“diversified investors should rationally be motivated to internalize intra-portfolio negative externalities. This portfolio perspective can explain the increasing climate change related activism of institutional investors” https://t.co/B1muk1GbDt

— Stefan Padfield (@ProfPadfield) May 26, 2019

“By understanding the corporation as a collaboration between the government and the individuals organizing, operating, and owning the corporation, the impermissibility of aggressive corporate tax avoidance becomes apparent.” @EricChaffee, 76 Wash. & Lee L. Rev. 93 #corpgov

— Stefan Padfield (@ProfPadfield) May 26, 2019

Is the “80 cents” figure “simply incompatible w/ calls of equal pay for equal work”? “figures are raw medians…meaning they don’t control for…hours worked”; “Studies that compare apples w/ apples find a much narrower pay gap—or none at all.” https://t.co/tXdaQN2Ozi #corpgov

— Stefan Padfield (@ProfPadfield) May 28, 2019

“Even more pointed is the possibility that global poverty is declining because of increasing economic inequality rather than in spite of increasing inequality. This challenges a central liberal nostrum that economic inequality causes poverty.” https://t.co/bi4dvzrFSt #corpgov

— Stefan Padfield (@ProfPadfield) May 23, 2019

“federal government began in the 1970s to endow private actors with the public purpose of rating the soundness of [financial] instruments…. Predictably, their performance of their public function began to be

…

As it’s a holiday weekend, I’ll be brief and flag for readers one of the most intriguing news stories – given my research interests – that I came across this past week.  In Sirius Computer moves to block derivatives holders from speculation, Kristen Haunss notes:

Language in the financing package backing Sirius’ buyout by private equity firm Clayton, Dubilier & Rice (CD&R) prohibits lenders that own derivative positions from voting on company matters, according to three sources familiar with the loan credit agreement. As investor activism rises, the borrower wants to prevent these holders from declaring a default that could pay off for their hedged trades.

It’s an interesting move to limit potential strategic behavior by lenders with CDS positions.  The story notes that additional such limitations could be seen in the future.  If you want to learn more about recent cases of such strategic lender behavior, a great place to start would be Gina-Gail S. Fletcher’s Engineered Credit Default Swaps: Innovative or Manipulative?, which will be published in the New York University Law Review.

A couple of weeks ago, I was lucky to participate in a panel on securities litigation at George Mason University Antonin Scalia Law School, along with Professor J.W. Verret, Jonathan Richman of Proskauer Rose, Steven Toll of Cohen Milstein, moderated by Judge Michelle Childs of the District of South Carolina.  We had a lively discussion about current issues concerning these actions, including what I guess is now being branded as “event-driven” litigation, definitions of materiality, and arbitration clauses in charters and bylaws.

In my opening remarks, I discussed merger litigation and the shift from state to federal courts, covering much of the territory I previously described on this blog (of course, since that post, the Supreme Court dismissed the Emulex case as improvidently granted).  I also drew from research by Matthew Cain, Steven Davidoff Solomon, Jill Fisch, and Randall Thomas, presented in April at the ILEP symposium on corporate accountability.  (Their research is not yet public but I will link here as soon as it becomes available).

In the meantime, if you’re interested, you can watch a video of the panel here:

The other panels from the symposium are also available for viewing at this link

We have a new call for papers in Professional Responsibility.  It’s the law regulating the business of law.

AALS Section on Professional Responsibility 

2020 Annual Meeting

Call for Papers Announcement

Confronting the Big Questions About the Regulation of the Legal Profession

Saturday, January 4, 2020
10:30 a.m.-12:15 p.m.

Washington, D.C.

The AALS Professional Responsibility Section is pleased to announce a Call for Papers for the Section’s program at the AALS 2020 Annual Meeting in Washington, D.C. 

Program Description:

In its 2016 Final Report, the American Bar Association Presidential Commission on the Future of Legal Services concluded after a two-year inquiry that “technology, globalization, and other forces continue to transform how, why, and by whom legal services are accessed and delivered. Familiar and traditional practice structures are giving way in a marketplace that continues to evolve. New providers are emerging, online and offline, to offer a range of services in dramatically different ways. The legal profession, as the steward of the justice system, has reached an inflection point. Without significant change, the profession cannot ensure that the justice system serves everyone and that the rule of law is preserved. Innovation, and even unconventional thinking, is required.&rdquo…

The following comes to us from Bernard Sharfman:

I have slightly revised a key paragraph from the Introduction of my new article, Enhancing the Value of Shareholder Voting Recommendations. This paragraph takes the approach that shareholder voting is really more about authority than accountability. Using this approach has significant implications for the use of board voting recommendations. I would appreciate any comments that you may have on the following:

[S]hareholder voting in a public company cannot be looked at as simply another tool of accountability, i.e., a device to minimize agency costs or enhance efficiency, such as when shareholders file a direct or derivative lawsuit, initiate a proxy contest, attempt a hostile takeover, or take significant positions in the company and then advocate for change (hedge fund activism, here and here). When shareholders vote they are also participating, alongside the board, in corporate decision making. That is, they are temporarily transformed into a locus of corporate authority that rivals the authority of the board. As co-decision makers it is critical that shareholders and those with delegated voting authority, such as mutual fund advisers, have at their disposal informed and sufficiently precise voting recommendations, no matter what the…

Today, I thought of Haskell Murray’s recent post, Reflections on the Life of a Smiling, Selfless Educator: Rivers Lynch, in thinking about paying tribute to my former colleague, mentor, and friend, University of Notre Dame Law School Professor John Nagle, who passed away yesterday.  Like so many, I am stunned and devastated by John’s death.  He too was a smiling, selfless educator who positively impacted the lives of so many.

John was a tremendous scholar in the areas of environmental law, property, legislation & regulation, and biodiversity and the law.  Yet because of his characteristic selflessness, I could always as his junior colleague count on him to critically read and comment on my work on topics such as the Federal Reserve and clearinghouses!  His feedback, in addition to his lasting support and encouragement, has been a priceless gift in my life.  I will be forever grateful.

Others have written about how John creatively integrated his life and research.  For example, he managed to “convert his love of the outdoors and our national parks into a research agenda.”  In catching up with John, I always loved hearing about his most recent national park adventure.  And…

In 2014, the Supreme Court decided Burwell v. Hobby Lobby Stores, where it held that it is possible for a for-profit corporation to have a religious identity, derived from the religious commitments of “the humans who own and control those companies.”  In so holding, the Court relied in part on state laws that permit even for-profit corporations to pursue purposes beyond stockholder wealth maximization.  As the Court put it:

Not all corporations that decline to organize as nonprofits do so in order to maximize profit. For example, organizations with religious and charitable aims might organize as for-profit corporations because of the potential advantages of that corporate form, such as the freedom to participate in lobbying for legislation or campaigning for political candidates who promote their religious or charitable goals.  In fact, recognizing the inherent compatibility between establishing a for-profit corporation and pursuing nonprofit goals, States have increasingly adopted laws formally recognizing hybrid corporate forms. Over half of the States, for instance, now recognize the “benefit corporation,” a dual-purpose entity that seeks to achieve both a benefit for the public and a profit for its owners.

In any event, the objectives that may properly be pursued by the companies in

…