I managed to hold off for a few weeks–and then for the past 24-48 hours (or so)–in reporting back on the current state of the Corporate Transparency Act (CTA). But the U.S. Supreme Court has again spoken, and so it is time to do an update (since little more is likely to happen over the weekend). FinCEN, the U.S. Financial Crimes Enforcement Network, summarizes the current state of play, an update from my post earlier this month.

On January 23, 2025, the Supreme Court granted the government’s motion to stay a nationwide injunction issued by a federal judge in Texas (Texas Top Cop Shop, Inc. v. McHenry—formerly, Texas Top Cop Shop v. Garland). As a separate nationwide order issued by a different federal judge in Texas (Smith v. U.S. Department of the Treasury) still remains in place, reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop. Reporting companies also are not subject to liability if they fail to file this information while the Smith order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.

And so it goes . . . .

Law firm memos have started to be released (see, e.g., here and here, among many others), and general business and industry outlets quickly have picked up the story. For some, the back-and-forth relating to reporting compliance and enforcement is likely to be the winter installment of the “Full Employment for Lawyers Act” (as I am wont to refer to legal changes that incentivize, or force, lawyers to scurry around to perform new analyses–and perhaps charge clients new fees–with each adjustment). [sigh] One news story worth a quick read is this one from Forbes, which features a classic quote from friend-of-the-BLPB Tom Rutledge, who is amusingly (but accurately) referred to in the piece as “[t][he national guru of all things CTA and BOI (if not LLC law generally).” {Note: BOI refers to Beneficial Ownership Information reporting under the CTA.]

There will be more to come. Among other things, the substantive legal questions raised in the various legal actions will eventually be heard, and then appealed. At this point, both the political and judicial aspects of the CTA remain quite fluid. Nevertheless, having posted this, I will step back again and take another breath–for now.

Sometimes you come across a case so clean, so pure, with respect to first principles, it’s actually quite charming. So it is with Caribbean Sun Airlines v. Halevi International, decided this week by the Delaware Supreme Court.

Alan Boyer was hired as a financial advisor to Caribbean Sun Airlines and a related entity, and in that capacity, was given a significant amount of access to the premises. At some point, he offered to buy the whole company, and as part of the transaction, sought a loan from Halevi, to be taken out in Caribbean’s name. Except when he approached Halevi, he represented that he was president of the company and a significant shareholder. He forged some documents to that effect, though the paperwork he provided to Halevi contained significant inconsistencies. As part of the due diligence process, one of Halevi’s representatives accompanied Boyer for a site visit, where Boyer was treated respectfully by the employees and permitted to access the computers, but he refused to take the representative to see the airplanes.

Boyer then signed a loan agreement on behalf of Caribbean Sun, including a confession-of-judgment affidavit. Halevi wired the company about $4 million.

Meanwhile, the principals of Caribbean Sun had no knowledge of any of this. Halevi eventually brought a lawsuit seeking repayment of the loan plus interest (totaling around $25 million), and the Superior Court entered judgment in its favor, ruling that the confession of judgment was binding on Caribbean under a theory of apparent authority.

I swear to god you could take those words as I have typed them, without making a single alteration, and dump them into the final exam for any introductory BizOrgs law school class, right? Law professors know where this is going, of course, and I almost feel bad for ruining the test-ready nature of the set up by revealing the end of the story – but reveal I shall.

Utterly unsurprisingly, and citing liberally from the Restatement of Agency, the Delaware Supreme Court held that apparent authority cannot be created by the actions of the putative agent alone; a third party relying on the agent’s authority must have a reasonable belief traceable to the manifestations of the principal. Here, of course, Caribbean Sun had not so manifested; after all, it had nothing to do with the forged documents. In a section of the opinion I fully expect to make its way into multiple casebooks, the court helpfully wrote:

Halevi’s argument that the facts of Kopelowitz’s site visit support a finding of apparent authority is also unavailing. As mentioned, the Superior Court placed great weight on this testimony, highlighting Boyer’s extensive access to Caribbean Sun and Miami Air’s facilities, records, and bank accounts. But this access, without more, cannot support a finding of apparent authority.

Granting Boyer access to their facilities, records, and bank accounts is certainly a manifestation by Caribbean Sun and Miami Air. But as we have discussed, “[a]pparent authority is created by a person’s manifestation that another has the authority to act with legal consequences for the person that makes the manifestation . . . .” Granting access to facilities and corporate accounts to employees who have no authority to bind an entity is done frequently in the ordinary course of business. For example, a wide range of individuals, from accountants to human resources professionals to low-level managers, in the course of performing their job duties, need access to a corporation’s offices, records, and bank accounts. Because they are commonplace and essential to the functioning of most businesses, these manifestations alone do not give rise to a reasonable belief by a third party that an agent is authorized to bind the entity to a major transaction such as Halevi’s loan and security agreement.

During the site visit, there were no other manifestations from either corporation that Boyer was empowered to act on their behalf in a transaction of this nature. While he had access to both corporations’ facilities and information, this access was no more extensive than would have been given to many other employees. And Boyer’s statement that he “runs the place” and the reactions of other employees to Boyer’s presence is not a manifestation by either Caribbean Sun or Miami Air.

The court also held that, given the inconsistencies in the forged paperwork, Halevi was under a duty to investigate further and its reliance was not “reasonable” under the circumstances.

But what of the $4 million Halevi wired? Surely it’s unfair to let Caribbean Sun keep that money free and clear! But, fear not, Halevi is pursuing a separate action for repayment, not based on the confession-of-judgment, and I presume it has a decent shot at least based on some kind of unjust enrichment/disgorgement theory. Mostly, though, I look forward to finding out what exactly Caribbean Sun thought the money was for when it just showed up, unsolicited, in its bank account.

And another thing: On this week’s Shareholder Primacy podcast, Mike Levin and I talk about the court decision holding that American Airlines violated its ERISA duties by including BlackRock index funds in its 401(k) plan, and about the National Association of Corporate Directors. Here at Apple, here at Spotify, and here at YouTube.

Dear BLPB Readers:

“Call for Papers: Wharton Financial Regulation Conference – 4/25, submission deadline 2/10.

We are pleased to announce that the annual Wharton Financial Regulation Conference will take place on Friday, April 25, 2025.

Convening as the Trump administration wraps up its first 100 days, the conference offers a timely opportunity for scholars and policymakers to assess recent developments in financial regulation and peer over the horizon.

We invite submissions from scholars across all disciplines—law, economics, political science, history, business, and beyond—on any topic related to financial regulation, broadly construed.”

The complete call for papers is here:2025 Wharton Fin Reg Conference – CFP

A front page story in today’s WSJ is entitled “Pension Funds Want Private Equity to Open Up About Fees and Returns.” The article notes that “An increasing number of [fund] managers borrow cash using so-called subscription lines and net-asset-value loans to lift short-term performance and the fees they charge.” Curious about net asset value (NAV) financing and private equity? Check out my article, Net Asset Value Financing and Private Equity in the U. Pa. L. Rev. Online.  

The University of Memphis Cecil C. Humphreys School of Law is excited to invite nominations and applications for the Herbert Herff Chair of Excellence in Law. Memphis Law seeks academic leaders with a record of distinguished scholarship, demonstrated excellence in teaching, the ambition to lead the scholarly and intellectual life at the law school, and the capacity and drive to enhance the law school’s regional and national reputation. The appointment will be made at the rank of full professor with tenure. As a member of the faculty, the Chair of Excellence is expected to engage in high-level scholarly research and publication, excel in the classroom, and actively participate in faculty governance and service. The Chair of Excellence is expected to actively engage with faculty, both within the Law School and the University and throughout the country; to provide leadership for integrative research activities and significant engagement with academic and professional organizations; to support the scholarly activities of the law faculty; and to provide programmatic leadership, including developing and administering symposia. The chair is expected to engage with students, lawyers, judges, and other academic professionals. Memphis Law offers a competitive salary commensurate with experience and a generous annual stipend to support research and programmatic activities of the Chair of Excellence.

Memphis Law offers an outstanding educational program to prepare students for the practice of law within a Carnegie R1 research university. Our affordable tuition attracts a dedicated, hard-working, and diverse student body. Our downtown home, in a beautifully restored 19th century U.S. Customs House overlooking the Mississippi River perennially ranks as the best law school facility in the nation and positions students and faculty to have unparalleled access to the largest legal and business community in the Mid-South region. One of the most affordable cities in America, Memphis is a welcoming, thriving community shaped by its civil rights legacy. Memphis Law has a strong institutional commitment to diversity of its faculty and is interested in receiving expressions of interests from all persons, including those who will add to its diversity. The University of Memphis is an EEO/AA employer

Interested candidates should apply through the University of Memphis WorkForum link at https://workforum.memphis.edu/postings/42720. To be considered, a candidate must possess a Juris Doctor, have broad recognition for scholarly distinction, and an established teaching and service record. Please be prepared to submit your C.V., cover letter, writing sample, teaching evaluations, and a transcript as part of your application. The cover letter should discuss how the candidate may use the chair to bolster the intellectual life and reputation of the law school. Please direct all inquiries about the positions to: dromantz@memphis.edu, David S. Romantz, Cecil C. Humphreys Professor of Law, University of Memphis Law School. Review of applications will begin in the spring and continue until the position is filled.

Mercer University School of Law invites applications for up to two faculty members (one entry-level and one tenured), with appointments beginning in Fall 2025. We welcome applicants from all subject areas, with a particular focus on legal writing, commercial law, contracts, evidence, and remedies.

Founded in 1873, Mercer University School of Law has a long tradition of producing practice-ready lawyers who are committed to service. The school has earned a reputation for providing excellent legal education with an intense focus on student and faculty interaction. With an enrollment of approximately 375 students, Mercer Law School is one of 12 schools and colleges of Mercer University, which is consistently listed among the top institutions of higher education in the nation. The School of Law is nationally recognized for its exceptional programs in legal writing, advocacy (moot court and mock trial), public service, and professionalism and ethics.

The School of Law is located in Macon, Georgia, a city of approximately 156,000 residents. Macon is known for its rich musical heritage (e.g., Otis Redding, Little Richard, the Allman Brothers), vibrant arts community, recreational offerings (e.g., the Ocmulgee Mounds National Historic Park), and affordable cost of living. Located 85 miles from Atlanta, Macon offers the livability of a smaller city with convenient access to big-city amenities.

Mercer University recognizes the power of a diverse community and encourages applications from individuals with varied experiences, perspectives, and backgrounds. Mercer University is an AA/EEO/ADA employer.

Applicants should hold a J.D. degree from an accredited institution, demonstrate a commitment to excellence in teaching, and show potential for excellence in research and scholarship. Interested applicants should complete the brief online application at http://hr.mercer.edu/jobs/ and attach a current CV with the names and contact information of three references. For more information, contact Professor Ishaq Kundawala, Chair, Appointments Committee, Mercer University School of Law, at kundawala_i@law.mercer.edu.

The announcement set forth below relating to this spring’s conference focusing on the theme of “Integrating Doctrine, Practice, and Pedagogy to Prepare the Business and Transactional Attorneys of the Future,” was distributed earlier today by The Center for Transactional Law and Practice at Emory Law.

Announcement
By now, we hope that you’ve all seen the Press Release announcing the historic 6 million dollar gift from Emory’s emeritus professor Bill Carney for the formation of the William and Jane Carney Center for Business and Transactional Law.We are thrilled to jointly present this Conference, which will celebrate three pillars of the new Carney Center: doctrine, practice, and pedagogy. We will welcome you as scholars, lawyers, and teachers engaged in preparing students to become business and transactional attorneys.

The Conference will be held at Emory, beginning at 1:00 p.m. on Friday, May 30, 2025, and ending at 3:45 p.m. on Saturday, May 31, 2025. Information about registration and accommodations is forthcoming.
Call for Proposals
We are accepting proposals immediately, from now through the end of March. You may present alone or with colleagues.  Please prepare to give a 60-minute, interactive presentation on any aspect of business and transactional law and skills education viewed through the lens of our theme. How do we bring the three pillars of doctrine, practice, and pedagogy together to help students become competent business and transactional attorneys? 

The proposal submission portal is open; you may submit your proposal electronically here. For more information about the Conference, please contact Kelli Pittman at kelli.pittman@emory.edu.

Fellow Commissioners Peirce, Crenshaw, and Uyeda offered kind words in a statement issued earlier today on Gary Gensler’s last day on the Securities and Exchange Commission (SEC). In the statement, Chair Gensler was praised for being “committed to bipartisan engagement and a respectful exchange of ideas.” The statement ended with a lovely personal testament of gratitude.

Thank you, Chair, for your leadership, your zealous advocacy on behalf of our agency and investors, and your friendship. We are proud to have served this great agency alongside you. Your extensive public service over the past thirty years cautions against saying goodbye; instead, we will say – so long for now.

Chair Gensler also released a video on YouTube relating to his departure from the SEC, which you can find here. It is a useful, quick retrospective. At just a bit more than six minutes in length, it covers a bunch. I offered it up to the students in my Securities Regulation course as something they might want to watch. Among other things, he highlights the core policy underpinnings of federal securities regulation as the video progresses.

As the new SEC takes shape, I am sure we all will have more to say. I look forward to teaching the Securities Regulation course this semester and will endeavor to post on related teaching items of interest as I come across them.

We are here today because we are tired. We are tired of paying more for less. We are tired of living in rat-infested slums… We are tired of having to pay a median rent of $97 a month in Lawndale for four rooms while whites living in South Deering pay $73 a month for five rooms. Now is the time to make real the promises of democracy. Now is the time to open the doors of opportunity to all of God’s children . . . .

Dr. Martin Luther King, Jr, Chicago Soldier Field Stadium, Chicago Open Housing Movement, 1966

Each year, as the Monday-focused blogger for the Business Law Prof Blog, I endeavor to offer a post that connects with Dr. King’s work in some way. Today, which also is the day on which the United States inaugurates a new presidential administration, I focus on the role of federal regulation in creating and sustaining racial separation and racism. In 2020, The University of Tennessee College of Law produced a faculty video series labeled “How Did We Get Here.” The series focused on areas in which law or policy has contributed to systemic racism.

The video in the series I highlight today features my Tennessee Law colleague Eric Amarante describing how federal housing policy incorporated and fostered continuation of a racial divide and accompanying racism. You can find the video here. It is a fascinating story, told in a video less than ten minutes long. Although Eric does not cite to Dr. King in the video, fair housing was, as many know (and as the quote above indicates), a cause célèbre for him. See also the brief article here that includes the quote above. The video offers Knoxville as an example of the policies and regulations he describes, using color-coded maps and excerpts from primary texts as visual illustrations. Also of note, Eric’s video quotes President Franklin Delano Roosevelt in extolling a government value of assisting “the little fellow” at least as much as “large banks and corporations.”

For those who find the idea behind the video series interesting, you may want to check out other videos in the series, which include Ben Barton on unjust incarceration of black citizens, Lucy Jewel on legal reasoning related to inequality, and Penny White on jury selection.

[Posted at the request of friend-of-the-BLPB Paolo Farrah]

Dear Colleagues,

I am pleased to share the Call for Papers for an ESIL-supported event titled “Towards a Global Ecological-Economic Legal Framework,” organized in collaboration among our three interest groups: the ESIL IG on European and International Rule of Law, the ESIL IG on International Environmental Law, and the ESIL IG on International Economic Law. The event will take place at École Normale Supérieure – Paris Sciences et Lettres (ENS-PSL) on 6-7 June 2025.

The Call for Papers is open until 28 February 2025, and you can find further details here.

We look forward to receiving your abstracts and to meeting you in Paris in June 2025.

Best regards,
Paolo Farah

(On behalf of the ESIL IG on European and International Rule of Law, ESIL IG on International Environmental Law, and ESIL IG on International Economic Law)