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A full court press to lower the gates to private markets has emerged.  Last month, Duke’s Gina-Gail Fletcher testified before the House Committee on Financial Services, Subcommittee on Capital Markets.  The Committee titled the hearing: “Sophistication or Discrimination? How the Accredited Investor Definition Unfairly Limits Investment Access for the Non-wealthy and the Need for Reform.”  It considered a range of bills which would eat away at the accredited investor standard and allow broader access to private markets.

The U.S. Congress isn’t the only legislative body considering whether to allow ordinary retail investors to buy private offerings.  Nevada has introduced legislation which would create an intrastate offering exemption which would allow Nevadans making about $65,000 a year (Nevada’s median income) to be sold illiquid, private placements.  The Nevada proposal would create “Nevada certified investors” as an intrastate offering category.  The proposal describes it this way:

“Nevada certified investor” means a natural person who is, or a married couple who each are, a resident of this State  and who, at the time an offer to sell or sale of a security is made to the person or couple: 1. Holds an ownership interest of more than 50 percent in a 

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On January 30, 2023, the Hoover Institution hosted a one-day conference on Markets vs. Mandates: Promoting Environmental Quality and Economic Prosperity. You can find an overview of the program (including speaker bios) here, and recordings of the seven sessions here. What follows are some excerpts from the session descriptions.

Sanjai Bhagat explained that ESG investing principles and new standards of corporate social responsibility are not based on the fiduciary duty to maximize shareholder value.

John Cochrane asserted that the Security and Exchange Commission’s plan to enforce ESG investment practices isn’t based on “saving the planet” but on bending corporations to serve a particular political agenda. Echoing Bhagat, Cochrane said the ESG mandates would not maximize shareholder value. It would instead deny capital to companies, lower their asset prices, and curb returns to investors. ESG mandates would also pervert markets, destroy competition, and encourage some companies to rent-seek from the government.

Mark Mills argued that ambitious goals to achieve zero carbon emissions in the coming decades are delusional. He said that over the past 20 years, after $5 trillion spent worldwide, there hasn’t been any significant movement toward transitions to renewables. Today, global energy derived from

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Quick post today to mention that I did a podcast!  Evan Epstein of UC Law San Francisco hosts a regular podcast called “Boardroom Governance” for which he’s interviewed everyone who has anything to do with corporate issues – academics, practitioners, board members, you name it.  Recently, he was kind enough to invite me for an interview.  It was a great discussion, covering everything from Twitter v. Musk (of course), to the McDonald’s decision, to Sam Bankman-Fried, to public benefit corporations, to Domino’s pizza.

You can give it a listen here (and at that link there’s a handy index, if you want to jump to particular points).

This post was originally intended to be submitted as a comment to Ann Lipton’s recent “Don’t Say Anything” post – so please read that post first before continuing. I ultimately decided to publish this as a free-standing post because it got a bit long for a comment and I’ll be better able to follow any subsequent comments here. As always, I remain open to changing my mind in the light of convincing feedback.

Ann’s post starts by referencing “Florida’s ‘Don’t Say Gay’ law, HB 1557.” For context, the following from Heritage Action’s Executive Director Jessica Anderson (here) may be helpful:

While the Left and the corporate media continue to lie about Florida’s Parental Rights in Education bill, HB 1557, Florida Republicans haven’t stopped working to protect parents and children. Nothing in the bill bans the word ‘gay’ or censors schools — it simply protects grades K-3 from sexualized instruction and bolsters parents’ rights to know what’s going on in their children’s lives at school.

As for the substance of the case, I predict that Chancery will not dismiss the request. Why? Because it does not have to dismiss it in order to discourage “bullying” because this…

As you may be aware, a Disney shareholder, Kenneth Simeone, has filed a Section 220 action in Delaware Chancery seeking books and records pertaining to Disney’s announcement in early 2022 that it opposed Florida’s “Don’t Say Gay” law, HB 1557. 

Before the law was passed, Disney’s CEO, Robert Chapek, told employees that the company would not take a public position on the law.  That decision infuriated Disney employees, who, among other things, began staging walkouts in protest.  Ultimately, Chapek reversed course and publicly stated that Disney opposed the law.

In the wake of that announcement, Governor Ron DeSantis and the Florida legislature voted to dissolve Disney’s self-governed Reedy Creek Improvement District, although they later walked back their actions by maintaining the district but transferring control to Florida political appointees.  Chapek was fired by the board (likely for a host of reasons), and former CEO Robert Iger was restored to his old role.

Anyway, Simeone claims that he has a credible basis to suspect that Disney’s public opposition to the law was the result of mismanagement and breach of fiduciary duty.  In particular, he claims that Disney’s officers and directors may have put their personal political preferences…

Thomson Reuters recently published an accounting & compliance alert (here) noting the following.

  • Representative Bill Huizenga of Michigan signaled a new working group “will lean heavily into the Supreme Court’s 2022 ruling in West Virginia v. EPA to argue that the SEC has gone beyond its statutory authority with the proposed [climate] rules, set to be finalized this spring…. The working group will examine how to ‘rein in the SEC’s regulatory overreach’ and reinforce the materiality standard in the disclosure regime, as well as ‘hold to account market participants who misuse the proxy process or their outsized influence to impose ideological preferences in ways that circumvent democratic lawmaking,’ according to a news release.” 
  • “Senator Marco Rubio on Feb. 2 announced his ‘anti-woke agenda’ for the 118th Congress, including the Mind Your Own Business Act that would enable shareholders to more easily sue public companies over socially-driven actions, such as refusing to do business in states that crack down on abortion or restrict voting rights.” [FWIW, I suspect that Sen. Rubio might replace “refusing to do business in states that crack down on abortion or restrict voting rights” with “refusing to do business in states that protect the

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As I’ve mentioned repeatedly in this space, I recently posted a new paper to SSRN: Inside Out (or, One State to Rule them All): New Challenges to the Internal Affairs Doctrine, forthcoming in the Wake Forest Law Review.  The paper is about the uncertain boundary between matters subject to the internal affairs doctrine, and matters subject to ordinary choice of law analysis, and one of the issues I tackle concerns LLC agreements.  Specifically, LLCs have increasingly included employment provisions in their operating agreements, leaving Delaware courts in somewhat of a quandary as to whether the operating agreement is subject to the internal affairs doctrine – and thus Delaware law – or whether instead it should be treated as an employment contract, subject to ordinary choice of law analysis. (I also blogged about one such case here; as longtime readers are aware, stuff I muse on in blog posts often ends up in papers).

Anyhoo, this is why VC Will’s new opinion in Hightower Holding LLC v. Gibson is so striking.  There, partners in a financial advisory firm sold their interests to Hightower, and were made LLC members and principals in Hightower.  The LLC agreement contained a…

As reported by America First Legal (here), Texas Governor Greg Abbott’s office recently issued a memo reminding state agencies and universities that “federal and state law forbid discrimination against a current or prospective employee because of that person’s race, color, religion, sex, national origin, age, disability or military service.” As stated in the letter (here): “Rebranding this employment discrimination as ‘DEI’ doesn’t make the practice any less illegal.” Of course, the extent to which diversity may be deemed a compelling interest justifying at least some forms of racial discrimination is an issue currently before the Supreme Court (see here).

Continuing ongoing coverage of the case challenging FINRA’s constitutional status, we have some new developments.  The plaintiffs have filed an Amended Complaint.  The United States has also intervened in the case to defend the constitutionality of the securities laws.

Lamentably, the Amended Complaint does not cite to Supreme Risk.   I can understand why they would not want to cite me.  Although the article discusses the possibility of their types of claims at length and characterizes them as a colorable risk with the current Supreme Court, it also points out that they might trigger a financial crisis if they win.  That being said, they cite many of the same people I cited in my article.  

Although I haven’t spent much time sitting with the Amended Complaint, I saw a few things that struck me as just plain wrong immediately. 

Let’s take one of their jurisdictional allegations.  To deal with the earlier motion to dismiss, the amended complaint tries to detail much more of FINRA’s connection to Florida.  It alleges that “FINRA also funds, operates, and conducts business in Florida through its Investors Rights Clinic that is located in this state.”  This struck me as completely untrue.  The Clinic…

Many BLPB readers are likely aware that Stephen Bainbridge recently published a new book, The Profit Motive: Defending Shareholder Value Maximization. I must admit that I’m a fan of the Introduction:

There are a lot of books on the market praising stakeholder capitalism. They proclaim a new age in which big corporations should embrace—and, in fact, are embracing—environmental, social, and governance (ESG) goals. Whether putatively objective academic tomes filled with statistics or mass market books filled with bullet points, the bottom line is the same; namely, that stakeholder capitalism is the right thing to do both morally and financially. This is not one of those books.

For those of you on the fence, there is an hour-long overview on YouTube (here), but if that’s too long you might consider a recent guest post by Prof. Bainbridge on the Corporate Finance Lab discussing the book (here). Below is a brief excerpt from that post.

Three major themes animate the project. First, any conception of corporate purpose that embraces goals other than creating value for shareholders is inconsistent with the mainstream of U.S. corporate law. Second, directors do—and should—have wide and substantially unfettered discretion as to how

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