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The SEC is in the process of crafting rules to facilitate crowdfunding of unregistered securities offerings.  There’s been a lot of back and forth about the merits of this idea – Michael Dorff, for example, has argued that it’s a sucker’s game, because the only businesses that will require crowdfunding are those too toxic for angel investors to touch.  Meanwhile, Steve Bradford just posted about a study suggesting that the “crowd” is better at identifying winning business ideas than individual investors – even the professionals.

One idea that’s been floated, however, is that crowdfunding will open doors for disadvantaged groups – like women.

Indiegogo, a crowdfunding website, recently boasted that women founders reach their target funding in much greater numbers than do women who seek startup capital through traditional means.  Women have had similar results on Kickstarter.

There’s been a lot written recently about how women fare poorly in the tech world when they seek startup funding.  Women report navigating a lot of pretty toxic sexism from the mostly-male angel investors with whom they must negotiate.

I have my doubts about the viability of crowdfunding, but I’ll be interested to see whether it can also level

Fellow BLPB blogers have shared on and off line their coverage scope and strategies for Business Associations/Corporations.  In thinking about how to fit in big corporate constitutional questions into a syllabus that is already jam packed with topics, this 2013 article (Teaching Citizens United v. FEC in the Introductory Business Associations Course) by Michael Guttentag at Loyola Los Angeles, provides some great suggestions.  Written in a post-Citizens United and pre-Hobby Lobby era, I think his insights are broadly applicable about how corporate constitutional rights illustrate the “costs that may arise from differences between manager interests and shareholder interests, the costs that may arise from following a shareholder primacy norm, and the distinctive nature of the role of the transactional lawyer.”  This short (8 pages) article is worth reading to identify some opportunities to discuss these important issues in a way that illustrates difficult concepts within your existing syllabus and hopefully keep students engaged throughout the semester.  

-Anne Tucker

This year, I’m going to be teaching a seminar on the financial crisis with a friend of mine from law school, Tanya Marsh of Wake Forest.  The seminar will be offered at Wake Forest in the Fall and then again at Duke in the Spring.  Among other things, we plan to assign the students to watch several movies about the crisis (some will be watched by the entire class; for others, different groups of students will watch different films, and then discuss them with the class).

In preparation, I watched (or, as the case may be, rewatched) the movies we’re likely to assign.  So here are my comments on the movies – which I assume many of you have already seen, but probably not everyone has seen everything – with the caveat that, I’m commenting at least as much as an audience member/amateur film critic as I am as a professor.

(Tanya tells me the students are unlikely to stumble across this post, but in case you do – these are my opinions only, we’ll want to hear yours!  And for what it’s worth, Tanya and I disagree on at least one of the films.)

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The exact measure of damages in a fraud on the market 10(b) action has long been a bit of a muddle, because it raises many difficult evidentiary and legal issues.  However, because most securities class actions are dismissed or settle, there actually are not many court decisions discussing the problem.   The Supreme Court’s decision in Comcast Corp. v. Behrend (2013), an antitrust case, may have begun to change that – as the BP litigation demonstrates.

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One of the reasons you read this blog is to keep up with developments related to business law and to read commentary on those developments. But how do we, the editors of this blog, keep up with new developments ourselves? What blogs and other sources do we follow?

I realize that, as a law professor, I probably have both more time and perhaps a greater professional obligation to keep up with law-related events and scholarship. And what I read is necessarily idiosyncratic, dependent in part on my particular interests and foibles. For some unknown reason, not everyone is interested in the latest from the SEC’s Division of Investment Management. And individual tastes vary; commentators I find interesting and informative, you might find banal, and vice versa.

But, with those disclaimers, here’s my list, for what it’s worth. I have divided it into four categories: blogs and RSS feeds, subscription services, daily news, and print resources. (Remember print? Those non-electronic things we used to hold in our hands.) I hope you’ll find something useful.

Blogs and RSS Feeds

To begin, let me admit that this list is incomplete. I only read blogs that offer RSS feeds. If they won’t deliver it…

Market efficiency is a concept used by economists to describe markets with certain theoretical characteristics.  For example, a “weak-form” efficient market is one where historical prices are not predictive of future prices, and therefore excess profits cannot be earned by using strategies based on historical pricing.  A “semi-strong” efficient market is one where public information is reflected in stock price to the point where it is impossible to earn excess returns by trading public information.

Market efficiency is also a legal concept, which, it must be said, only roughly tracks the economic definition.  In particular, in Section 10(b) litigation, an “efficient” market is one that absorbs information with sufficient speed and thoroughness to justify allowing plaintiffs to bring claims using the fraud on the market theory to satisfy the element of reliance.

The exact degree of speed/thoroughness that’s required for Section 10(b) litigation is something of a theoretical muddle (as Donald Langevoort has written extensively about) – although the Supreme Court’s recent Halliburton decision may provide more guidance on that (see discussion here and here).

For now, though, most courts try to assess “efficiency” by reference to what are known as the Cammer factors, taken from the case of Cammer v. Bloom, 711 F. Supp. 1264 (D.N.J. 1989).  These factors include weekly trading volume (with higher volume taken as an indicator of efficiency), the number of analysts reporting on the security, the number of market makers, and the cause-and-effect relationship between the disclosure of new information, and changes in the security’s price.  Some courts also consider additional factors such as the size of the bid-ask spread and the number of institutional owners.

These factors have frequently been criticized as duplicative or uninformative.  See e.g.,  Geoffrey Christopher Rapp, Proving Markets Inefficient: The Variability of Federal Court Decisions on Market Efficiency on Cammer v. Bloom and its Progeny.  Some commenters have speculated that a few of the factors are counterproductive, and in certain markets might indicate less efficiency.  See, e.g.,  William O. Fisher, Does the Efficient Market Theory Help Us Do Justice in a Time of Madness? (2005).

There’s a new paper that tests this claim, and concludes that the commenters are right, and at least some of these factors really are counterproductive.

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A few weeks ago a group of CEOs, business execs, policy-makers, academics and spiritual guides converged for a three-day symposium in Switzerland to discuss specific pathways for blending “inspiration,” “innovation,” and “investment”.  Indeed, the title and central theme of this year’s symposium was “Daring for Big Impact — Blending Inspiration, Innovation and Investment” and I was humbled to be invited to present my work on Shareholder Cultivation and New Governance. I left feeling inspired and with a renewed sense of purpose, and recently posted a summary of the discussions on the HuffPo. A link to that piece is available here.

One of the classic arguments against private securities liability – and in particular, Section 10(b) fraud-on-the-market liability, with its high potential damages – is that it overdeters issuers, thus stifling voluntary disclosures rather than encouraging them.  This was in fact the theory behind the PSLRA’s safe harbor: the statute makes it particularly difficult for private plaintiffs to bring claims based on projections of future performance, in part because of Congress’s fear that expansive liability would dissuade issuers from making projections at all.

Two new empirical studies challenge this common wisdom.

The first, Private Litigation Costs and Voluntary Disclosure: Evidence from Foreign Cross-Listed Firms, by James P. Naughton et al., uses the Supreme Court’s decision in National Australia Bank v. Morrison as a natural experiment.  That decision abruptly removed the specter of private Section 10(b) liability based on securities sold on a foreign exchange.  The authors compare voluntary earnings guidance offered by firms whose securities are cross-listed in the US and abroad before and after Morrison to determine how the diminished threat of liability affects issuer behavior. 

As it turns out, the authors found that earnings guidance decreased for those firms whose securities are cross-listed, as compared to counterparts whose securities…