edX online platform. 

“BU Law is committed to using new technologies to open up our classrooms not only to our students, but to all qualified practitioners with an interest in studying legal topics,” says BU Law Dean Maureen O’Rourke. “I am pleased that our very first MOOC will focus on compliance, and will provide all students, both with and without law degrees, with marketable skills for which there is significant demand in the US and abroad.”

The course will examine the issues that multinational companies face in adhering to the numerous laws and regulations that govern their operations. Students will be introduced to new tools for managing risk in the global marketplace…

An ongoing issue in many securities cases concerns the precise state of mind necessary to satisfy the element of scienter in a Section 10(b) violation.  The basic dispute is about whether the defendant must have intended to harm investors, or whether it is sufficient if the defendant simply intended to mislead them.

One would have thought this issue was settled by the Supreme Court’s decision in Basic Inc. v. Levinson, 485 U.S. 224 (1988).  There, the defendants lied to investors by falsely claiming that they were not engaged in merger negotiations.  The lie was not intended to harm anyone; if anything, the defendants intended to benefit investors by concealing the talks so as not to prejudice a beneficial deal.  The Supreme Court did not weigh in on the definition of scienter per se, but it did emphasize that the defendants’ benign motives would not immunize them from liability.  As the Court put it, “[W]e think that creating an exception to a regulatory scheme founded on a prodisclosure legislative philosophy, because complying with the regulation might be ‘bad for business,’ is a role for Congress, not this Court.”

Similarly, in Nakkhumpun v. Taylor, 2015 U.S. App. LEXIS 5547 (10th Cir. Apr. 7, 2015), the Tenth Circuit rejected a defendant’s argument that his false statements – in that case, false characterizations as to why a corporate asset sale had fallen through – were intended to benefit investors by attracting new deal partners.  The Tenth Circuit held that whatever the defendant’s ultimate motive, Section 10(b) liability would be imposed if he intentionally or recklessly misled investors.

Nonetheless, courts continue to sporadically define Section 10(b) scienter in a more limited manner.

[More under the jump]

As most of you know, this year’s U.S. News rankings of law schools are now available. I’m not a big fan of those rankings. I don’t think they’re a particularly meaningful way of comparing law schools. They sometimes provide a laugh or two, as when a dean disparages the rankings while pointing to his or her school’s rise in the rankings as a sign of successful decanal leadership. But no student should be choosing a law school based on those rankings.

However, the rankings are fun to play with from time to time, and here’s one example for your amusement.

Most of the top 100 law schools in the rankings are affiliated with universities that are ranked in the U.S. News rankings of national universities. Everything else being equal, one would expect a law school’s ranking to be comparable to that of its university, and many are. Yale is the top-ranked law school (an obvious mistake in this Harvard grad’s opinion); its university ranking is number 3. But that’s not always the case; many of the law school rankings are significantly different from the rankings of their universities.

I computed a comparison score for each of the top…

It was recently announced that the SEC has reached a settlement in its lawsuit against Freddie Mac executives Richard Syron, Patricia Cook, and Donald Bisenius.  The basic allegation in the case was that these executives violated Section 17 of the Securities Act and Section 10(b) of the Exchange Act by dramatically understating Freddie Mac’s exposure to subprime mortgages.  The executives falsely claimed that Freddie Mac’s portfolio included $2 to $6 billion of subprime loans, when the true figure was closer to $141 billion to $244 billion.  Freddie Mac’s exposure to subprime loans ultimately caused it to experience dramatic losses, thus harming investors.

The SEC ran into difficulty because there is no accepted definition of “subprime.”  The SEC alleged that investors understood the term to refer to certain loans issued with a high likelihood of default, such as loans with high loan to value and debt to income ratios.  The executives, however, claimed that “subprime” was understood by investors only to refer to loans that were designated as subprime by their originators.

The case has now settled, and, under the terms of the settlement, the executives will make payments to a Fair Funds account for the benefit of investors, in…

I may be hopelessly old-fashioned, but I believe academic scholarship demands evenhanded objectivity. An academic should present all sides of an issue fairly, weigh those arguments, and reach a conclusion that, to the extent humanly possible, is not merely a reflection of the academic’s predispositions. One must openly acknowledge the weaknesses of one’s conclusions as well as the strengths of the arguments against one’s conclusions.

An advocate also needs to deal with the opponents’ arguments, but the advocate begins with a pre-determined conclusion. In writing a brief, a lawyer is trying to convince the court to rule in favor of his or her client, not to weigh both sides evenhandedly and objectively.

Many faculty candidates are practicing lawyers or work for organizations that have a particular policy position. They’re advocates. In my experience, some candidates find it difficult to make the transition from advocacy to academic analysis, and their job talks (and their early scholarship) often reflect that.

Here’s a question to test that: “Make the strongest argument you can against your position.”

If a candidate can do that in a way that would satisfy those on the other side of the issue, that candidate is probably ready for the…

In Dura Pharmaceuticals, Inc. v. Broudo, 544 US 336 (2005), the Supreme Court held that to bring a fraud-on-the-market action under Section 10(b), shareholders would have to plead and prove the element of “loss causation,” namely, that disclosure of the fraud caused the company’s stock price to drop, resulting in plaintiffs’ losses.

Since Dura was decided, there has been concern that companies might try to avoid liability by strategically disclosing information in a manner that would make it more difficult for plaintiffs to establish stock price effects.

In their new paper, Disclosure Strategies and Shareholder Litigation Risk, Michael Furchtgott and Frank Partnoy take significant steps toward establishing that these fears are well-grounded.

[More under the cut]

The following comes to us from Lee Epstein, Ethan A.H. Shepley Distinguished University Professor at Washington University in St. Louis.

The 14th annual workshop on Conducting Empirical Legal Scholarship, co-taught by Lee Epstein and Andrew D. Martin, will run from June 15-June 17 at Washington University in St. Louis. The workshop is for law school faculty, lawyers, political science faculty, and graduate students interested in learning about empirical research and how to evaluate empirical work. It provides the formal training necessary to design, conduct, and assess empirical studies, and to use statistical software (Stata) to analyze and manage data.

Participants need no background or knowledge of statistics to enroll in the workshop. Registration is here. For more information, please contact Lee Epstein.

I attended this workshop a few years ago, and thought it was excellent.