Back in 2019, I posted about a panel at Tulane’s Corporate Law Institute discussing Rule 14a-6(g).  That rule allows shareholders who are not seeking proxy authority to communicate with other shareholders without filing a proxy statement, but under some circumstances, any holder of more than $5 million of stock must file their written solicitation materials with the SEC.

In 2019, the new thing was for shareholders who own less than $5 million to file materials anyway, because they’d figured out that EDGAR was actually a cheap and efficient mechanism to allow them to communicate with other shareholders.  So, for example, proponents of 14-8 proposals, or vote-no campaigns, had begun filing statements with the SEC under 14a-6.

At that CLI, SEC counsel Ted Yu explained new Commission guidance that such voluntary filings were permissible, so long as there was disclosure that the filing was voluntary.

After that, Dipesh Bhattarai, Brian Blank, Tingting Liu, Kathryn Schumann-Foster, and Tracie Woidtke conducted a study of these 14a-6(g) filings.  I posted about their paper in 2022:

They find that a variety of institutional investors make these filings, including public pension funds (38%), union funds (26%), and other institutions, including hedge funds (22%).  The filings may be used to support shareholder proposals that are already on the ballot – and thus to exceed the 500-word limit for such proposals – and to oppose management proposals, such as director nominations and say-on-pay.  And these filings are taken seriously: 74% of them are accessed by a major investment bank, and they appear to have an effect on voting outcomes and forced CEO turnover.

So this is fascinating.  The rule, adopted in 1992, at least as I always understood it, was intended to ensure that all shareholders receive the same information, and to allow that information to be publicly vetted, so that large shareholders can’t lobby others in secret (and away from management prying eyes).  But with modern computerized filings, the rule has been, functionally, hacked, to serve as a low-cost mechanism by which shareholders can communicate with other shareholders – and shareholders find it useful.  That’s a good thing…

Apparently, too much of one, because proxy exempt solicitations have proliferated, sometimes filed not by the shareholder-proponent of a proposal, but instead by organizations that support or oppose it.

So, in one of the first acts of the SEC under the new administration, the SEC has issued new guidance that will, as far as I can tell, severely curtail or eliminate the use of exempt solicitations.  According to the new guidance,

Question: Can a person submit written soliciting material under the cover of a Notice of Exempt Solicitation on EDGAR if the written soliciting material has not been sent or given to security holders?

Answer: No. The submission of a Notice of Exempt Solicitation on EDGAR is not intended to be the means through which a person disseminates written soliciting material to security holders. Rather, its purpose is to notify the public of the written soliciting material that the person has sent or given to security holders through other means.

Meaning, as far as I can tell, EDGAR can no long be used for low-cost distribution; shareholders have to go to the expense of actually distributing the material separately before it can be filed with EDGAR for a 14a-6(g) distribution (though it is not clear how many others must be separately solicited).  There are some other tweaks (discussed in various firm client memos, including this one from Gibson Dunn (h/t thecorporatecounsel)), but that seems to be the bombshell.

I can believe that the process has become too crowded – especially to the extent it’s been used by nonshareholders and to offer statements that do not constitute “solicitations” – but it seems we’ve just lost a valuable method by which dispersed shareholders can communicate with each other.

And another thing.  New Shareholder Primacy podcast is up!  This week, Mike Levin talks to Adriana Robertson of U Chicago and Slava Fos of Boston College about ways companies control and sometimes manipulate annual shareholder meetings.  Available here at Spotify, here at Apple, and here at YouTube.

This year’s symposium, titled Navigating the Relationship Between the Administrative State and Emerging Technology, will focus on the evolving regulatory frameworks around emerging technologies like digital assets and artificial intelligence (AI). These technologies are rapidly transforming the way individuals and businesses engage in commerce, interact socially, and innovate. These advancements, however, raise profound questions about the applicability of existing regulatory structures. The symposium will bring together leading experts to discuss how the administrative state can balance the protection of innovation with the mitigation of risks associated with these technologies, while ensuring that laws evolve to meet the challenges of the future.

We are thrilled to welcome Michele Korver, Head of Regulatory & Operating Partner at a16z crypto, to deliver the opening keynote. Michele’s wealth of experience in both the public and private sectors will provide invaluable insights into the state of digital asset regulation. The event will conclude with a thought-provoking closing address, offering reflections on the key discussions of the day.

Welcome and Opening Remarks (1:15 PM – 1:25 PM)

The symposium will begin with brief welcoming remarks, setting the stage for an afternoon of in-depth discussions and exploring the complexities surrounding the intersection of technology, law, and regulation.

Opening Keynote Address (1:25 PM – 1:55 PM)

SPEAKER

Michele Korver, Head of Regulatory and Operating Partner, a16z

Michele Korver is the Head of Regulatory in the Crypto fund where she helps our web3 portfolio companies to navigate the regulatory landscape and works to educate and liaise with government agencies and policymakers.

She joined a16z crypto after more than 25 years in government and law enforcement. Michele started her career as a Special Agent in the U.S. Secret Service, where she investigated financial crimes, before serving as a federal prosecutor for over a decade in the Miami, Florida, and Denver, Colorado, United States Attorney’s Offices. Specializing in money laundering and transnational organized crime, Michele advanced to become one of the foremost federal prosecutors in crypto. In 2017, she debuted the role of Digital Currency Counsel, the U.S. Department of Justice’s first dedicated subject matter expert in cryptocurrency-related prosecutions and forfeitures, creating and managing the Criminal Division’s Digital Currency Initiative. Following her time at the DOJ, she served as Chief Digital Currency Advisor at the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), advising the Director on digital asset-related matters across the bureau’s divisions, while advancing FinCEN’s leadership role within the space.

Michele participated in the Treasury-led U.S. delegation to the Financial Action Task Force, consulting on standards and recommendations involving virtual asset activities and service providers and was a contributing author to the Department of Justice’s 2020 Cryptocurrency Enforcement Framework. She also co-authored the articles “Attribution in Cryptocurrency Cases” (Feb. 2019) and “Surfing the First Wave of Cryptocurrency Money Laundering” (May 2021), both published in the DOJ Journal of Federal Law and Practice.

Michele received her B.A. from the University of Florida, her J.D. magna cum laude from the University of Miami School of Law, and clerked for U.S. District Court Judge William P. Dimitrouleas in the Southern District of Florida

Panel I: SEC Regulation by Enforcement: Scope of Jurisdiction and Impact on Market Participants (1:55 PM – 2:40 PM)

MODERATOR

Christoph Henkel, Professor of Law, Drake University: Professor Christoph Henkel brings a wealth of international experience to the panel. Before joining Drake, having served as a professor at the Chicago-Kent College of Law, the University of Illinois Chicago School of Law, and the Mississippi College of Law, he brings a broad perspective on regulatory issues in digital assets and emerging technologies. Before entering academia, Professor Henkel worked as an arbitrator at the Directorate of General Trade at the European Commission and practiced law at Sidley Austin’s Chicago office. His education includes a J.D. from Justus-Liebig University Law School in Giessen, Germany, an S.J.D., and an LLM from the University of Wisconsin Law School. He will lead a critical discussion on the SEC’s enforcement actions and their implications for digital asset firms, particularly around the application of the Howey Test and the SEC’s enforcement approach in the absence of clear legislation.

PANELISTS

Amanda Tuminelli, Chief Legal Officer, DeFi Education Fund: Amanda Tuminelli serves as the Chief Legal Officer of the DeFi Education Fund, a nonpartisan nonprofit policy organization that advocates for sound policy for decentralized finance, where she leads the organization’s impact litigation and policy efforts. Prior to joining DEF, Amanda was a lawyer at Kobre & Kim, where she defended clients against criminal and regulatory investigations, government enforcement actions, and large scale litigation, particularly in the crypto and blockchain space. She previously served as a law clerk for the Honorable Ann M. Donnelly of the U.S. District Court for the Eastern District of New York and practiced at Dechert LLP in their white-collar and securities litigation group.

Marisa Coppel, Head of Legal, Blockchain Association: Marisa Coppel is the Head of Legal at the Blockchain Association, a trade organization advocating for the digital asset industry. Before joining the Blockchain Association, Marisa worked as an associate at Covington & Burling LLP and O’Melveny & Myers LLP, specializing in securities law and litigation. She also served as a judicial law clerk for the U.S. District Court for the Central District of California. Marisa holds a J.D. from Loyola Law School, Los Angeles. Her legal expertise will bring an important perspective on how the SEC’s enforcement actions are affecting blockchain companies and the legal uncertainty facing firms in the digital asset space.

Daniel Stabile, Partner and Co-Chair, Digital Assets & Blockchain Technology Group, Winston & Strawn LLP: Daniel Stabile is a Partner and Co-Chair of the Digital Assets & Blockchain Technology Group at Winston & Strawn LLP. Daniel is also an adjunct professor at the University of Miami School of Law, where he teaches a course on digital assets and blockchain technology. He is one of the co-authors of the first law school textbook dedicated to the regulation of digital assets and blockchain. Prior to joining Winston & Strawn, Daniel worked at Shutts & Bowen and Dewey & LeBoeuf LLP. He holds a J.D. from The George Washington University Law School. Daniel’s deep knowledge of blockchain technology and legal regulation will offer critical insights into the challenges that the SEC’s enforcement actions pose for digital asset firms. 

Intermediate Speaker (3:00 – 3:15 PM)

SPEAKER

Jake Chervinsky, Chief Legal Officer, Variant

Jake Chervinsky is the Chief Legal Officer at Variant, a crypto-focused venture fund investing in decentralized technologies. He is also a board member of the DeFi Education Fund. Previously, Jake served as Chief Policy Officer at the Blockchain Association and as General Counsel at Compound Labs, one of the leading decentralized finance protocols. Jake earned his J.D. from The George Washington University Law School. As an expert in decentralized finance (DeFi), Jake will provide an essential overview of DeFi’s role in the broader financial ecosystem, its legal challenges, and the regulatory landscape that must evolve to address these challenges. His presentation will highlight how DeFi challenges traditional financial systems and discuss the legal issues facing DeFi projects.

Panel II: Potential Solutions to the Incongruence Between Decentralized Finance and Legacy Financial Regulation (3:15 PM – 4:00 PM)

MODERATOR

Miller Whitehouse-Levine, CEO, DeFi Education Fund: Miller Whitehouse-Levine is the CEO of the DeFi Education Fund, a non-profit organization that advocates for the legal and regulatory issues surrounding decentralized finance. Before founding DeFi Education Fund, Miller was the Director of Policy at the Blockchain Association, where he developed policies and strategies to support the growth of decentralized finance and blockchain technology. Miller holds a bachelor’s degree from Georgetown University’s Walsh School of Foreign Service. He will moderate the panel on finding solutions to regulatory gaps between decentralized finance and traditional financial systems, bringing valuable insights from his experience in DeFi policy advocacy.

PANELISTS

Rodrigo Seira, Special Counsel, Cooley LLP: Rodrigo Seira is a Special Counsel at Cooley LLP, where he advises clients in the blockchain and digital asset space on regulatory compliance and legal strategy. Prior to joining Cooley, Rodrigo worked with the crypto-focused investment firm Paradigm and at DLx Law and Cleary Gottlieb Steen & Hamilton. Rodrigo earned his J.D. from Harvard Law School. His deep knowledge of cryptocurrency and blockchain regulation will bring valuable perspective on how decentralized finance (DeFi) fits within the broader regulatory framework and the solutions that are emerging at both the federal and state levels.

Drew Hinkes, Partner, Winston & Strawn LLP: Drew Hinkes is a partner at Winston & Strawn LLP and an adjunct professor at both NYU Stern School of Business and the University of Miami School of Law. He is a co-chair of the Uniform Commercial Code’s Emerging Technologies Subcommittee and has written extensively about blockchain regulation. Drew earned his J.D. from the University of Miami School of Law. He is widely recognized as an expert in the intersection of law, technology, and blockchain, and he will provide critical insights on how DeFi’s unique characteristics challenge traditional financial regulations.

Kimberly Prior, Partner, Winston & Strawn LLP: Kimberly Prior is a partner at Winston & Strawn LLP and co-chair of the Digital Assets & Blockchain Technology Group. She also serves as an adjunct professor at the University of Miami School of Law, teaching courses on blockchain and digital asset regulation. Prior to her role at Winston & Strawn, Kimberly worked at Shutts & Bowen and Baker McKenzie. Kimberly holds a J.D. from Stetson University College of Law. Her expertise in financial services and digital assets will be instrumental in discussing the regulatory solutions for DeFi and how traditional financial regulations can adapt to the challenges presented by decentralized finance.

Panel III: The Global Reach of U.S. Anti-Money Laundering & Sanctions Laws (4:10 PM – 4:55 PM)

MODERATOR

Lee Sullenger, Director, Financial Crimes Compliance (Digital Assets), BNY: Lee Sullenger is the Director of Financial Crimes Compliance for Digital Assets at BNY Mellon. Lee is also the founder of CryptoCytes, the only crypto-native platform where individuals can become credentialed as Cryptocurrency Crimes Investigators. Before joining BNY, Lee held positions at PNC, Citi Bank, and Raytheon, and served 22 years in the U.S. Army, retiring as a Lieutenant Colonel. Lee’s extensive experience in financial crimes compliance will drive the panel’s discussion on the global challenges of anti-money laundering (AML) laws as they apply to digital assets and how U.S. sanctions laws have been adapted to address illicit activities in the cross-border digital asset space.

PANELISTS

Michele Korver, Head of Regulatory and Operating Partner, a16z: Michele Korver’s previous experience as Chief Digital Currency Advisor at FinCEN and as Digital Currency Counsel at the DOJ makes her an expert on the global reach of U.S. financial regulations. She will provide valuable insights into how the U.S. government is adapting AML and sanctions laws to deal with emerging digital assets and their cross-border implications. Michele earned her J.D. from the University of Miami School of Law where she served as the Managing Editor of the University of Miami Law Review.

Ari Redbord, Global Head of Policy and Government Affairs, TRM Labs: Ari Redbord leads global policy and government affairs at TRM Labs, a firm that specializes in blockchain analytics for financial institutions and government agencies. Previously, Ari served as Senior Advisor to the Under Secretary for Terrorism and Financial Intelligence at the U.S. Treasury and as an Assistant United States Attorney. Ari earned his J.D. from Georgetown University Law Center. His vast experience in policy and regulatory affairs will offer critical insights into the role of AML and sanctions laws in the digital asset space.

Carla Reyes, Associate Professor of Law, SMU Dedman School of Law: Carla Reyes is an Associate Professor of Law at Southern Methodist University’s Dedman School of Law. She serves as Associate Research Director on the Permanent Editorial Board for the Uniform Commercial Code and as Director of Research on the Technology Committee of the UCC. Carla’s research focuses on the intersection of law and technology, and she has significant experience in blockchain and digital assets. Her expertise will shed light on how anti-money laundering and sanctions regulations must evolve to address the challenges posed by digital currencies. Professor Reyes earned her J.D. from Duke University.

Panel IV: Artificial Intelligence and Anticompetitive Behavior (5:05 PM – 5:50 PM)

This panel will address the philosophical and practical implications of artificial intelligence (AI) on competition, focusing on whether the widespread use of AI could lead to monopolistic behavior or market concentration. Panelists will discuss the challenges AI presents in terms of market entry, with large firms controlling the vast resources needed to train AI models. Additionally, the panel will explore the role of government in regulating AI to prevent anticompetitive behavior while fostering innovation. The discussion will consider the evolving relationship between AI technology and market competition, exploring the balance between innovation and ensuring fair competition in a rapidly changing technological landscape.

MODERATOR

Marcia Narine Weldon, Professor of Law, University of Miami School of Law: Professor Marcia Narine Weldon is a faculty member at the University of Miami School of Law, where she serves as the Director of the Transactional Skills Program. In addition to her academic work, she is General Counsel for Avatar Buddy and The Women’s Fund Miami-Dade. Professor Weldon has extensive experience in both legal academia and corporate law, having previously worked as the Vice President, Deputy General Counsel, and Vice President of Global Compliance & Business Standards at Ryder. She has also practiced law with Morgan Lewis and Cleary Gottlieb, and served as a judicial law clerk for Justice Marie Garibaldi of the New Jersey Supreme Court. Professor Weldon earned her J.D. from Harvard Law School. Professor Weldon’s unique combination of academic, legal practice, and compliance experience gives her a valuable perspective on the intersection of law, technology, and competition.

PANELISTS

John Newman, Professor of Law, University of Miami School of Law: John Newman is a Professor of Law at the University of Miami School of Law, where his research focuses on antitrust law, particularly in the context of technology and innovation. Prior to joining academia, Professor Newman served as a Deputy Director in the Federal Trade Commission’s Bureau of Competition and as a trial attorney in the DOJ’s antitrust division. His expertise in antitrust enforcement will be crucial to the discussion on how AI could influence market dynamics and the potential regulatory frameworks to address anticompetitive behaviors. Professor Newman earned his J.D. from the University of Iowa College of Law.

Samir Patel, Associate, Holland & Knight: Samir Patel is an associate at Holland & Knight, where he specializes in gaming, digital assets, and artificial intelligence. In addition to his practice, Samir serves as an adjunct professor at Michigan State University College of Law and has previously worked with the ABA Young Lawyers Division’s Innovation Committee. Samir has been actively involved in the Miami-Dade County Cryptocurrency Task Force, which seeks to create a regulatory framework for digital assets in the region. Samir’s expertise in both digital assets and AI, combined with his practical experience in the regulatory space, will provide valuable insights into how AI technologies could affect market competition and the role of government in regulating these technologies. Samir earned his J.D. from the Michigan State University College of Law.

Closing Remarks (5:50 PM – 6:00 PM)

David Lourie has a new paper out considering what standard the SEC should use when deciding whether to impose personal liability on Chief Compliance Officers (CCOs) for compliance failures at their firms.

The SEC now requires financial services firms to have CCOs. Exactly when they do or should face personal liability appears unclear. One SEC Staff member told CCOs that they would face personal liability in three circumstances: (1) when the CCO is affirmatively involved in misconduct; (2)
when the CCO engages in efforts to obstruct or mislead the SEC; or (3) when
the CCO exhibits “a wholesale failure to carry out his or her responsibilities.” What does “wholesale failure” mean here? It’s not totally clear. In the past, the SEC has sought to impose personal liability on CCOs for compliance failures and proceeded under a negligence standard–exposing a CCO to liability if they negligently performed their duties.

Figuring out when you should and shouldn’t hold CCOs personally liable is challenging. I’ll confess that my initial instinct is to lean toward personal liability so that someone at these financial services firms will take compliance seriously. Lourie makes a compelling case that putting too much liability on CCOs may turn them into self-protective box checkers and deter people from taking the role. It could also drive up the costs associated with having a CCO. How much insurance will you need to buy to manage the risk that someone at Wells Fargo will do something illegal? I don’t know, but it’s probably a large number.

Lourie argues for a clear shift to a recklessness standard for personal liability for CCOs. He also details a number of enforcement actions where the CCO’s conduct rose to that level. Reserving personal liability for these more egregious violations may be a better fit. Of course, narrowing CCO personal liability doesn’t mean that the SEC cannot still drop the hammer on misbehaving firms. Some subset of the CCOs getting dragged in personally now may be the ones had the bad luck to accept a job with a firm full of scofflaws.

At the annual meeting of the Association of American Law Schools earlier this month, the Section on Agency, Partnerships, LLCs, and Unincorporated Associations (for which I was the outgoing Chair) focused its principal panel on the intersection of the section’s mandate with technology. As might be expected, blockchains and generative artificial intelligence (AI) were a core focus. It was exciting to hear about some of the work being done in this space.

I was reminded as I was listening to the speakers about an article that I knew was forthcoming. I checked in with the author this past week and it has, in fact, now been published. The article is Zhaoyi Li‘s Artificial Fiduciaries, available here through the Washington and Lee Law Review and here on SSRN. Here’s the SSRN abstract.

The rapid development of technology in the last decade has affected all levels of society. Corporate governance has not been immune to these changes. In the future, Artificial Intelligence (“AI”) fiduciaries may be technologically capable of serving as independent corporate directors. This could be an effective way to address the challenge of the absence of truly independent directors in the traditional governance framework. Artificial fiduciaries could also offer a way to mitigate agency costs and improve overall corporate governance. However, traditional corporate law lacks solutions for coping with the integration of AI into corporate governance.

Currently, there is little scholarship discussing the intersection of AI and corporate governance. Because the impact of technology on corporate governance is inevitable, jurisdictions with a robust corporate focus (such as Delaware) will likely have to amend their corporate laws. This Article introduces the theory of artificial fiduciaries and offers a novel interpretation of traditional fiduciary duties. It aims to harmonize the long‑established duties of loyalty and care with the fast‑paced technological advancements of the modern era. The discussion extends beyond the question of whether AI is more than a mere tool and scrutinizes the anticipated critiques of AI’s alleged faults—including issues of bias, the “black box” problem, and concerns related to the “superdirector.” It also explores the “human in the loop” option in the context of artificial fiduciaries. This comprehensive analysis not only highlights AI’s pivotal role in driving the evolution of traditional corporate governance toward an innovative technological framework but also delineates clear trajectories and presents a strategic blueprint for technological governance’s forthcoming evolution.

Those of us who teach and write about corporate governance will face questions about the use of AI in corporate governance in our work. Professor Li’s article is one that may help us to answer some of those questions–or at least enable us to probe them more deeply. Among other things, I am sure that I will be referring students to it, since this is a hot topic of discussion for them as well as for those of us working in the law teaching trenches.

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.