Dear BLPB Readers:

The Edmond J. SafraCenter for Ethics at TelAviv University is accepting applications for its 2021-22 post-doctorate fellowship program. The Center offers grants to outstanding researchers who study the ethical, moral and political aspects of markets, local or global, real or virtual. The Center encourages applications from all disciplines and fields, including economics, social sciences, business, the humanities, and the law.  Complete call for applications here: Download Call for Post-Doc 2021-22

For the high school student in your life:

The mission of FIRE is to defend and sustain individual rights at America’s colleges and universities. These rights include freedom of speech, legal equality, due process, religious liberty, and sanctity of conscience—the essential qualities of individual liberty and dignity. In addition to defending the rights of students and faculty, FIRE works to educate students and the general public on the necessity of free speech and its importance to a thriving democratic society.

The freedom of speech, enshrined in the First Amendment to the Constitution, is a foundational American right. Nowhere is that right more important than on our college campuses, where the free flow of ideas and the clash of opposing views advance knowledge and promote human progress. It is on our college campuses, however, where some of the most serious violations of free speech occur, and where students are regularly censored simply because their expression might offend others….

In a persuasive letter or essay, convince your peers that free speech is a better idea than censorship.

Details here.

In 2018, a securities class action was filed against Allergan, alleging that the company concealed risks associated with breast implants.  Boston Retirement System was appointed lead plaintiff, and the case survived a motion to dismiss.  The court refused to certify the class, however, because of perceived misconduct by lead counsel Pomerantz.  See In re Allergan PLC Sec. Litig., 2020 WL 5796763 (S.D.N.Y. Sept. 29, 2020).

Specifically, Judge McMahon held that Pomerantz had defied her original order appointing it as lead counsel by taking on another firm – Thornton – as a kind of shadow co-lead counsel.  When Pomerantz was appointed, McMahon specifically rejected its request to name Thornton as co-lead because, in her words, “the involvement of multiple firms tends to inflate legal fees.”  Despite her order, well:

Thornton has not only remained involved in this litigation, albeit under the rubric of “additional counsel,” but that it has effectively played the role of co-lead counsel – to the point that BRS’ corporate representative has testified under oath that Thornton’s responsibilities did not change at all in response to the lead plaintiff order. It is clear that Thornton has been fully involved in every aspect of this case to date.

…

That’s right – it’s the moment we’ve all been waiting for.  The Court has granted cert in Goldman Sachs v. Arkansas Teachers Retirement System.  (Oh, I think there was some other stuff about not throwing out 20 million presidential votes in four states).

In any event, here are the questions presented by the petition:

(1) Whether a defendant in a securities class action may rebut the presumption of classwide reliance recognized in Basic Inc. v. Levinson by pointing to the generic nature of the alleged misstatements in showing that the statements had no impact on the price of the security, even though that evidence is also relevant to the substantive element of materiality; and (2) whether a defendant seeking to rebut the Basic presumption has only a burden of production or also the ultimate burden of persuasion.

I may or may not have more to say later but for those interested, my blog post about the Second Circuit opinion is here, and you can read all of the cert briefing here.

Earlier this year, the North American Securities Administrators Association released a draft Model Whistleblower Act.  As I wrote when the draft act emerged, the draft model legislation seemed to closely track the federal whistleblower-bounty program enacted as a part of Dodd-Frank.  In cribbing from Dodd-Frank, the initial draft picked up one of the problems with Dodd-Frank in that it contained language which had been interpreted to only protect whistleblowers who went to the regulator–not whistleblowers who reported internally.

To help states avoid the problem, Andrew Jennings led a comment letter effort, which I joined along with Andrew Baker and Samantha Prince.  Our comment letter (one of only seven submitted) explained that the draft language could be improved to address two concerns: (i) explicitly protecting internal reporting; and (ii) making clear that whistleblowers may anonymously report via counsel.

NASAA amended the draft model legislation to address these concerns.   The final model legislation now explicitly protects internal whistleblowers and contemplates anonymous whistleblowing through counsel.

I’m enormously grateful to Andrew Jennings for taking on drafting the letter at a time when he could have otherwise been pursuing purely academic scholarship.  This kind of involvement matters and has a real impact.  In the…

Over at Defining Ideas, Richard Epstein notes:

This past week, Nasdaq announced that it had applied to the Securities and Exchange Commission for authorization to impose diversity requirements on the boards of directors of its listed companies. The substantive proposal requires that each company include on its board at least two diverse directors, one of whom must be a woman (or, more precisely, one who self-identifies as female) and one who self-identifies as a member of an underrepresented minority, including “Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, two or more races or ethnicities,” or as “LGBTQ+.” Whenever these targets are not met, the listed company must offer a public explanation as to why that is the case…. In defense of its diversity mandate, Nasdaq tries to bring itself within … traditional rationales by claiming that increasingly diverse boards will help “prevent fraudulent and manipulative acts and practices.” Such avoidance of fraud and manipulation purportedly follows from a decrease in groupthink that comes from airing diverse perspectives.

This made me wonder whether we’ll soon be seeing a similarly structured viewpoint diversity proposal from Nasdaq, given that according to the…

Several weeks ago, I posted about VC Laster’s opinion in the busted Anthem-Cigna merger.  Ever since then, I continued to mull the case and – in particular – I had questions about what might happen if the Cigna shareholders sued Cigna’s management over the deal’s failure.  I planned to post about it as a hypothetical thought experiment, but then – what ho! – the Cigna shareholders did in fact file such a lawsuit – though, as I explain below, not quite the one I was contemplating. 

Anyhoo, now I am finally getting around to posting my thoughts, though I’m almost hesitant to do so because I’m afraid the answer to my questions may be really obvious and I’m simply splattering my ignorance over the internet, but, well, that’s what blogging is for, so, here goes.

It all starts with Laster’s conclusions after the Anthem-Cigna trial. He found that Cigna’s CEO, David Cordani, intentionally tried to sink the deal by refusing to honor Cigna’s commitments under the merger agreement.  And Cordani did so not out of concern for Cigna’s stockholders, but because he was resentful of not being chosen to lead to the combined entity.  For example, after an agreement…