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Hey, everyone.  Two very quick hits today.  First, as any follower of this blog knows, I have been avidly following the Salzberg v. Sciabacucchi litigation (see prior posts here and here and here, etc), not because I care very much about whether corporations can select a federal forum for Section 11 claims, but because I think if corporations can use their charters and bylaws to select a federal forum for Section 11 claims, the next step is using charters and bylaws to adopt provisions requiring individualized arbitration of federal securities claims, and that opens up a whole new can of worms.  (For newcomers, my article on the subject of arbitration clauses in corporate charters and bylaws is here).

In any event, on Wednesday, the Delaware Supreme Court heard oral argument on federal forum provision issue. I don’t really have any insights about it – although the justices asked several questions at the beginning of each advocate’s presentation, they were, for the most part, quiet – but if you want to see for yourself, the video is here.

Additionally, last week I had the opportunity to speak on a panel with Sean Griffith and Adriana Robertson, moderated by…

Briefing continues in litigation aimed at overturning the SEC’s Regulation Best Interest.

After the parties filed their briefs on December 27, the amicus front heated up.  The Public Investors Arbitration Bar Association filed an amicus brief citing some academic works by Rutger’s Arthur Laby, and St. John’s Christine Lazaro.  Better Markets and the Consumer Federation also filed an amicus brief–also citing influential work by Arthur Laby.  Even former members of congress–notably Dodd and Frank have weighed in arguing that the SEC misread Dodd-Frank.

It’s worth following the case as it continues to develop.

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Most readers are probably familiar with the case of Morrison v. Berry.  There, Fresh Market was taken private by Apollo in a two-step tender offer.  After the deal closed, a shareholder filed a lawsuit alleging that the directors had breached their duties and failed to obtain the best price for shareholders because Ray Berry, founder of Fresh Market and Chair of the Board, along with his son, colluded with Apollo to roll over their shares in the new company and rig the sales process in Apollo’s favor.  Defendants contended that shareholders’ acceptance of Apollo’s offer cleansed any breaches under Corwin; therefore, the critical question was whether the shareholders were fully informed.  VC Glasscock held that any omissions were immaterial as a matter of law, and the Delaware Supreme Court reversed, holding that omissions regarding the Berrys’ level of precommitment to Apollo were material.

After remand, the plaintiff filed a new complaint and the defendants renewed their motions to dismiss.  And on December 31, VC Glasscock granted in part and denied in part those motions.  In particular, he held:

(1) The directors other than Ray Berry were independent and disinterested, and neither the sales process nor the…

I want to get an early start on wishing a HAPPY NEW YEAR to all BLPB readers!  May 2020 be one of your best years yet!  I’m celebrating by going to my very first “Shrimp Drop” with my mom.  Turns out that Fernandina Beach, FL. is the “Birthplace of the Modern Shrimping Industry.”  I do love shrimp!

Other than this, I can’t think of a more exciting way to ring in 2020 than by reading a new, fantastic article on banking!  Fortunately, I didn’t have to look far.  Jeremy C. Kress and Matthew C. Turk recently posted: Too Many to Fail: Against Community Bank Deregulation (here).  Legal scholarship has thus far paid scant attention to community banks.  After reading their work, you’ll understand why this shortfall is unfortunate, and this article so important.  Here’s the abstract:  

Since the 2008 financial crisis, policymakers and scholars have fixated on the problem of “too-big-to-fail” banks. This fixation, however, overlooks the historically dominant pattern in banking crises: the contemporaneous failure of many small institutions. We call this blind spot the “too-many-to-fail” problem, and document how its neglect has skewed the past decade of financial regulation. In particular, we argue…

I’ve previously blogged about – and written an essay about – how one of the knock-on effects of Corwin and MFW is to increase the distance between the treatment of controlling shareholder transactions, and other transactions, under Delaware law.  As a result, the outcome of many a motion to dismiss turns solely on the presence or absence of a controlling shareholder – which puts increasing pressure on the definition of control in the first place.  In particular, I’ve argued, courts uncomfortable with Corwin’s Draconian effects may be tempted to expand the definition of control in order to avoid early dismissals of cases that smack of unfairness.

The latest example of the genre comes by way of Vice Chancellor McCormick’s ruling on the motion to dismiss in Garfield v. BlackRock Mortgage Ventures et al.  There, an enterprise organized as an “Up-C” sought to transform itself into an ordinary corporation, largely for the benefit of the two founding investors, BlackRock and HC Partners, as well as several directors and corporate officers.  The question was whether the transaction was fair to the public stockholders, who overwhelmingly voted in favor of the deal.  If BlackRock and HC Partners were not deemed to…

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I have previously commented that many investments describe themselves as “sustainable” or “ESG” (environmental, social, governance) focused, without much standardization as to what those terms mean – and I’ve criticized the SEC for failing to step in to create a set of uniform definitions.

Turns out, the SEC might finally be taking some action, though it’s not necessarily what I’d hoped for:

Many investment firms have been touting new products as socially responsible. Now, regulators are scrutinizing some funds in an attempt to determine whether those claims are at odds with reality.

The Securities and Exchange Commission has sent examination letters to firms as record amounts of money flow into ESG funds. These funds broadly market themselves as trying to invest in companies that pursue strategies to address environmental, social or governance challenges, such as climate change and corporate diversity.

But there have been critics of the growth in these funds. Some argue investment funds should focus solely on returns, and some firms have faced questions about how strictly they adhere to ESG principles….

One letter the SEC sent earlier this year to an investment manager with ESG offerings asked for a list of the stocks it had

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