So, I am very anti-fraud, and I think cheaters should not prosper.  But I also think courts should know what they are talking about, especially in criminal cases. The following is from a new Second Circuit case: 
Although we review claims of insufficiency de novo, United States v. Harvey, 746 F.3d 87, 89 (2d Cir. 2014), it is well recognized that “a defendant mounting such a challenge bears a heavy burden” because “in assessing whether the evidence was sufficient to sustain a conviction, we review the evidence in the light most favorable to the government, drawing all inferences in the government’s favor and deferring to the jury’s assessments of the witnesses’ credibility.”  . . . 
[W]e reject Jasmin’s challenge to her Hobbs Act conviction. The evidence presented at trial more than sufficiently describes the consideration received by Jasmin in exchange for her official actions as Mayor, including the $5,000 in cash from Stern, “advance” cash for their partnership, and shares in the limited liability corporation that would develop the community center.
United States v. Jasmin, No. 15-2546-CR, 2016 WL 4501977, at *2 (2d Cir. Aug. 29, 2016). 
 
I can’t actually figure out exactly what’s going on here, but I know a few things: (1) “advance” cash for a partnership probably needs to be assessed more closely because, what partnership? and (2) there should not be shares in a “limited liability corporation.” Or maybe there should be, if they just mean “corporation.” But I think they mean an LLC, which should provide membership interests.  At a minimum, I would love to see a court call people out in such situations for perpetrating frauds with incorrect entity forms. Yeah, I’m that kind of law nerd. 
Imagine this: Professor walks into Business Associations class Monday morning at 8:00 am having prepared to cover 14 pages of reading when she assigned only three (intending, when creating the syllabus, as she later recalled, to use the time to summarize, contrast, and compare agency law rules that will again come into play in partnership and other entity law–and to catch up, if need be).  OK.  The professor is me.  First lesson (which I thought I had learned many moons ago): always double-check the syllabus on what you’ve assigned.
 
So, what happened in class?  Well, the students didn’t let on that the outline for the class plan that I scripted out on the whiteboard seemed to go beyond the reading.  But they might not have recognized that, since it was only an outline.  However, once I started covering the unassigned material, someone did alert me to my error.  Shocked (!), I told them that I had been too nice (weak response) and that–obviously–I had not checked the syllabus to confirm the day’s reading assignment before scripting out the class plan and preparing for class.
 
I didn’t then let the students go after learning of the mistake (having covered in summary fashion those three pages in about 15 minutes of class time). Instead, I constructed a hypothetical set of facts relating to a business conducted as a sole proprietorship from the facts of the partnership case on the syllabus for Wednesday (which I had prepared to cover for today) and asked the students to analyze contract and tort liability based on the hypothetical using the agency law rules we covered over the past four classes.  Detriment: people weren’t prepared for this based on the prompts in the syllabus for today’s class, and it took a while (and a board diagram) to establish the facts of the hypothetical with some (albeit far-from-perfect) clarity.  Benefit: many students learned that they don’t yet know/understand agency law, and I got the opportunity to give the students a few pointers on how partnership law will be different from agency law.
 
Did I make the right choice?  I am following up with a post on the course TWEN site to capture the agency law rules we covered in class (to which the students did not have many salient citations).  What else can I do to take this lemon and turn it into lemonade?  All suggestions are welcomed.

I’ve been fascinated by the efforts of various state attorneys general to investigate Exxon for securities fraud on the ground that its climate change denial misleads investors about the risks of investing in the company.  Exxon has filed a lawsuit in Texas to halt the inquiries, arguing that they infringe on its free speech rights, and Congressman Lamar Smith, head of the House science committee, has subpoenaed the attorneys general involved, to determine if this is a coordinated political attack on the company.  The dispute has even made it into the Democratic party platform, which states that “All corporations owe it to their shareholders to fully analyze and disclose the risks they face, including climate risk. …  Democrats also respectfully request the Department of Justice to investigate allegations of corporate fraud on the part of fossil fuel companies accused of misleading shareholders and the public on the scientific reality of climate change.”

An investigation by the Virgin Islands was dropped; as far as I know, both the New York and Massachusetts investigations continue, and investigations by other states.  Exxon’s lawsuit remains pending.

It’s not a new idea, to claim that securities regulation impinges on free speech rights – the DC Circuit struck down part of the SEC’s conflict minerals rule on just that ground – but usually these arguments are aimed at rules that require issuers to speak, or prohibit issuers from making truthful statements.  The Exxon case is unusual because it comes in the context of, well, false statements.

At the same time, though, one cannot help but suspect that the real concern isn’t investors, but the nature of Exxon’s participation in public political debates.

[More under the jump]

Continue Reading Free Speech, Securities Regulation, and Exxon (plus a video about Business Associations)

During the past few days, I have participated in a lot of meetings.

This has led to some thinking on what makes a good meeting.

To me, a useful meeting is one that accomplishes things that could not be handled appropriately by an e-mail. Some meetings are held, I am convinced, because those calling the meetings are not sure that participants read and pay attention to e-mails. This worry could be best addressed, in my opinion, by making expectations regarding e-mail management clear, perhaps coupled with consequences for those who ignore the contents.

That said, e-mail is not appropriate in all cases and here are four categories where in-person meetings can work better than e-mail:

  1. Inspire. Perhaps some can be inspired over e-mail, but it seems much easier to inspire in person. As such, I think some good meetings can be used to inspire participants to achieve organizational goals. But inspiring others, especially sometimes cynical professors, can be difficult to do.
  2. Build Relationships. Sometimes the only times you see certain colleagues are at faculty meetings, so meetings can be a good way to build relationships, especially if folks hang around before and after meetings or if significant time is given for small group discussion.
  3. Engage in Group Discussions. E-mail is pretty good for one-way communication, but as anyone who has been on a group e-mail with hundreds of replies knows, e-mail isn’t great for dynamic group conversation. As such, it may make sense to have meetings when a group needs to converse about working through an issue. That said, preparation for the meeting can often be done alone, and the lion-share of the conversation can be done in small groups.
  4. Engage in Difficult Conversations. When tone is important, e-mail is often inadequate. Thus, in-person meetings may be important for communication of sensitive or controversial information.

When meetings focus on things that cannot be done remotely, I think meetings can be quite useful. Similarly, when teaching, we should think – what is it that students cannot get through an e-mail, the internet, or an online class? We should focus on those things. As such, I am trying to do even more interactive projects and small group discussions in class this semester.

I’m now in my third year of teaching on the tenure track after two years of a VAP. I still consider myself a newbie because despite over twenty years of practice experience, teaching is a whole different ball game.

This semester I am teaching Civil Procedure, which is now a one-semester 4-credit class instead of a two-semester class, and a 4-credit Business Associations class. Both are required at my institution and bar tested in Florida. I have taught them both before and thankfully get strong reviews from my students, but I am always looking to improve.

To that end, I recently took a look at Emily Grant’s essay, Beyond Best Practices: Lessons from Tina Stark About the First Day of Class. The abstract states:

This Article reviews and expands the literature on best practices in a narrow subset — the first day of class. As the same time it seeks to convey words of wisdom from one of the most well-known and highly-regarded legal educators: Tina Stark, a giant in transactional drafting. The first day of any law school class can be fraught with tension and nerves, even for professors. This article presents advice from Professor Stark, supplemented with guidance from best practices research, so that professors can take advantage of the opportunities that the first day of class offers to set the tone for a successful semester.

I haven’t adopted all of the suggestions– I don’t think it’s wise, for example, for an untenured professor to have students use my first name. However, I have used some variation of her techniques to make students more comfortable both before and during class. I continue to find value in the survey that I send to students prior to the semester so that I can ascertain their level of understanding of business concepts, their learning objectives, and their expected area of practice. For the first time this semester, I will send an anonymous survey after the midterm asking students what they think is working and what they think needs improvement. I may not take all of the students’ suggestions, but because I am trying new things this semester including more graded quizzes and a flipped classroom, I don’t want to waste time using ineffective techniques.

Like Stark, I also share a “humbling story” on the first day of class. This is especially important for many of my Business Associations students who fear anything related to math, numbers, or accounting. I explain my career path as a litigator and how it was naively designed to avoid interaction with complex business topics. I also discuss how what we learn will help the family, criminal, and litigation-minded students who don’t understand how this course will apply to them after the bar.

Stark focuses on a collaborative classroom and team grading, and I do as well. For the first time, I have flipped the classroom in both Civil Procedure and Business Associations, and therefore the students see my PowerPoints and helpful videos prior to class. During class we apply what they have learned. They work in law firms during class where they caucus to determine a team answer to the problems sets I have given them in advance or they work on new problems or drafting exercises based on what they have reviewed prior to class.

Stark brings in homemade brownies for her students. I’m too lazy for that so I will bring in energy bars and Vitamin C before midterms and finals, and buy lunch or bagels for students who show up to my marathon review sessions. I agree with Stark’s view that making the students feel comfortable in a supportive learning environment makes them more apt to ask questions both in class and during office hours.

I recommend the article even though many of you may be past the first day already or veteran educators. I also welcome any suggestions that you have found helpful in improving the learning environment. Please leave comments below or email me offline at mnarine@stu.edu

 

Increasing business demands are prompting companies to expand into new products and markets. Businesses also are engaging in mergers, acquisitions and joint ventures; issuing  securities; and performing other transactions associated with business growth, which results in larger corporate teams. Many companies have a need for additional in-house legal professionals who are readily available to help manage mounting financial and industry-related regulations. Moreover, corporate legal departments often prefer to handle more routine legal work in-house and retain the services of outside counsel for specialized legal work.

Real estate, IP, health care and compliance were also mentioned along with the noted strong growth in litigation.  The full report/study is available here:  Download Legal_2016_job_salary_guide.

 

-Anne Tucker

I am still working my way through this new paper, Seeking an Angle of Repose in U.S. Business Organization Law: Fiduciary Duty Themes and Observations, from J. William Callison of Faegre Baker Daniels LLP. It’s an interesting premise, and worth a look. Here’s the abstract:

This article applies liberal, neoliberal, critical, feminist and communitarian political theories to limited liability company and partnership fiduciary duty law; discusses developments in that law over the last two decades by focusing on theory; suggests a pragmatic and balanced approach to fiduciary duty law that incorporates desirable features of different approaches; and suggests that law, as developed in uniform acts, has been moving toward a balanced approach.

The paper is available here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2827771

We are now more than three months into the Title III crowdfunding experiment.  I have been wanting to get back to posting on Title III crowdfunding since my “LIVE” post back in May, but so much other fun stuff has been going on!  So, to make me feel a bit better on that point, I will share some current crowdfunding data with you all in this post based on publicly available information obtained from a Westlaw search performed yesterday (Sunday, August 21, 2016).  [Note to the powers that be at the SEC:  EDGAR makes it hard to find the aggregated set of Form C filings unless you are collecting data on an ongoing basis.  I hope that changes as EDGAR continues to improve . . . .]  

At the outset, I will note that others have offered their own reports on Title III crowdfunding since I last posted (including here, here, and here).  These reports offer some nice summaries.  This post offers a less comprehensive data dump focusing in on completed offerings and withdrawn offerings.  At the end, I offer some limited observations from the information provided here about crowdfunding as a small-business capital-raising alternative, the need for EDGAR adjustments, inferences about the success of Title III crowdfunded offerings, and platform disclosure about withdrawn offerings.

First, however, the top-level Westlaw-based summary:

Total Form C filings: 85 (275 filings show on Westlaw, but only 85 are non-exhibit filings representing distinct offerings)
Total Form C/A filings (amendments, including exhibit filings): 153
Total Form C-U filings (updates): 4
Total Form C-W filings (withdrawals): 2

The remainder of this post takes a shallow dive into the updates and withdrawals.  Filings in each case are presented in reverse chronological order by filing date.  All referenced dates are in 2016.  Issuer names are copied from filings and may not be the actual legal names of the entities.

Continue Reading A Bit More Title III Crowdfunding Data . . . .