Welcome to the ongoing guest blog that discusses the work of the ULC study committee that focuses on coercive labor practices.  In the last two blogs (here and here) I discussed two frameworks the study committee was considering: one that focuses on disclosure and one that examines labor procurement. Both of these frameworks rely on the government-as-regulator model. In this next blog I examine the government-as-purchaser model, one that would harness the enormous buying power of many of our states into a uniform law. 

More after the jump …

Continue Reading Guest Blog: ULC’s work on Coercive Labor Practices in Supply Chains, Part 4

I think that the GCs at Big Pharma have hacked into my Zoom account. First, some background. Earlier this week, I asked my students in UM’s Lawyering in a Pandemic course to imagine that they were the compliance officers or GCs at the drug companies involved in Operation Warp Speed, the public-private partnership formed to find a vaccine for COVID-19 in months, rather than years. I asked the students what they would do if they thought that the scientists were cutting corners to meet the government’s deadlines. Some indicated that they would report it internally and then externally, if necessary.

I hated to burst their bubbles, but I explained that the current administration hasn’t been too welcoming to whistleblowers. I had served on a non-partisan, multi-stakeholder Department of Labor Whistleblower Protection Advisory Committee when President Trump came into office, which was disbanded shortly thereafter. For over a year after that, I received calls from concerned scientists asking where they could lodge complaints. With that background, I wanted my students to think about how company executives could reasonably would report on cutting corners to the government that was requiring the “warp speed” results in the first place. We didn’t even get into the potential ethical issues related to lawyers as whistleblowers.

Well the good news is that Pfizer, Moderna, Johnson & Johnson, GlaxoSmithKline, and Sanofi  announced on Friday that they have signed a pledge to make sure that they won’t jeopardize public safety by ignoring protocols. Apparently, the FDA may be planning its own statement to reassure the public. I look forward to seeing the statements when they’re released, but these companies have been working on these drugs for months. Better late than never, but why issue this statement now? Perhaps the lawyers and compliance officers – the gatekeepers – were doing their jobs and protecting the shareholders and the stakeholders. Maybe the scientists stood their ground. We will never know how or why the companies made this decision, but I’m glad they did. The companies hadn’t announced this safety pledge yet when I had my class and at the time, almost none of the students said they would get the vaccine. Maybe the pledge will change their minds.

Although the drug companies seem to be doing the right thing, I have other questions about Kodak. During the same class, I had asked my students to imagine that they were the GC, compliance officer, or board member at Kodak. Of course, some of my students probably didn’t even know what Kodak is because they take pictures with their phones. They don’t remember Kodak for film and cameras and absolutely no one knows Kodak as a pharmaceutical company. Perhaps that’s why everyone was stunned when Kodak announced a $765 million federal loan to start producing drug ingredients, especially because it’s so far outside the scope of its business. After all, the company makes chemicals for film development and manufacturing but not for life saving drugs. Kodak has struggled over the past few years because it missed the boat on digital cameras and has significant debt, filing for bankruptcy in 2012. It even dabbled in cryptocurrency for a few months in 2018. Not the first choice to help develop a vaccine.

To be charitable, Kodak did own a pharmaceutical company for a few years in the 80’s. But its most recent 10-K states that “Kodak is a global technology company focused on print and advanced materials and chemicals. Kodak provides industry-leading hardware, software, consumables and services primarily to customers in commercial print, packaging, publishing, manufacturing and entertainment.” 

The Kodak deal became even more newsworthy because the company issued 1.75 million in stock and options to the CEO and other grants to company insiders and board members before the public announcement of the federal loan. The CEO had only had the job for a year. I haven’t seen any news reports of insiders complaining or refusing the grants. In fact, the day after the announcement of the loan, a Kodak board member made a $116 million dollar donation to charity he founded. Understandably, the news of the deal caused Kodak’s shares to soar. Insiders profited, and the SEC started asking questions after looking at records of the stock trades.

Alas, the deal is on hold as the SEC investigates. The White House’s own trade advisor has said that this may be “one of the dumbest decisions by executives in corporate history.” I’m not sure about that, but there actually may be nothing to see here. Some believe that there was a snafu with the timing of the announcement and that the nuances of Reg FD may get Kodak off the hook .I wonder though, what the gatekeepers were doing? Did the GC, compliance officer, or any board member ask the obvious questions? “Why are we doing something so far outside of our core competency?” They didn’t even get the digital camera thing right and that is Kodak’s core competency. Did anyone ask “should we really be issuing options and grants right before the announcement? Isn’t this loan material, nonpublic information and shouldn’t we wait to trade?”

I’ll keep watching the Kodak saga and will report back. In coming posts, I’ll write about other compliance and corporate governance mishaps. In the meantime, stay safe and please wear your masks.

.

I’ve talked before in this space about how regulation of ERISA plans and ERISA plan voting is really part of a larger debate about the proper role of shareholders in corporate governance, and even whether the purpose of the corporation is to maximize shareholder value.  And a few weeks ago, I blogged about how the Department of Labor had proposed new rules/interpretations to limit ESG investing for ERISA-governed retirement plans, and promote investments in private equity.

Apparently to honor Labor Day, the DoL took it a step further this week to limit ERISA plans’ ability to vote their shares, in large part because – it says – of excess costs due to “the recent increase in the number of environmental and social shareholder proposals introduced. It is likely that many of these proposals have little bearing on share value or other relation to plan interests…”

A lot of words after the jump. So many words.

Continue Reading I Just Read the Department of Labor’s New ERISA Voting Proposals and Boy Are My Fingers Tired (from typing)

Dear BLPB readers:

AALS Section on Real Estate Transactions and Section on Academic Support

The Changing Architecture of Legal Education: 

Real Estate Transactions as a Case Study

Seeking Panelists:

What real property law courses should law schools be teaching?

Who should be teaching these courses?

How should the courses be taught?

The Section on Real Estate Transactions and the Section on Academic Support seek to explore these questions and related issues at their joint online session during the 2021 AALS Annual Meeting, The Changing Architecture of Approaches to Legal Education: Real Estate Transactions as a Case Study.

Members of the legal academic community are invited to submit statements of interest in joining the panel of presenters who will discuss the following in the context of real property law and related courses (mortgage finance, securitization, commercial leasing, housing law, real estate development, etc.):

  • Law schools’ curricular choices
  • Course content and design
  • Teaching and pedagogy application.

As explained more in the “Background” section below, the Sections are specifically looking to highlight issues related to course offerings, curricular design, and teaching methodologies that can better prepare students for modern practice and ensure student achievement of course objectives. Statements of interest (including a description/summary of your proposed presentation) should be emailed to Andrea Boyack at andrea.boyack@washburn.edu by September 17, 2020.

There is no formal paper requirement associated with participation on the panel. 

The full call for presenters is here: Download AALS Section on Real Estate Transactions and Section on Academic Support Call for Presenters

Dear BLPB readers:

CALL FOR PAPERS IN
LEGAL STRATEGY, ETHICS, LEADERSHIP, AND COMPLIANCE FOR ORGANIZATIONS

The Tobias Leadership Center at Indiana University, the Center for Legal Studies & Business Ethics in the Spears School of Business at Oklahoma State University, and the American Business Law Journal to Cohost 2021 Symposium:

Ethical Leadership and Legal Strategies for Post-2020 Organizations

The Tobias Leadership Center at Indiana University, the Center for Legal Studies & Business Ethics at the Spears School of Business, and the American Business Law Journal (ABLJ) welcome submissions on legal strategy, ethics, leadership, and compliance issues that may advance positive organizational change following the multiple challenges of 2020: Public health issues, an economic recession, civil rights and social justice movements, changing working conditions, environmental concerns, innovation, and evolving legal norms. This theme is consistent with 2020 AACSB Standard 9. The ABLJ anticipates publishing a special issue devoted to the symposium theme.

The challenges facing organizations around the globe following the convergence of monumental events in 2020 require a renewed focus on ethical leadership and legal strategies that build structures and organizations to make a positive societal impact. Often times, the law is lagging in its ability to address new means of interacting and conducting business. Given the severity and reach of challenges in 2020, it is imperative to advance the legal and ethical research to meet the moment. This symposium hopes to generate a broad range of scholarship that develops options and opportunities for organizations to contribute positively to their communities and the world following the disruptions of 2020. Only submissions on the symposium theme will be considered for presentation. Interdisciplinary submissions are especially welcome.

The complete call for papers is here: Download Call for papers

Sergio Gramitto, co-author (with Lynn Stout and Tamara Belinfanti) of Citizen Capitalism: How a Universal Fund Can Provide Influence and Income to All just published Artificial Agents in Corporate Boardrooms in the Cornell Law Review.  Here is the abstract:

Thousands of years ago, Roman businessmen often ran joint businesses through commonly owned, highly intelligent slaves. Roman slaves did not have full legal capacity and were considered property of their co-owners. Now business corporations are looking to delegate decision-making to uberintelligent machines through the use of artificial intelligence in boardrooms. Artificial intelligence in boardrooms could assist, integrate, or even replace human directors. However, the concept of using artificial intelligence in boardrooms is largely unexplored and raises several issues. This Article sheds light on legal and policy challenges concerning artificial agents in boardrooms. The arguments revolve around two fundamental questions: (1) what role can artificial intelligence play in boardrooms? and (2) what ramifications would the deployment of artificial agents in boardrooms entail?

On Saturday, Cathy Hwang, Carliss Chatman, and I released a draft statement on race/racism in business law.  Thus far, we have 242 law professors publicly joining this statement:

We are law professors, and many of us write and teach about business law.

 

We think race and racism are important to the study of business law, just as they are important to the study of any area of law. From slavery and redlining to lack of opportunity in the workplace and limited access to capital, race and racism have always been part of business and business law.

 

To our colleagues and our students: we welcome the opportunity to engage in these discussions and commit to thinking hard about how to incorporate them into our research and our teaching.

Thank you to all of our colleagues who join us in recognizing that issues of race and racism are important to the study and teaching of business law.  Jessica Erickson has also helped compile resources here, which were gathered by soliciting the AALS Business Law Section list-serve.  She will continue to update it as additional resources come in.  If you would like to join the statement, you can still register support here.

This is the first installment of a multi-part guest blog presenting some results of the first comprehensive, large-scale, national survey of public attitudes regarding insider trading. My co-authors (Jeremy Kidd and George Mocsary) and I present the survey’s complete results in our forthcoming article, Public Perceptions of Insider Trading. This installment situates the survey amidst the ongoing debate over the goals of the U.S. insider-trading enforcement regime, and current efforts to reform it. Subsequent installments will share some of the survey results and their implications.

U.S. insider-trading law has been mired in controversy for most of its sixty-year history. Many scholars have argued that restrictions on insider trading should never have been adopted because it is victimless and improves market performance. Others claim that insider trading is unfair, imposes a tax on market participation, and undermines the public’s confidence in our capital markets. Some such critics advocate for broader theories of liability along with stiffer penalties.

Arguments on both sides of this controversy regularly appeal to claims that turn crucially on the public’s actual attitudes concerning insider trading. For example, the recently-published Report of the Bharara Task Force on Insider Trading opens with the declaration that “[m]ost agree that there is something fundamentally unfair about [insider trading].” And in United States v. O’Hagan, Justice Ginsburg averred that “investors would hesitate to venture their capital in a market where [insider trading] is unchecked by law.” Such empirical claims (and their contraries) are rarely backed by data. They therefore amount to little more than speculation. With stiff civil fines and up to 20 years of imprisonment at stake, however, these laws should be based on more than guesswork.

My co-authors and I hope to shed new light on this decades-old debate. Our findings come at a crucial time. Congress may be poised to implement a statutory overhaul of our sixty-year old insider trading regime, with the recent passage of the Insider Trading Prohibition Act in the House with a near-unanimous 410-13 vote. We hope that the survey data will inform these efforts and facilitate intelligent reform.

The survey was administered to a census-representative group (across age, gender, race, and other categories) of 1,313 respondents in April 2019, providing a survey-level margin of error of ±3 percent.

The questions addressed a broad swath of topics covering respondents’ attitudes concerning, inter alia, the pervasiveness of insider trading; how knowledge of widespread insider trading would affect market confidence; whether insider trading is morally wrong, should be illegal, or should be punished; and whether they would personally trade on inside information if they had the opportunity. Some of the results are surprising, and reflect a great deal of ambivalence. For example, what does it mean that nearly a fifth of respondents would engage in insider trading even though they believe it is immoral?

The survey also asked a number of scenario-based questions to test respondents’ intuitions concerning insider trading in a variety of contexts from the boardroom to the cocktail party. Finally, the survey looked to test the firmness of respondents’ views by subjecting them to “propaganda” for and against insider trading, and measuring the extent to which such influence changed their views. The results show a significant change in views after exposure to propaganda, suggesting the public’s views on insider trading are not firmly held.

The next installments to this post will detail some of the survey’s results and point to further empirical research that my co-authors and I plan to undertake.

Prof_John_Anderson I’m delighted to share that former UVA law school classmate and friend, Professor John Anderson, is joining us as a guest blogger at the Business Law Prof Blog on Tuesdays over the next month. 

Professor Anderson teaches Business Associations, Contracts, White Collar Criminal Law, Securities Law, Human Rights, and Law and Philosophy. His recent scholarship focuses on securities enforcement, white collar crime, and intersections of law and philosophy (e.g., business ethics, constitutionalism, problems of pluralism, and human rights). Professor Anderson has been published in leading peer-reviewed journals and top law journals. He recently published a book with Cambridge University Press, Insider Trading: Law, Ethics, and Reform (2018). Professor Anderson has received numerous teaching awards, and he was named the Mississippi College Distinguished Professor of the Year for 2018-2019.  

We’re looking forward to Professor Anderson’s posts, and hope that BLPB readers enjoy them too!

Call for Papers – EXTENDED DEADLINE

AALS Section on Transactional Law and Skills

The New Public Interest in Private Markets: Transactional Innovation for Promoting Inclusion

January 5-9, 2021, AALS Annual Meeting

The AALS Section on Transactional Law and Skills is pleased to announce a program titled The New Public Interest in Private Markets: Transactional Innovation for Promoting Inclusion during the 2021 AALS Annual Meeting, which will be held virtually. This session will explore how recent developments in corporate and transactional practice address issues of bias in corporate governance and the workplace, with examples ranging from Weinstein representations & warranties in M&A agreements to California’s Women on Boards statute to inclusion riders in the entertainment industry. These developments raise immediate questions of whether public policy goals of achieving greater inclusivity are being met, and they also shed light on perennial debates about the role public law and private ordering play in spurring social innovation.

In addition to paper presentations, the program will feature a panel focusing on how to incorporate concepts, issues, and discussions of equity and inclusivity across the transactional curriculum, including in clinics and other experiential courses, as well as in doctrinal courses.

FORMAT: Scholars whose papers are selected will provide a presentation of their paper, followed by commentary and audience Q&A.

SUBMISSION PROCEDURE: Scholars who are interested in participating in the program should send a draft or summary of at least three pages to Professor Matt Jennejohn at jennejohnm@law.byu.edu on or before Friday, September 25, 2020. The subject line of the email should read: “Submission—AALS Transactional Law and Skills Section Program.”

Scholars whose papers are selected for the program will need to submit a draft by December 16, 2020.

Pursuant to AALS rules, faculty at fee-paid non-member law schools, foreign faculty, adjunct and visiting faculty (without a full-time position at an AALS member law school), graduate students, fellows, and non-law school faculty are not eligible to submit. Please note that all presenters at the program are responsible for paying their own annual meeting registration fees and travel expenses.