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What’s the Purpose of the Corporation?  Law & Economics Center at Scalia Law to Hold Luncheon Panel Reflecting on the Debate Generated by the Revolutionary Business Roundtable Statement Made Two Years Ago Next Week

Almost 51 years ago, on September 13, 1970, Milton Friedman published an essay in The New York Times with a title that captured his thesis that “The Social Responsibility Of Business Is to Increase Its Profits.”  This shareholder value maximization metric for evaluating the legal and financial fiduciary duties of corporate officers has served as the dominant paradigm for defining the purpose of the corporation both before and certainly for the fifty years after publication of Friedman’s influential essay.  Yet, on August 19, 2019 – now nearly two years ago – the powerful Business Roundtable attempted to effect a dramatic shift away from the purpose of the corporation being defined by the single metric of shareholder wealth maximization.  It released what it called a “new Statement on the Purpose of a Corporation signed by 181 CEOs who commit to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders.”  This move was received with both applause and condemnation, each of which continue two years later. 

In light of this anniversary, on Wednesday, August 18, 2021, from 11:45 am -1:00 pm at The National Press Club in Washington, D.C., the Law & Economics Center at George Mason University Antonin Scalia Law School will host an event titled Business Roundtable v. Milton Friedman: Reflections on the Second Anniversary of “Redefining” the Purpose of the Corporation.  A balanced panel of corporate governance experts will evaluate the economic and legal arguments involved in the debate over the proper purpose of the corporation and reflect on the state of the debate two years after the Business Roundtable’s attempt to erase the Friedman doctrine and redefine corporate purpose. 

Those interested can register here.  Lunch will be provided.  The panelists are:  Lisa Fairfax (Presidential Professor and Co-Director, Institute for Law and Economics, University of Pennsylvania Carey Law School), Donald J. Kochan (Professor of Law and Deputy Executive Director, Law & Economics Center, George Mason University Scalia Law School), Robert T. Miller (F. Arnold Daum Chair in Corporate Finance and Law, University of Iowa College of Law), and Roberto Tallarita (Lecturer on Law, and Associate Director of the Program on Corporate Governance, Harvard Law School).  The panel will be moderated by The Honorable David J. Porter, Judge, U.S. Court of Appeals for the Third Circuit; and, welcome remarks will be given by Ken Randall (Allison and Dorothy Rouse Dean and George Mason University Foundation Professor of Law).

WAYNE STATE UNIVERSITY LAW SCHOOL is seeking to fill up to four tenure-track or tenured faculty positions. We encourage applications from candidates who will enhance the diversity of our faculty and whose scholarship engages with questions of social justice.
 
Although we welcome and encourage applications from candidates in all fields, we have particular interest in the following areas: (i) business law, (ii) financial regulation, and (iii) labor and employment law.
 
In addition, we seek applications for the Coleman A. Young Foundation Endowed Chair of Urban Affairs. This Chair will be held jointly in the Department of Urban Studies and Planning in the College of Liberal Arts and Sciences and the Law School. The position provides a unique opportunity to promote high-impact activities and research on matters central to modern urban affairs. The holder of the chair will occupy a highly visible and influential position in the university, the metropolitan Detroit area and the broader community by playing a leadership role on issues of urban affairs in academia. The minimum qualifications for the Young Chair are: (a) an earned doctorate and/or a JD; (b) a substantial record of published work based either on research or reflections on practice; or (c) career experience in related government or foundation management, urban policy, health policy, social justice policy, or a related field; and (d) a record of direct involvement in public service achievement.
 
Wayne Law warmly welcomes applications from women, members of minority groups, and others who will contribute to the diversity of the faculty.
Candidates should send a cover letter, CV, and any other relevant materials to Professor Gregory Fox, Faculty Appointments Committee Chair, at gfox@wayne.edu.
 

Dear BLPB Readers:

Christian Brothers University School of Business seeks to fill a tenure-track or long-term contract faculty appointment in Business Law beginning in Fall 2021. Ph.D, D.B.A, J.D., L.L.M. or substantial professional experience with relevant Master’s degree is required. 

The faculty member will also advise students, participate in curriculum development and service activities. Candidates should demonstrate a commitment to excellence in teaching and an appreciation of the mission of a Lasallian institution of higher education.

The School seeks a dynamic colleague with the ability to effectively teach undergraduate and graduate level subjects related to Business Law. A candidate who is qualified to teach in a second business discipline, especially accounting, data analytics or entrepreneurship, is highly preferred. The School of Business promotes a student-centric teaching-learning model and the successful candidate’s teaching philosophy should reflect an emphasis on student engagement and cognitive development. 

This position presents the successful candidate with an exciting opportunity to help develop students into ethical leaders who embrace social responsibility in addition to keen business acumen. Faculty and students in the business school have multiple opportunities to engage with the Memphis community through internships, projects, our Center for Community Engagement and our Center for Entrepreneurship and Innovation. The candidate will play an active role in the continuous improvement and design of an innovative curriculum that meets the needs of future business leaders. The ideal candidate is willing to take risks, is creative, and is adaptive to the ever-changing market.

The faculty of the School of Business prides itself on walking alongside each student during his or her educational journey to eventually earning a degree and beginning a career. The School presently offers the B.S. in Accounting, B.S. in Finance, B.S in Management, B.S. in Marketing, and the B.S. in Business Administration with concentrations in banking, international business, management information systems, and sport management. At the graduate level, the School offers the Master of Accounting (MAcc), the Master of Business Administration (MBA), and an MBA in Healthcare Management.

Requirements:

  • Ph.D, D.B.A, J.D or L.L.M. strongly preferred
  • Teaching experience strongly preferred
  • Prefer qualified to teach in a second business discipline, preferably accounting, data analytics, or entrepreneurship.

The full posting for this position is here.

The University of Tennessee

College of Law

THE UNIVERSITY OF TENNESSEE COLLEGE OF LAW invites applications from both entry-level and lateral candidates for two full-time, tenure-track or tenured faculty positions to commence in the Fall Semester 2022.  The College is looking for candidates who will fill a range of curricular needs.  We are particularly interested in the subject area of business law, including business associations and contracts.  Other areas of interest include corporate and regulatory compliance, education law, environmental law, estate planning, health law, immigration law, legal writing, and property.  We also seek candidates who integrate cutting-edge legal issues into their courses or are interested in helping us expand our offerings in areas like technology, cybersecurity, e-discovery, and data privacy.  We welcome applications from candidates who incorporate practical lawyering skills into their courses.

A J.D. or equivalent law degree is required.  Successful applicants must have a strong academic background.  Significant professional experience is desirable.  Candidates also must have a strong commitment to excellence in teaching, scholarship, and service.

In furtherance of the University’s and the College’s fundamental commitment to diversity among our faculty, student body, and staff, we strongly encourage applications from those who would bring increased diversity to our faculty, curriculum, and programs.

The committee will review applications submitted through the AALS Faculty Appointments Register (FAR) and will also consider applications submitted outside of the FAR process.  Candidates who are not applying through the FAR may submit their application materials directly to Michelle Kwon, Chair of the Faculty Appointments Committee, by emailing them to lawfacultyhiring@utk.edu.  Please include a letter of interest, including the subjects the candidate is interested in teaching, and a CV with the names and contact information of three references. Applications from candidates not participating in the FAR will have the best chance of full consideration if they are received by September 1, 2021.

The University of Tennessee is an EEO/AA/Title VI/Title IX/Section 504/ADA/ADEA institution in the provision of its education and employment programs and services. All qualified applicants will receive equal consideration for employment and admission without regard to race, color, national origin, religion, sex, pregnancy, marital status, sexual orientation, gender identity, age, physical or mental disability, genetic information, veteran status, and parental status.

USC Gould School of Law and Lewis & Clark Law School present the inaugural West Coast Bankruptcy Roundtable to be held February 3-4, 2022 in Los Angeles.  Spearheaded by Robert Rasmussen, Michael Simkovic, and Samir Parikh, the Roundtable seeks to bring together experienced and junior scholars to discuss particularly noteworthy scholarship involving financial restructuring and business law.  We seek scholars exploring diverse topics and will be interested in interdisciplinary perspectives.

The Roundtable invites the submission of papers.  Selected participants will receive a $1,000 stipend and have the opportunity to workshop their papers in an intimate, collegial setting.  Current attendees include Barry Adler (NYU), Ken Ayotte (Berkeley), Douglas Baird (Chicago), Bruce Bennett (Jones Day), Mitu Gulati (UVA), Yair Listokin (Yale), Bruce Markell (Northwestern), Ed Morrison (Columbia), Alan Schwartz (Yale), Jamie Sprayregen (Kirkland & Ellis), David Skeel (Penn), and Fred Tung (BU). 

Papers will be selected through a blind review process.  Scholars are invited to submit a 3 – 5 page overview of a proposed paper.  Submissions may be an introduction, excerpt from a longer paper, or extended abstract.  The submission should be anonymized, and – aside from general citations to the author’s previous articles – all references to the author should be removed.

Please submit proposals by September 7, 2021.  Invitations will be issued via email by October 8th.  Working drafts of papers must be available for circulation to participants by January 11, 2022.  

Proposals – as well as questions and concerns – should be directed to Samir Parikh at sparikh@lclark.edu. 

Entry Level Positions

Tulane University Law School invites applications from entry-level candidates for one or more tenure-track faculty positions.  We welcome applications from candidates with teaching and research interests in all topics, but we are particularly interested in candidates who focus on constitutional law, commercial law, racial justice, race and the law, and critical race theory. We especially invite applications from candidates who will enhance the diversity of the law faculty and who can demonstrate a commitment to institutional diversity, equity, and inclusion.  Applications and queries should be addressed, preferably via email, to Professor Adam Feibelman, Tulane Law School, 6329 Freret St., New Orleans, LA 70118-5670, afeibelm@tulane.edu.

Chair in Environmental Law

Tulane University Law School invites nominations and applications for a Chair in Environmental Law. We seek an academic leader with a record of distinguished scholarship, excellence in teaching, and the demonstrated capacity to direct a well-established program in environmental law. The appointment will be made at the level of tenured, full professor. 

The responsibilities of the chair holder include scholarly research and publication; classroom teaching; participation in faculty governance; serving as Director of the Center for Environmental Law; active involvement in student mentoring and counseling; engagement with faculty both within the Law School and throughout the University; together with other chairs and senior faculty, providing leadership for integrative research activities; significant engagement with academic institutions and professional organizations in environmental law and related areas of law, including frequent participation in meetings and symposia. The chair holder is expected to provide leadership in our long-standing environmental law program in terms of research, curriculum, and public engagement. Tulane Law School, with world-leading strength in environmental, energy, maritime, as well as international and comparative law, provides the chair holder the unique opportunity and support to lead and expand an already prominent program in environmental law.

The qualifications required for the chair are:

  • Juris Doctor (J.D.) and/or Ph.D. (or equivalent doctoral degree) in Law
  • Broad recognition for scholarly distinction
  • Established publication record
  • Clearly developed long term research agenda
  • Extensive teaching experience  
  • Demonstrated capacity for programmatic leadership   

Interested candidates and all inquiries should be directed to:

Stephen M. Griffin
W. R. Irby Chair and Rutledge C. Clement Jr. Professor in Constitutional Law
Tulane University School of Law
John Giffen Weinmann Hall
6329 Freret Street, Suite 230F
New Orleans, LA 70118-5670
sgriffin@tulane.edu

Review of applications will begin in the fall and continue until completion.

For further information about Tulane University Law School, consult: www.law.tulane.edu. Tulane University is an equal employment opportunity/affirmative action employer committed to excellence through diversity. All eligible candidates are invited to apply for position vacancies as appropriate.

Very quick post this week just to call to your attention the recent complaint filed in Delaware Chancery by Grant & Eisenhofer, Delman v. GigAcquisitions3 LLC , No. 2021-0679.  (Bloomberg article on the case here, with links to the docket and complaint).

The complaint challenges the Lightning eMotors de-SPAC transaction on behalf of a class of investors in the SPAC shell company.  Rather than bring federal fraud claims, though – as many prior SPAC plaintiffs have – this plaintiff is alleging that the acquisition was a poor deal for the SPAC, initiated to benefit the SPAC sponsor, who had a limited time to complete a deal before liquidating.  Therefore, the directors and the SPAC’s sponsor breached their fiduciary duties to the SPAC.

Two things of note:

First, G&E seems to be self-consciously pitching the case as a bellwether challenge to the SPAC trend generally.  In the complaint, it alleges:

Gig3’s history is part of a disturbing trend of SPAC transactions in which financial conflicts of interest of sponsors and insiders override good corporate governance and the interests of SPAC stockholders….

This Court should take this opportunity to affirm that the boards and controllers of SPACs incorporated in Delaware owe the same fiduciary duties to their stockholders as do the boards and controllers of any Delaware corporation, and thus put an end to the money-grabbing SPAC bonanza that has been burgeoning in recent years at the expense of the investing public

Second, obviously, the shareholders needed to vote in favor of the merger, which raises the specter of Corwin cleansing.  So G&E argues that the vote was not fully informed but, more interestingly, also argues that the SPAC sponsor and its principal were minority controlling shareholders by virtue of their roughly 20% stockholdings, their chummy relationships with several directors, and the compensation of the “independent” directors which included financial interests in the sponsor.

Yadda yadda yadda me on the malleable definition of a controlling shareholder, which means – it’ll be interesting to see whether Delaware is willing to take this bait.  If it is, then, like the SEC’s recent scrutiny, this could represent another significant speedbump in the SPAC boom.

One other point about this: retail SPAC shareholders are speculators and often do not vote their shares in favor of the de-SPAC transactions; on at least two occasions, this has led to SPACs openly encouraging anyone to vote who held as of the record date even if they have since sold their shares.  If we see more suits like G&E’s, I look forward to the Corwin cleansing arguments in those cases.

The SEC’s order is available here.  Chairman Gensler’s comments on the new rules are available here.  In pertinent part, Chairman Gensler offers the following observations:

These rules will allow investors to gain a better understanding of Nasdaq-listed companies’ approach to board diversity, while ensuring that those companies have the flexibility to make decisions that best serve their shareholders. . . .  

 . . . These rules reflect calls from investors for greater transparency about the people who lead public companies, and a broad cross-section of commenters supported the proposed board diversity disclosure rule. Investors are looking for consistent and comparable data when making decisions about their investments. I believe that our markets work best when investors have access to such information.

The focus on standardized disclosures in this commentary is of particular interest to me. 

The order is lengthy and includes copious footnotes with references to the many comment letters received on the Nasdaq rule-making proposal.  For those (like me) who research and write in the area, this SEC order is a “must read.”  I look forward to spending time with it in the near future.

Indiana University has a top-notch Business Law and Ethics department in their business school. I know a number of their professors and they would be fabulous colleagues.

—-

The Kelley School of Business at Indiana University in Bloomington seeks applications for a tenured/tenure-track position or positions in the Department of Business Law and Ethics, effective fall 2022. The candidate(s) selected will join a well-established department of 28 full- time faculty members who teach a variety of courses on legal topics, business ethics, and critical thinking at the undergraduate and graduate levels. It is anticipated that the position(s) will be at the assistant professor rank, though appointment at a higher rank could occur if a selected candidate’s record so warrants.

To be qualified, a candidate must have a J.D. degree with an excellent academic record and must demonstrate the potential for outstanding teaching and excellent scholarship in law and/or ethics, as well as the ability to contribute positively to a multicultural campus. Qualified applicants with expertise in any area of law and/or ethics will be considered, and we welcome candidates with teaching interests across a broad range of legal and ethical issues in business, as well as research methods or perspectives, that would contribute to the diversity of our department and help usadvance the Kelley School’s equity and inclusion initiatives and programs.

Candidates with appropriate subject-matter expertise and interest would have the opportunity to be involved on the leading edge of a developing interdisciplinary collaboration between the Kelley School of Business and the Kinsey Institute, the premier research institute on human sexuality and relationships and a trusted source for evidence-based information on critical issues in sexuality, gender, and reproduction. Such expertise, however, is not required to be qualified and considered for the position or positions.

Interested candidates should review the application requirements and submit their application materials at https://indiana.peopleadmin.com/postings/11252. Candidates may direct questions to: Professor Josh Perry, Department Chair (joshperr@indiana.edu), or Professor Tim Fort, Search Committee Chair (timfort@indiana.edu), both at Department of Business Law and Ethics, Kelley School of Business, Indiana University, 1309 E. 10th Street, Bloomington, IN 47405.

Application materials received by September 15, 2021 will be assured of consideration. However, the search will continue until the position(s) is/are filled.

Indiana University is an equal employment and affirmative action employer and a provider of ADA services. All qualified applicants will receive consideration for employment without regard to age, ethnicity, color, race, religion, sex, sexual orientation, gender identity or expression, genetic information, marital status, national origin, disability status or protected veteran status.

In January of 2020, The Bharara Task Force on Insider Trading released its report recommending that Congress adopt sweeping reforms of our insider trading enforcement regime. And it appears there is at least some momentum building to act on this recommendation. In April of 2021, the House of Representatives passed the Promoting Transparent Standards for Corporate Insiders Act, and in May of 2021, the House passed the Insider Trading Prohibition Act.  I have expressed some concerns about these bills (see, e.g., here and here). But, as I argue in my book, Insider Trading: Law, Ethics, and Reform, I am in complete agreement with the claim that our current insider trading regime is broken and needs to be reformed.

We should not, however, rush to adopt a new insider trading regime without first thoughtfully considering what constitutes insider trading; why it is wrong; who is harmed by it; and the nature and extent of the harm. The answers to these questions have been subject to endless academic debate, but are crucial for determining whether insider trading should be regulated civilly and/or criminally (or not at all), as well as for determining the nature and magnitude of any sanctions to be imposed.

Historically, insider trading regimes around the globe can be grouped (roughly) into four categories (listed from the least to most restrictive): (a) laissez-faire regimes, which permit all trading on information asymmetries, so long as there is no affirmative fraud (actual misrepresentations or concealment); (b) fiduciary-fraud regimes, which recognize a duty to disclose or abstain from trading, but only for those who share a recognized duty of trust and confidence (with either the counterparty to the trade, or with the source of the information, or both); (c) equal-access regimes, which preclude trading by those who have acquired information advantages by virtue of their privileged access to sources that are structurally closed to other market participants (regardless of whether such trading violates a duty of trust and confidence); and (d) parity-of-information regimes, which strive to prohibit all trading on material nonpublic information (regardless of the source).

The following scenario illustrates conduct that would expose the trader to liability under a parity-of-information regime, but not under an equal access, fiduciary-fraud, or laissez-faire regime. As you read through the fact pattern, ask yourself: (1) Is this trading wrong? (2) Who (if anyone) is harmed by it? (3) What is the nature and extent of the harm? (4) Should this trading be regulated (civilly or criminally)? (Please share any answers/thoughts in the comments below!):

A high-school janitor is traveling home from work late at night on a public bus. She looks down and sees a trampled piece of paper. She picks up the paper and reads it. It appears to be someone’s notes from a meeting—though there is nothing to identify the paper’s owner/author. The paper reads as follows:

Meet at HQ of XYZ Corp at 3PM on Jan. 3 to finalize the merger with BIG Corp. Merger to be announced to public on Jan 10. Note: the announcement of merger will send shares of XYZ through the roof, so everyone must maintain strict confidentiality.

The janitor looks up and sees the bus is totally empty. There is no chance of finding the person who dropped the paper. It is January 4. The janitor opens an online brokerage account when she gets home and buys as many shares of XYZ Corp as she can afford. She makes huge profits when the merger is announced on January 10.

If you do not think the janitor has done anything wrong or harmful in this scenario, then you will probably not favor the parity-of-information model for insider trading regulation—which would render this conduct illegal. You will likely favor some version of one of the other insider-trading models instead. My next post will offer a scenario to test our intuitions about the equal-access model (the second-most restrictive regime).

The hope is that walking through these scenarios will help bring some clarity to our shared understanding of when trading on material nonpublic information is wrong and harmful—and (given our answer to this question) the nature and extent to which it should be regulated.