The AALS Section on Transactional Laws and Skills is pleased to announce its program, “Markets and Regulation: The Shifting Context of Transactional Practice,” to be held (per the draft program) from 8:30-10:30 on Sat. Jan. 4 at the AALS 2020 Annual Meeting in Washington D.C. on “Pillars of Democracy: Law, Representation, and Knowledge.” This session will explore the changing regulatory context of transactional legal practice, which is rapidly evolving in response to new innovations and challenges across a range of markets. Emerging issues range from privacy law and cybersecurity, to national security concerns, antitrust, and international trade and investment, to the prospect of new regulatory responses to climate change and other environmental threats. The forms these regulatory responses take are also diverse, including not only traditional public regulation, but also private governance, which draws upon the efforts of NGOs, trade associations, and international organizations.

Pedagogy Panel: In addition to paper presentations from our Call for Papers (circulated separately), the program will feature a panel of 3-4 speakers who will focus on how to incorporate regulatory concepts and issues across the transactional curriculum, including in clinics and other experiential courses, as well as in doctrinal courses. Our Section is proud to announce that this program will be co-sponsored by the Section on Business Associations and the Section on Securities Regulation.

Panelist (Self-) Nomination Information: We invite any full-time faculty member of an AALS member school, whether or not they are a member of the Section, who would like to participate on the pedagogy panel to email (i) a brief statement of interest of no more than 300 words indicating their approach; and (ii) their CV to Virginia Harper Ho, Chair of the Section, at vharperho@ku.edu on or before May 18, 2019. Invited panelists will be notified by no later than June 10, 2019. All presenters will be responsible for paying their registration fee, hotel, and travel expenses. Any inquiries about this Call for Nominations should be submitted to the Section Chair Virginia Harper Ho, University of Kansas School of Law, at vharperho@ku.edu or (785) 864-9217.

AALS SECTION ON TRANSACTIONAL LAW AND SKILLS Markets & Regulation: The Shifting Context of Transactional Practice 2020 AALS Annual Meeting Washington, D.C.

The AALS Section on Transactional Laws and Skills is pleased to announce a call for papers for its program, “Markets and Regulation: The Shifting Context of Transactional Practice,” to be held at the AALS 2020 Annual Meeting in Washington D.C. on “Pillars of Democracy: Law, Representation, and Knowledge.” This session will explore the changing regulatory context of transactional legal practice, which is rapidly evolving in response to new innovations and challenges across a range of markets. Emerging issues range from privacy law and cybersecurity, to national security concerns, antitrust, and international trade and investment, to the prospect of new regulatory responses to climate change and other environmental threats. The forms these regulatory responses take are also diverse, including not only traditional public regulation, but also private governance, which draws upon the efforts of NGOs, trade associations, and international organizations.

In addition to paper presentations, the program will feature a panel focusing on how to incorporate regulatory concepts and issues across the transactional curriculum, including in clinics and other experiential courses, as well as in doctrinal courses. This program will be co-sponsored by the Section on Business Associations and the Section on Securities Regulation.

Submission Information: The Section on Transactional Law and Skills invites any full-time faculty member of an AALS member school who has written an unpublished paper, or who is interested in writing a paper on this topic, to submit a 1 or 2-page proposal or full draft to Virginia Harper Ho, Chair of the Section, at vharperho@ku.edu on or before August 15, 2019. Papers accepted for publication but that will not yet be published as of the 2019 meeting are also welcome. Please remove the author’s name and identifying information from the submission and instead include the author’s name and contact information in the submission email. Up to two papers will be selected after review by members of the Executive Committee of the Section. Authors of selected papers will be notified by September 15, 2019. The Call for Paper presenters will be responsible for paying their registration fee, hotel, and travel expenses. Any inquiries about the Call for Papers should be submitted to the Section Chair Virginia Harper Ho, University of Kansas School of Law, at vharperho@ku.edu or (785) 864-9217.

A recent op-ed by St. John’s Christine Lazaro captures some of the issues FINRA’s new proposal won’t solve:

In the event of a product failure, or concentrated misconduct, firms simply cannot make investors whole and a restricted fund will not last long enough to pay a string of arbitration awards resulting from the misconduct. Troubled firms will remain more likely to shut down, leaving investors with no recourse, with the key people simply moving on to new firms.

Finra must do more to ensure that firms, and those in charge of the firms, are held accountable when their brokers go astray. While this proposal is a welcome step in the right direction, until Finra defines “accountability” to mean protecting investors and making them whole, investors will not be fully protected.

These product failures happen fairly regularly.  When some toxic offering slips through and blows up, investors working with smaller firms will still find themselves out of luck.  Instead of the second or third arbitration award pushing the firm out of business, it might be the fourth or the fifth.  Although it’s something of an improvement, we’re still in a world where only the first few smaller firm customers to secure an arbitration award may be paid.

So, this post is about shameless self-promotion and a cautionary tale.  A while back I was asked to write the West Virginia section of Texas A &M Journal of Property Law’s Oil and Gas Survey.  It’s a short overview of recent developments, and one of the many perils of the law review process is how long such things take to get to print.  

Even worse than a slow timeline, a miscommunication meant that my final round of edits did not make it into the piece, and there are a couple of errors. The editors were appropriately apologetic, and I know it all happened in good faith.  I take some ownership, too, in that I was not at all demanding about knowing the schedule for the next round of edits or the overall timeline.

Ultimately, despite the (nonsubstantive) errors, I hope the piece will be helpful to some folks. There are some interesting oil and gas cases happening in West Virginia (and around the country), and how they turn out could have a significant impact on the oil and gas business.  

Here’s the abstract to my article, which you can find here: 

This Article summarizes and discusses important recent developments in West Virginia’s oil and gas law, including legislative action and case law. This Article is divided into three Sections. First, West Virginia’s evolution in its approach to fractional mineral owner disputes in the Marcellus Shale. After multiple efforts to pass a forced pooling bill, the state settled instead on a cotenancy solution. Second, West Virginia addressed flat-rate royalties, following two court cases, a legislative response, and a subsequent court challenge to the legislation. Finally, this Article discusses three developments in lease interpretation: (1) what will be deemed “reasonably necessary” for oil and gas development in West Virginia; (2) if implied pooling rights are included in West Virginia leases that are silent on the matter; and (3) whether non-executory and non-participating royalty owners have rights to approve pooling.

Today, I have been attending and presenting at the Midwest Symposium on Social Entrepreneurship in Kansas City, Missouri.  This is the Seventh Annual installment of this event, which engages entrepreneurs, lawyers, government actors, and others in education, networking, and discussions around various issues (which differ from year to year) relating to social enterprise structure, governance, finance, and operations.  I love attending this symposium.  The people are socially and intellectually stimulating.  I appreciate Tony Luppino inviting me to participate.

There is much I could write about the programs today.  However, I will focus in one one small thing for now: Opportunity Zones and more particularly the funds that invest in them.  A quick description of Opportunity Zones and a cautionary message on related investment funds follow.

The U.S. Internal Revenue Service has defined Opportunity Zones as follows in a Q&A posted on its website:

An Opportunity Zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation of authority to the Internal Revenue Service.

The main point is to encourage investment in businesses or real estate in distressed areas of the United States through federal tax incentives.

Unsurprisingly, investment funds have been established to make these tax-advantaged financings.  From that state of affairs stems my public service announcement.  As I listened to folks talking about this form of funding real estate and businesses, the securities lawyer in me became uncomfortable.  The presenters appeared to be ignoring the seemingly obvious conclusion that the process of seeking investors to participate in these investment funds is a securities offering that must be registered under federal or state securities laws, unless an exemption is available.  So, I raised that point from the audience . . . .

Sure enough, if one looks or resources on the Internet, one learns that promoters of these funds seem to have reached the same legal conclusion about the potential application of securities offering registration/exemptions.  (See, e.g., here and here.)  Federal registration exemptions in or under the Securities Act of 1933, as amended, that might work in this context include those for private placements (Section 4(a)(2) or Rule 506(b)) and intrastate offerings (Section 3(a)(11) and Rules 147 and 147A).

Bottom line word to the wise?  Find an exemption for the offer or sale of investment interests in a Qualified Opportunity Fund or register the offering with the Securities and Exchange Commission and any applicable state securities commission.  Otherwise, proceed at your regulatory peril . . . .

 

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 of great significance, I wanted to share its abstract and to encourage readers’ review:

Robotic and software innovation threatens to displace one third of the global workforce by 2030. Widespread worker displacement would decimate U.S. social safety net funding. To address these issues, Bill Gates and others have proposed a robot tax. A robot tax, while elegant on its face, masks the underlying tension between innovation and employment tax policies. Only by examining the foundational principles of these two policies is it evident that their dissonance can only be harmonized by requiring these policies to remain faithful to their original objectives.

Innovation policy has strayed from its twin economic and social welfare objectives. As economic progress has more recently eclipsed the importance of social goals, innovation policy no longer works in concert with employment tax policy. Indeed, insofar as innovation policy fosters workforce automation substitution to the detriment of the U.S. social safety net, it undermines employment tax policy. Employment tax policy never contemplated the extent and sudden arrival of automation substitution in the workforce. In its current form, the employment tax is insufficiently robust to adjust to automation substitution. Consequently, a new approach to tax policy analysis is needed.

The intersection of innovation and tax is an undertheorized area. This article highlights the tension that automation creates amongst employment tax and innovation policies by identifying the fundamental objectives that motivate each policy. This paper is the first to harmonize the dissonance between innovation and employment tax policy, the first to use the lens of sustainability to address the dissonance, and the first to introduce sustainable taxation as a superior approach for crafting tax policy and for harmonizing employment tax and innovation policies, in particular.      

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 activist stances; Vanguard, I think, just opened that door a crack.  (If anyone else has more info on this or a different theory, please drop a comment or otherwise let me know.)

That said, I think this is a good move.  I’ve long argued that mutual funds’ practice of centralizing their voting behavior is problematic both from the perspective of fund governance and from the perspective of corporate governance.  On the fund governance side, vote centralization may fail to reflect the distinct interests of individual funds.  On the corporate governance side, a diversified portfolio of funds may influence managerial decisionmaking in ways that conflict with the interests of less diversified shareholders.  Given the concerns these days that mutual fund companies exercise too much power over corporate behavior, decentralizing voting authority seems like the most obvious – and appropriate – solution.

 

 

 

 

Join me in Miami, June 26-28.

 

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Managing Compliance Across Borders

June 26-28, 2019

Managing Compliance Across Borders is a program for world-wide compliance, risk and audit professionals to discuss current developments and hot topics (e.g. cybersecurity, data protection, privacy, data analytics, regulation, FCPA and more) affecting compliance practice in the U.S., Canada, Europe, and Latin America. Learn more

See a Snapshot: Who Will Be There?
You will have extensive networking opportunities with high-level compliance professionals and access to panel discussions with major firms, banks, government offices and corporations, including:

  • BRF Brazil
  • Carnival Corporation
  • Central Bank of Brazil
  • Endeavor
  • Equal Employment Opportunity Commission
  • Eversheds Sutherland
  • Fidelity Investments
  • Hilton Grand Vacations
  • Ingram Micro
  • Jones Day
  • Kaufman Rossin
  • LATAM Airlines
  • Laureate Education, Inc.

 
  • MasterCard Worldwide
  • MDO Partners
  • Olin Corporation
  • PwC
  • Royal Caribbean Cruises
  • Tech Data
  • The SEC
  • TracFone Wireless
  • U.S. Department of Justice
  • Univision
  • UPS
  • XO Logistics
  • Zenith Source

 

Location
Donna E. Shalala Student Center
1330 Miller Drive
Miami, FL 33146

 

CLE Credit
Upwards of 10 general CLE credits in ethics and technology applied for with The Florida Bar

 

Program Fee: $2,500 $1,750 until June 1 
Use promo code “MCAB2019” for discount 

Non-profit and Miami Law Alumni discounts are available, please contact:
Hakim A. Lakhdar, Director of Professional Legal Programs, for details

Learn More: Visit the website for updated speaker information, schedule and topic details.

This program is designed and presented in collaboration with our partner in Switzerland

University of St. Gallen

 

 

 

 

 

 

 

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. 578-631 (2018).

James D. Cox & Randall S. Thomas.  Delaware’s Retreat: Exploring Developing Fissures and Tectonic Shifts in Delaware Corporate Law.  42 Del. J. Corp. L. 323-389 (2018).

Jill E. Fisch.  Governance by Contract: The Implications for Corporate Bylaws.  106 Cal. L. Rev. 373-409 (2018).

Jill E. Fisch, Jonah B. Gelbach & Jonathan Klick.  The Logic and Limits of Event Studies in Securities Fraud Litigation.  96 Tex. L. Rev. 553-618 (2018).

George S. Geis.  Traceable Shares and Corporate Law.  113 Nw. U. L. Rev. 227-277 (2018).

Cathy Hwang.  Deal Momentum.  65 UCLA L. Rev. 376-425 (2018).

Dorothy S. Lund.  The Case against Passive Shareholding Voting.  43 J. Corp. L. 493-536 (2018).

Edward B. Rock & Daniel L. Rubinfeld.  Antitrust for Institutional Investors.  82 Antitrust L. J. 221-78 (2018).

Mark J. Roe.  Stock-Market Short-Termism’s Impact.  167 U. Pa. L. Rev. 71-121 (2018).