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In general, I’m probably about as excited to listen or read about the area of tax law as most people are about the area of clearing and settlement (not that I understand this!).  However, at a January 2019 symposium organized by the University of Pennsylvania Journal of Business Law, in collaboration with the Center for the Study of Business Ethics, Regulation, & Crime at the University of Maryland, on Harmonizing Business Law, Kathryn Kisska-Schulze & Karie Davis-Nozemack completely captured my attention in a presentation that focused on “the intersection of U.S. industrialization with employment and innovation tax policies.”  I’d never given any thought to the potential implications of the increasing automation of the workplace for existing social safety nets.  Yet it immediately struck me as a critical, timely issue. 

So, I was delighted this weekend to have a chance to read their recently posted article, Humans vs. Robots: Rethinking Policy for a More Sustainable Future (forthcoming, Maryland Law Review).  I learned a lot.  For example, I never knew that in addition to writing about the “invisible hand” and moral sentiments, that Adam Smith also wrote about tax!  As this article is a really interesting read about a topic…

Vanguard recently announced that it will no longer centralize proxy voting across all of its funds; instead, its externally managed funds will set their own proxy voting policies.  Although these represent only around 9% of Vanguard’s assets under management, they include almost all of Vanguard’s actively managed funds and actively managed equity assets. 

I haven’t really seen much explanation for the shift from Vanguard itself – its own statement on the matter is quite vague – but I suspect they may have made the change for the same reason that Fidelity separates active and passive voting authority, namely, to avoid having the active funds grouped with the passive for the purposes of Section 13(d) of the Securities Exchange Act.  Fidelity’s policy is longstanding because historically, it specializes in active funds.  Vanguard, by contrast, is nearly synonymous with index funds, so my guess is that it reached a point where the active assets under management were becoming a regulatory risk, especially if those funds wanted to take positions with a view toward influencing – or supporting those who influence – management.  As John Morley points out, Section 13(d) limits the ability of large fund providers to take…

Every year the Corporate Practice Commentator releases its annual annual poll of best corporate and securities law articles.  I had the pleasure of seeing earlier stages for some of these papers at conferences over the past few years.    

These are the results this year:

The Corporate Practice Commentator is pleased to announce the results of its twenty-fifth annual poll to select the ten best corporate and securities articles.  Teachers in corporate and securities law were asked to select the best corporate and securities articles from a list of articles published and indexed in legal journals during 2018.  Just short of 400 articles were on this year’s list.  Because of the vagaries of publication, indexing, and mailing, some articles published in 2018 have a 2017 date, and not all articles containing a 2018 date were published and indexed in time to be included in this year’s list.

The articles, listed in alphabetical order of the initial author, are:

Yakov Amihud, Markus Schmid & Steven Davidoff Solomon.  Settling the Staggered Board Debate.  166 U. Pa. L. Rev. 1475-1510 (2018).

Tamara Belinfanti & Lynn Stout.  Contested Visions: The Value of Systems Theory for Corporate Law.  166 U. Pa. L. Rev.

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I read with interest and some sadness this New York Times article published last month.  Having just finished a full weekend of yoga continuing education with a group of women (most of whom were about to graduate from a registered teacher training like the one I completed last November), I feel compelled to say a few words about the article and the business of yoga and yoga instructor training.  My perspective on the matters raised in the article is, of course, colored by my background in business law practice and teaching and my recent teacher training experiences.  I am sure that co-blogger Colleen also would be interested in the article for similar reasons (and given her earlier post on yoga and entrepreneurship).

The article highlights specific tactics allegedly used to generate then expansion/growth of a particular yoga business.  The core aspect of the article–reports that instructors were pressured or coerced to make sales pitches that may have misrepresented the instructor training program or the results it can achieve–struck me most clearly.  To say that the “story” told in the article was chilling understates the case.  My thought after reading it?  This does not look like the yoga businesses or…

This past week, the Commodity Futures Trading Commission (CFTC) released its third clearinghouse supervisory stress test report (see reports for 2016 and 2017).  The tests were based upon positions at CME Clearing and LCH Limited, and consisted of: 1) “reverse stress tests of CCP [clearinghouse] resources,” covering futures and options at CME and interest rate swaps at LCH, and 2) an “analysis of stressed liquidation costs,” covering certain interest rate swaps house accounts at LCH .    

Among the encouraging findings of these tests were:

The results of the reverse stress test indicate that the two tested CCPs would have sufficient pre-funded resources to cover losses even if all CMs with losses defaulted under certain extreme historic 1-day scenarios.

Results suggest pre-funded resources would have been sufficient to cover extreme but plausible market losses plus liquidation expenses for two house accounts even if the actual liquidation costs were double the amount of the liquidation margin add-on. This analysis, like the reverse stress exercise, did not include assessment powers.

Although encouraging, these results should not be taken as an invitation to complacency in this area.  Indeed, as the CFTC’s news release about the tests…

I’m basically buried in exam-grading right now, and that leads me to the perennial question of how best to design a law school exam.  Up until now, I’ve pretty much stuck to a single format: short essays (such as issue-spotters), in-class (3-3.5 hours), limited open book (they can use assigned materials and their own notes).  I’m wondering whether next year I should mix that up a bit.  For instance, Securities Regulation seems especially well-suited to multiple choice, at least partially; I also wonder whether a take-home exam would allow students to craft more thoughtful answers.

So, consider this a call for commentary: Especially if you teach in the business space, what kind of exam do you find works best, and why? Joan, I know, actually gives oral midterms – which I think is amazing, but I’m not quite ready for – so of the other options, in-class or take home?  Open book or closed?  Multiple choice or something else?  Why do you choose what you choose?

FINRA recently announced a new regulatory notice aimed at addressing the unpaid awards problem. In recent years, about a third of arbitration awards rendered in the FINRA forum have gone unpaid.  

The proposal calls for particular firms to set aside additional capital to pay possible awards.  FINRA described the idea:

As part of FINRA’s ongoing initiatives to protect investors from misconduct, FINRA is requesting comment on proposed new Rule 4111 (Restricted Firm Obligations) that would impose tailored obligations, including possible financial requirements, on designated member firms that cross specified numeric disclosure-event thresholds. These thresholds were developed through a thorough analysis and are based on the number of events at similarly sized peers. The member firms that could be subject to these obligations, while small in number, present heightened risk of harm to investors and their activities may undermine confidence in the securities markets as a whole. The proposal would further promote investor protection and market integrity and give FINRA another tool to incentivize member firms to comply with regulatory requirements and to pay arbitration awards.

On the whole, this seems like a step in the right direction.  It remains to be seen how significantly this proposal could reduce total unpaid…

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