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As reported by The American Civil Rights Project (here):

After months of pressure from concerned stockholders, Coca-Cola’s General Counsel Monica Howard Douglas recently let it be known that the illegal discriminatory outside-counsel policies Coke announced with great fanfare last year “have not been and are not policy of the company.” …

In January 2021, Douglas’s predecessor, Bradley Gayton, published the policies in a highly publicized open letter addressed to “U.S. Firms Supporting The Coca-Cola Company.” Under it, Coke’s law firms were required to staff Coke matters so that that “diverse” attorneys performed at least 30% of all hours billed, with “Black attorneys” performing “at least half [15%] of that amount” …. The letter stated that non-compliance for two successive quarters “will result” in Coke’s unilateral reduction of a firm’s future legal fees and that all future consideration for both new legal work and inclusion in Coke’s preferred-vendor list would turn on compliance….

[T]he ACR Project wrote to Coke, its officers, and its directors, on behalf of several shareholders, demanding the public retraction of the discriminatory policies. If Coke had refused, these shareholders would hold Coke’s officers and directors personally liable for breaching their fiduciary duties to investors.

After…

AALS Professional Responsibility Section – 2023 Annual Meeting New Voices

The AALS Professional Responsibility Section invites papers for its program “2023 New Voices Workshop.” The goal of this audience interactive workshop is to provide a forum for new voices and new ideas related to professional responsibility (PR), broadly defined. Many scholars might address PR without realizing it. We are interested in your potential contributions whether you are an evidence scholar writing about the attorney-client privilege, a feminist interested in gender dynamics that affect lawyering, a critical race scholar commenting on how power plays out in legal systems, an ethicist exploring the moral foundations of the rules governing lawyering, or something entirely different. Toward that end, we encourage you to submit a proposal even if you are pursuing scholarship on PR for the first time, even if you question whether your ideas really do relate to PR, and even if you are reticent to submit for some other reason. 

The selected papers will be presented at the AALS Annual Meeting in January of 2023

WORKSHOP DESCRIPTION:

The Workshop will be an opportunity to nurture the growth of a broad scholarly community in the field of Professional Responsibility and Legal Ethics. As…

The following comes to us from the Law & Economics Center at the Antonin Scalia Law School at George Mason University.

The Law & Economics Center is pleased to announce that we are now accepting applications to the Workshop for Law Professors on Teaching Capitalism. This program will be held at the Park Hyatt Beaver Creek Resort and Spa in Beaver Creek, Colorado with attendees arriving on Sunday, July 10 and departing on Thursday, July 14.

The Workshop for Law Professors on Teaching Capitalism is a five-day program that will deepen law professors’ understanding of the fundamentals of capitalism, educate the participants in methods and techniques for teaching about capitalism as a stand-alone course in their own law schools, and help guide these professors in ways to integrate lessons learned from capitalism and discussions around the topic into their subject-specific doctrinal courses like corporations, constitutional law, or on common law subjects. The workshop is designed to enrich the curricula of law schools across the country by encouraging a more robust discussion of capitalism and its relationship with the law in courses, by giving its attendees the tools necessary to take this instructional guidance back to their home institutions.  Across…

I really enjoyed Matthew Wansley’s new paper, Moonshots, forthcoming in the Columbia Business Review.  He focuses on the complicated incentives involved in performing “moonshot” research, that is, highly risky projects that could dramatically advance a field, but that will take years to develop.  He argues that the venture carveout structure – whereby a startup has public company parents alongside other private investors, and employee incentive ownership, is designed to mitigate the various conflicts and agency costs that would exist among the players, and uses autonomous driving as the major case study.

I haven’t seen much about corporate investment in outside entities – though I gather there has been more written in the business literature, the only other legal paper I’m familiar with is Jennifer Fan’s Catching Disruptions: Regulating Corporate Venture Capital, 2018 Colum. Bus. L. Rev. 341, which offers a detailed descriptive account of how corporate venture capital functions and how it differs from traditional venture capital.  But the two papers together convince me that this is a phenomenon that needs more attention in the legal scholarship.

Professor Julie Hill recently posted Bank Access to Federal Reserve Accounts and Payment Systems.  It’s an excellent and important article.  As I’ve blogged about (here) and written about (here), access to a master account at the Fed is an arcane, but highly important issue.      

Here’s the abstract for Professor Hill’s article:

“Should the Federal Reserve process payments for a Colorado credit union established to serve the cannabis industry? Should the Federal Reserve provide an account for a Connecticut uninsured bank that plans to keep all its depositors’ money in that Federal Reserve account? Should the Federal Reserve provide payment services for an uninsured, government-owned bank in American Samoa? What about Wyoming cryptocurrency custody banks? Should they have access to Federal Reserve accounts and payment systems? Although the Federal Reserve has recently considered account and payment services applications from these novel banks, its process for evaluating the applications is not transparent.

This Article examines how the Federal Reserve decides which banks get access to its accounts and payment systems. It explores the sometimes-ambiguous statutory authority governing the Federal Reserve’s provision of accounts and payments and chronicles the Federal Reserve’s longtime policies limiting access…

The blog has previously covered the ongoing litigation over California’s director diversity statutes, with Ann contributing this insightful writeup of an earlier Ninth Circuit decision.  The case has returned to the Ninth Circuit on appeal again after the District Court denied a motion for a preliminary injunction.   The case involves a shareholder claim challenging SB 826 on the theory that the law exerts pressure on shareholders to unconstitutionally discriminate when they cast their votes for directors in shareholder elections out of fear that electing a board without enough women will subject the corporation to a fine.

I joined with seventeen other securities and business law scholars to file an amicus brief arguing that the shareholder claim should be classified as a derivative claim.  Many thanks to all who joined and many apologies to Faith Stevelman who joined before the filing deadline and sent thoughtful comments.  In the rush to finalize the brief, I didn’t get her name on the final list of amici.  

This is the summary of the argument:

This shareholder derivative litigation should be decided under ordinary rules for shareholder litigation.  Plaintiff has asserted claims and sought a preliminary injunction as a shareholder of OSI Systems, Inc. (OSI). 

…

By now, I’m sure everyone is very much aware that Elon Musk took a giant stake in Twitter, was late filing his Schedule 13G (and failed to include a certification that he intended to hold passively), was added to Twitter’s board, and updated his Schedule 13G to a 13D, leaving a question whether he should have been filing on 13D all along.  Once Musk did reveal his stake, Twitter’s stock price shot up.

The SEC has not historically policed the Schedule 13G/Schedule 13D filing requirements with great vigor, though Gary Gensler has highlighted the potential harm to traders/markets when they trade in ignorance of the presence of a potential activist investor; see also United States v. Bilzerian, 926 F.2d 1285 (2d Cir. 1991) (“Section 13(d)’s purpose is to alert investors to potential changes in corporate control so that they can properly evaluate the company in which they had invested or were investing.” (quotations and alterations omitted)).

Matt Levine asks whether this means Elon Musk engaged in insider trading, since he managed to save maybe $143 million by continuing to amass Twitter stock before finally revealing his holdings.

I’m going to ask something else: do the traders who sold between the time he was supposed to file the 13G, and the time he actually filed it, have a claim?  And it seems pretty much, yes they do.

And boy howdy this got long, so, under the cut it goes:

Recently, I had the pleasure of attending “Avoiding Fraud in the ERA of NIL and Student Athletes,” the inaugural event of the Wilkinson Family Speaker Series at the University of Oklahoma College of Law.  I learned so much and had a chance to meet several of the incredible speakers!  I wanted to share with BLPB readers a summary from Laura Palk, the Assistant Dean of External Affairs, so that those interested in these topics will be on the lookout for future events in this series. 

“OU Law Dean Katheleen Guzman in collaboration with VP for Intercollegiate Athletics, Joe Castiglione, hosted a two-day discussion regarding investor fraud and the student athlete in light of the new name image likeness rules, starting with a fireside chat with former NFL player, Leonard Davis, and his attorney, Graig Alvarez. They were joined by moderator, Lou Straney, to share their story of how athletes are frequently targeted by trusted friends and advisors and how to avoid becoming a target. The next day, Professor Megan Shaner, along with national experts Jeff Abrams, Lisa Braganca, Robert Cockburn, Richard Frankowski, Professor Nicole Iannarone, Jason Leonard, Robin Ringo and Professor Andrew Tuch, presented a symposium educating the OU community and alumni about various types of investment fraud, how to identify…

So the SEC dropped a couple of hundred pages of proposed new rules governing SPAC transactions. 

I’d say the rules fall into three categories: 

First, there are the ones meant to harmonize the regulatory framework for SPACs and for more traditional IPOs, both in terms of requiring disclosures akin to those in the IPO context, and in terms of imposing similar liability regimes, so that SPAC target companies will be vulnerable to Section 11 liability, financial advisors that shepherd the de-SPAC process will be treated as underwriters, and the PSLRA safe harbor will be unavailable for de-SPAC related projections.

(That last point is tricky: As the SEC acknowledged in its release, and as Professor Amanda Rose points out in a paper, because the de-SPAC is a merger, companies may essentially be required to include projections, like the ones that underlie financial advisors’ opinions, in their proxy statements.  Which would mean, unlike in a traditional IPO, there would be no minimizing liability exposure simply by failing to include projections in the SEC filings.  Couple that with Section 11 liability and it could be pretty intense.  That said, the SEC is proposing to require issuers to include climate-related forward-looking information…