As co-blogger Joan Heminway mentioned in Monday’s post, I’m soon heading to Connecting the Threads VI.  I could not be more excited! I’m so grateful to the University of Tennessee Law School for hosting the Symposium, and especially Professors Joan Heminway and George Kuney, in addition to all of the hard-working, excellent law student editorial staff of Transactions: The Tennessee Journal of Business Law, who help with the Symposium and later edit and publish our symposium-related articles.  Paying for Energy Peaks: Learning from Texas’ February 2021 Power Crisis, coauthored with Professor James Coleman, is my latest article in Transactions and my first in the energy space!  Here’s its first paragraph (with footnotes removed):

“From February 14–19, 2021, winter storm Uri blanketed Texas with extreme cold. Tragically, the severe temperatures overwhelmed the state’s power system. Texas’ power grid ended up more than 20 Gigawatts short of the electricity Texans needed – more power than all of California produces on an average day. Over two-hundred lives were lost and an estimated $295 billion in damage resulted. Yet many had long regarded Texas’ electric power system, and its regulation, as a model for others. What happened? That question

I recently had a chance to listen to an episode of the Institutionalized podcast discussing efforts by the American Civil Rights Project to combat the embrace of neo-racism by corporate America. (Cf. “In his new book, Woke Racism: How a New Religion Has Betrayed Black America, Professor John McWhorter argues that a neoracism, disguised as antiracism, is hurting Black communities in this country.”)  In the course of that podcast, Dan Morenoff, Executive Director of the American Civil Rights Project, discussed a relevant recent litigation filing against Starbucks. A copy of the complaint can be found in the ACRP press release here, and here is an excerpt from that release:

Yesterday [8/30/22], for the National Center for Public Policy Research, a longtime Starbucks shareholder, the American Civil Rights Project sued Starbucks’ officers and directors. That suit – NCPPR v. Schultz et al. – seeks both to bar those officers and directors from continuing to implement racially discriminatory policies and to hold them responsible for the harms those policies have done to shareholders. This step follows the parties’ exchange of letters.  In March, the ACR Project wrote the defendants and Starbucks demanding the immediate retraction of seven

…

Senators Reed, Warren, and Cortez Masto recently introduced a bill to expand Section 12(g) of the Exchange Act.  The bill, as I understand it, would require that private companies with WKSI-level private valuation, or $5 bill in revenue plus 5,000 employees, would become reporting companies.

I couldn’t find announcements from the sponsoring senators about the purpose of the bill, but there is this floor statement from Sen. Reed:

[T]hese companies have incredible influence over our society and way of life.  … It should be alarming when private companies can become extremely large and influential in our economy and raise unlimited amounts of capital from an unlimited number of investors, while circumventing the basic disclosure and governance requirements that Congress sought to apply…

I wrote a whole article on how securities disclosures are nominally intended for investors, but they are used by other audiences, and the distortive effects of attempting to hijack the securities disclosure system for the benefit of stakeholders.  My point is not that stakeholders don’t deserve disclosure – far from it! – but instead that we should openly create a stakeholder disclosure system rather than continue to filter stakeholder-oriented disclosures through the SEC.

This bill … illustrates the…

The SEC’s investor advisory committee recently released a draft climate disclosure recommendation.  The recommendation generally supported the SEC’s proposal with some suggestions changes.  The recommendation runs just 6 pages but makes a number of thoughtful points. 

It calls for eliminating a proposed requirement for the board to disclose the climate expertise of its members in favor of a requirement for management to discuss climate-related risks and opportunities.  This strikes me as a better approach.  Investors want to have a sense about how the corporation will respond to climate change.  So long as the board can get qualified expert advice, it doesn’t need to have members with direct climate-risk expertise–something that will be difficult to define anyway.

Wentong Zheng has published Corporations As Private Regulators, 55 U. Mich. J.L. Reform 649. The paper can be downloaded here. Below is an excerpt.

In August 2018, technology giant Microsoft made headlines by announcing that it would soon require its suppliers and contractors with more than fifty employees to offer workers at least twelve weeks of paid parental leave.¹ Microsoft’s new policy closely mirrors a Washington state law requiring that workers in the state receive twelve weeks of paid family leave; it is an effort to extend that same level of benefit to workers outside of the company’s home state.²

While groundbreaking for the world of paid family leave, Microsoft’s move was only one example of an increasingly common trend of corporations weighing in on public policy through corporate action. Following the 2018 mass shooting at Marjory Stoneman Douglas High School in Parkland, Florida, Dick’s Sporting Goods banned sales of assault-style weapons and raised the minimum age for purchase of firearms and ammunition in its stores to twenty-one.³ Citigroup placed restrictions on their new retail business clients, prohibiting them from selling guns to customers who have not passed a background check and are under the…

A while back, I blogged about a securities fraud case where the only lead plaintiff applicant was rejected on the grounds that he had sent harassing letters to the defendants.  Ultimately, in that case, no alternative lead plaintiff ever completed a new application, and the case did not proceed as a class.  Instead, several investors proceeded on an individualized basis, and their claims were eventually dismissed.

Well, it happened again: in Bosch v. Credit Suisse Group, 22-cv-2477 (ENV), Magistrate Judge Roanne Mann held that the only proposed lead plaintiff – with a $621 stake – simply did not have enough interest in the case to justify appointment as lead. 

This is a bit more unusual than the earlier case I blogged about, though, because the denial wasn’t based on misconduct, but simply dollar value of losses.  The judge reasoned that, according to the PSLRA, the lead plaintiff must make a “prima facie showing that its claims satisfy the typicality and adequacy requirements of Rule 23,” and then held that a $621 loss rendered the plaintiff inadequate: “This Court is not satisfied that Jimenez has a sufficient interest in the litigation to vigorously pursue the claims of the…

As set forth below, on September 23 I’ll be moderating two panel discussions as Akron Law hosts the Buckingham Leadership Series. The images below are JPEGs, so please click here if you’d like to register to attend (registration is free).