I want to wish all BLPB readers a Happy Thanksgiving!

Below, I’ve excerpted information about the upcoming Law and Ethics of Big Data research symposium.  The call for papers is here: Download BIG DATA CALL FOR PAPERS March 27-28 2020 at GA Tech

Law and Ethics of Big Data

Hosted and Sponsored by: Cecil B. Day Program for Business Ethics Machine Learning @ Georgia Tech (ML@GATECH)Georgia Institute of Technology, Scheller College of Business Co-Hosted by: Virginia Tech Center for Business Intelligence Analytics The Department of Business Law and Ethics, Kelley School of Business March 27th and 28th 2020 at the Scheller College of Business, Georgia Institute of Technology, Atlanta, GA

Abstract Submission Deadline: February 1, 2020

We are pleased to announce the research colloquium, “Law and Ethics of Big Data,” at the Scheller College of Business, Georgia Institute of Technology, Atlanta, GA, co-hosted by Professor Deven R. Desai, Assistant Professor Angie Raymond of Indiana University, and Professor Janine Hiller of Virginia Tech.

Due to the success of this multi-year event that is in its seventh year, the colloquium will be expanded and we seek broad participation from multiple disciplines; please consider submitting research that is ready for the discussion stage.

Recently, these stories caught my eye:

Neptune Says Readying for IPO Means Readying Low-Carbon Strategy

Neptune Energy Group Ltd. said that preparing to go public, possibly within the next two years, means it has to explain to potential investors how its fossil fuel-based business model is sustainable.

The company is putting together an ESG strategy, a term encompassing environmental, social and governance issues, which it will publish along with its annual report in April. The move reflects growing concern about climate change among investors in the sector, many of whom are demanding a stronger response from oil producers amid a gradual shift toward cleaner energy….

John Browne [the former BP Plc chief] who helped create the largest privately held oil company in Europe — Wintershall DEA — has said an ESG strategy is now crucial to attracting investment.

Indeed, even oil behemoth Saudi Aramco has been touting its relatively low carbon intensity — the level of emissions per unit of energy produced — to woo investors to its initial public offering.

These Agencies Want to Check Who’s Naughty and Who’s Nice

Credit rating companies are muscling their way into the burgeoning world of responsible investing, purchasing smaller outfits that provide

…

The broker-dealer community enjoys unusual influence over its regulation because Congress made an industry trade-association the primary regulator for broker-dealers.  FINRA’s member firms elect much of its governing board and influence how FINRA will allocate its resources and set priorities.  This includes decisions about how many resources to devote to enforcement and supervision activities which might prevent significant investor losses.  Giving the industry collective responsibility for making harmed investors whole might cause the organization to devote more resources to enforcement and investor protection.

Unpaid arbitration awards may escalate if changing market conditions reveal that brokerage firms have sold investors interests in frauds and ponzi schemes.  Consider the recent case of Taylor Capital Management.  Taylor’s representatives reportedly sold interests in  “an alleged $283 million loan fraud” run though a company known as 1 Global Capital.  The allegations remind me of the Woodbridge Ponzi scheme that collapsed last year.  Now that Taylor Capital Management has closed its doors, the investors harmed by its conduct may not be able to recover.  We may never know the true scope of the harm because investors won’t file arbitration claims against an entity that cannot pay them.

It’s difficult to know whether these early collapses will…

“A decade ago, South Dakotan trust companies held $57.3bn in assets. By the end of 2020, that total will have risen to $355.2bn.” https://t.co/tiDCLXb2y8 #corpgov

— Stefan Padfield (@ProfPadfield) November 17, 2019

“an example of a successful 220 demand based on the court’s finding of: (1) A credible basis to investigate claims of breach of the duty of loyalty; &, (2) The rejection of the argument that … the plaintiff … was a mere proxy for plaintiff’s counsel” #corpgov https://t.co/47xWvHb5nQ

— Stefan Padfield (@ProfPadfield) November 18, 2019

“After the US Supreme Court decided in Green v. Santa Fe that merger challenges were the province of state law and not classic federal securities laws because they focused on fiduciary duty, not securities deceit and fraud, the Delaware state courts rose to prominence” #corpgov https://t.co/k0hLwO61Qg

— Stefan Padfield (@ProfPadfield) November 18, 2019

“we conducted an analysis of 50 equity joint venture legal agreements—drawn from across industries, geographies, and formation years—to see how the contracts address the [the duty of loyalty]. We found four basic approaches” https://t.co/RL9d5AIlpB

— Stefan Padfield (@ProfPadfield) November 17, 2019

“HP may also receive some pressure to merge from Carl Ichan, who owns a 4.24% stake in HP in

…

Today, I read about at least two interesting fintech regulation-related news items.

First, the New York State Department of Financial Services “has granted a charter under New York Banking Law to Fidelity Digital Asset Services, LLC (FDAS), to operate as a limited liability trust company as part of the state’s rapidly growing virtual currency marketplace.” (here)

Second, CFTC Chairman Heath Tarbert published an op-ed, Fintech Regulation Needs More Principles, Not More Rules, in Fortune magazine (here).  The title aptly summarizes this short piece.  In general, I tend to agree with Tarbert that “a principles-based approach is the best way to govern this emerging market,” but that some areas, such as customer protection, might be “more suited to a rules-based approach.”  Tarbert also notes that “CFTC staff is currently considering how the core principles applicable to exchanges…and clearinghouses…can be better tailored for fintech,” and that “core principles have been central to our evaluation of clearinghouses that would clear derivatives resulting in delivery of Bitcoin” (information about ICE’s physically settled Bitcoin contracts here).

In a former post (here), I wrote:

A participant [at the December 2018 MRAC meeting] briefly remarked that clearinghouse default funds…

I’ve frequently been asked to express a view on the spectacular decline of WeWork.  Is there a broader lesson here?  Or is this just a bizarre one-off?

I actually think there are a few lessons, and for this week’s post, I’ll start with the one about securities regulation and capital allocation.

One of the primary purposes of securities regulation is to ensure the efficient allocation of capital. See, e.g., John C. Coffee, Jr., Market Failure and the Economic Case for a Mandatory Disclosure System,  70 Va. L. Rev. 717 (1984); see also Benjamin Edwards, Conflicts and Capital Allocation, 78 Ohio St. L. J. 181 (2017).  SEC Chair Jay Clayton recently gave a speech in which he emphasized that the SEC is “not in the business of dictating a company’s strategic capital allocation decisions,” which is true – the SEC’s job is not to tell market actors where or how to invest – but the SEC is responsible for creating a disclosure regime that facilitates efficient capital allocation via investors’ choices.  And by that measure, the securities laws are failing.

As we all know, the securities laws – both through statutory revisions (JOBS Act) and…

Recent news reports claim that T-Mobile CEO John Legere may be in discussions with WeWork for him to leave T-Moble to take over as CEO at WeWork.  Legere came to my attention because of social media ads featuring videos of him bedecked in T-Mobile gear and hawking its services.   You’ve probably seen the ads as well. By all accounts, T-Mobile has grown dramatically under his leadership.  Legere’s name recognition and public visibility has also grown with the CEO becoming the ubiquitous face of the company.  In contrast, I cannot readily name or picture the CEOs of Verizon, Sprint, or AT&T.

T-Mobile may have spent millions to promote itself and also generate Legere’s visibility and name recognition.  It’s difficult to recall a T-Mobile advertisement without him in it. He now has about 6.5 million followers on Twitter.  In contrast, T-Mobile itself only has 1.2 million followers.  If he goes to WeWork, will his Twitter account go with him?  What does this mean for T-Mobile’s brand?  Is using corporate resources to secure additional social media followers for yourself ever a breach of the duty of loyalty to the corporation?

This strikes me as a corporate governance issue that boards should be thinking…