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Georgia State University College of Law located in Atlanta, Georgia is recruiting for a new faculty member to join the Phillip C. Cook Low Income Taxpayer Clinic.    As leadership in the clinic are looking to transition the new hire will likely serve as the Director of the clinic given the experience level of the candidate.  The clinic is funded by the IRS, private donors and the university so it is a secure job line.  We are posting this announcement out of cycle and the position will remain open until filled which means that recruitment may likely extend through next fall. The Committee is interested in lateral applicants, those pursuing training in clinical education and individuals with significant tax practice experience who may be new to clinical teaching.  The job posting is available here. 

-Anne Tucker

Happy Presidents’ Day.

Sometimes, this holiday gets overlooked. In fact, it’s not even treated as a holiday by my university. Originally the Washington’s Birthday holiday, it was renamed and broadened to include other Presidents, primarily Lincoln, who also has a February birthday. This isn’t business law, but I think it’s important to remember the greatness of those two men. Compared to many of today’s politicians, their intelligence and integrity is astounding. Their voices remain relevant today.

Here, for your enjoyment, quotes from Washington and Lincoln:

George Washington:

If benefits have resulted to our country from these services, let it always be remembered to your praise, and as an instructive example in our annals, that under circumstances in which the passions, agitated in every direction, were liable to mislead, amidst appearances sometimes dubious, vicissitudes of fortune often discouraging, in situations in which not unfrequently want of success has countenanced the spirit of criticism, the constancy of your support was the essential prop of the efforts, and a guarantee of the plans by which they were effected. Profoundly penetrated with this idea, I shall carry it with me to my grave, as a strong incitement to unceasing vows that heaven may continue…

The news this week in shareholder rights is that GE joined the list of companies that have voluntarily enacted their own bylaws permitting large shareholders to nominate directors to be included on the company proxy.  

GE’s action comes in the midst of a publicly-announced campaign by the New York City Comptroller to gather support for shareholder-enacted bylaws that would do roughly the same thing.  (And a very ugly battle over such bylaws at Whole Foods, as Marcia previously posted.)

In that context, GE’s move seems like something of a Trojan horse.  By enacting its own bylaw, GE preempts any attempts by shareholders to do so.  Meanwhile, because the bylaw is director-enacted, GE can yank it at any time – like, if it feels there’s a coherent movement that threatens the current board’s dominance.  In fact, this strategy was recently on display when Rupert Murdoch announced an unsolicited takeover of Time Warner.  The first thing Time Warner’s board did was to repeal a director-enacted bylaw that permitted shareholders to call special meetings.

As a result, I’m not quite yet ready to call this a great win for shareholder democracy.

At last month’s meeting of the Association of American Law Schools, the Section on Agency, Partnership, LLCs, and Unincorporated Associations sponsored a program on “Bringing Numbers into Basic and Advanced Business Associations Courses: How and Why to Teach Accounting, Finance, and Tax.”

I, like many business law professors, believe that at least some basic knowledge of accounting and finance is necessary to really understand business associations, securities regulation, and other business law courses. Unfortunately, many of my students have not had any accounting or finance, and many law students’ eyes glaze over whenever they see numbers.

The AALS panelists’ discussion of how to teach quantitative concepts to law students is excellent. The podcast is now available on the AALS web site, but, it’s password-protected, so only AALS members can access it. The audio is low quality, but it’s definitely worth listening to if you have access. (It’s not easy to work your way through the list of podcasts on the AALS site, but the program was on Sunday, January 4, at 10:30-12:15.)

The problem business law professors face is similar to that faced by undergraduate departments in dealing with underprepared high school students—those who have insufficient math or…

In their new paper, Rating Agencies and Information Efficiency: Do Multiple Credit Ratings Pay Off?, Stefan Morkoetter, Roman Stebler, and Simone Westerfeld  study whether it benefits investors to have more than one rating agency rate a particular security.

They find that when multiple rating agencies rate a particular tranche of a mortgage-backed security, not only is the initial rating more accurate, but the agencies devote more efforts to ongoing surveillance, increasing the accuracy of the rating over the life of the tranche.  They conclude that the increased efforts are traceable to a healthy competition among agencies; as the authors put it, “Since their activities are directly bench-marked to their peers’, rating agencies are induced to show more effort with regard to their monitoring obligations than observed for single-rated tranches.”

One of the reasons the paper is interesting is because Dodd Frank and the SEC implementing regulations impose new restrictions on conflicts of interest within credit ratings agencies, basically forbidding anyone from the business side from having any involvement with the ratings themselves.  In light of Morkoetter et al’s conclusions, I do have to wonder whether at least some business-side involvement with the ratings process creates a healthy sort…

Jonas Heese has posted an interesting paper to SSRN, Government Preferences and SEC Enforcement, where he argues that the SEC goes easy on firms that contribute significantly to employment in a particular area.  He finds that the effect is magnified in presidential election years in swing states, and for firms that are headquartered in districts senior congresspersons who have SEC oversight responsibilities.  This effect cannot be explained by the hypothesis that labor-intensive firms simply have better accounting; according to Hesse, they actually have worse accounting than other comparable businesses (which may in fact reflect their knowledge that the SEC is less likely to target them).  He concludes, essentially, that the SEC is responding to political/voter pressures to take a hands-off approach to firms that are responsible for providing jobs.

One of the interesting points he makes is that this kind of pressure is independent of “special interest” lobbying; rather, this kind of pressure is a result of government actors responding to voter preferences.

The paper is available for download here.

There’s a very interesting sentence in a New York Times story today about the Chinese company Alibaba.  China’s State Administration for Industry and Commerce has released a report criticizing illegal practices on Alibaba’s shopping web sites. Here’s the sentence that I as a securities lawyer found most interesting:

“The agency said that it had presented the findings to unidentified top Alibaba executives in a July 17 meeting at the company’s headquarters . . . , but that it had kept the results confidential at the time so as ‘not to affect Alibaba’s preparations for a stock market listing.’”

Alibaba made an initial public offering in the United States in September. If the story’s accurate, it means: (1) a Chinese government regulator deliberately withheld a government report so a Chinese company could sell its stock to U.S. investors at a higher price; (2) the Chinese company, knowing the Chinese regulator was going to issue an unfavorable report, intentionally withheld that information from offerees.