On Friday, Bill Haslam, the Governor of the State of Tennessee, spoke at a session sponsored by the C. Warren Neel Corporate Governance Center on The University of Tennessee’s Knoxville campus.  He is our former city mayor and a hometown favorite for many.  I always enjoy his talks.

His talk on Friday focused on how Tennessee is attracting businesses and jobs and how education–including higher education–plays a role.  But before he honed in on that topic, he asked an intriguing, albeit basic, question that operates on theoretical, political, and practical planes.  That question: How is government similar to and different from private enterprise?  He wanted audience participation.  I waited to see how everyone would react.  He got lots of good answers that cut across economics, management, finance, and governance.

Provocatively (at least for me), he characterized his gubernatorial role as akin to the role of a chief executive officer in a corporation.  He has served as a corporate manager (president of his family’s firm and the CEO of a division of another firm), and his vision of the state gubernatorial role is clearly framed by that experience.  He actually called the legislature his “board of directors” in his role as governor. 

Well, after that analogy, I just had to contribute to the discussion with a comment.  I endorsed the governor’s view of his position, but I also noted that the executive, as the head of a separate branch of a government of three branches, has power independent of the power afforded to the legislature.  That is when things got interesting, at least for me.

Continue Reading Government & Business: Is a Governor More Powerful Than a Corporate CEO?

I began my twenty-ninth year of law school teaching this week. It has now been thirty-six years since I entered law school as a student. Except for  four years of practice, I have been there ever since.

The world has changed significantly, but legal education hasn’t changed much.

When I entered law school in 1978,

  • the Internet was still unknown to the general public, a concept that scientists and the government were still developing. 
  • The personal computer was just beginning to take off, and no one I knew had one. 
  • Laptops were where your child sat.
  • Lexis computerized research was just beginning.
  • PowerPoint presentations did not exist. 
  • You bought your telephone, securely connected to your wall, from Ma Bell.

It’s amazing, given all the changes since then, how little has changed in legal education.

When I began law school, grades were determined primarily by a single end-of-semester exam. In most cases, they still are.

When I began law school, the focus was on the development of analytical skills, and clinical education was secondary. Not much change there (yet).

When I began law school, professors were using chalk and blackboards. They’re now using whiteboards and PowerPoint slides, but primarily just to display what they used to write on the blackboard.

When I began law school, students were required to purchase expensive textbooks consisting primarily of edited cases and questions. The textbook market was dominated by West, Foundation Press, and Little Brown. The publishers’ names have changed, but not much else.

When I began law school, law firms were practically begging students to take jobs, and summer clerkships were one long summer camp, filled with fine dining and entertainment and minimal work expectations. Well, I guess some things have changed.

Can you imagine if the rest of the world changed at the same pace as legal education? You would be spending your evenings watching TV programs on the three networks. You would have to be home to take a phone call—and, if you needed to talk to someone outside your town, it would cost you a fortune. If you needed information, you could drive to the library.

If legal education were a phone company, we’d all have landlines and we’d be debating whether to change to a Princess.

Adam Levitin at Credit Slips has an interesting breakdown of MBS litigation settlements.  He points out that of the $94.6 billion in settlement funds, only 2% has gone to private investors alleging securities-fraud-type claims.

He concludes:

First, it shows that legislative reforms and court rulings have seriously impeded the effectiveness of securities class action litigation. If ever there were an area ripe for private securities litigation, private-label RMBS is it, yet almost all of the recoveries are from six settlements.  This should be no surprise, but it’s rare to see numbers put on the effect.  This is what securities issuers and underwriters have long wanted, and the opposition has mainly been the plaintiffs’ bar, but perhaps investors will take note of the effect too. 

Second, the distribution shows how badly non-GSE investors got shafted. Remember, that private-label securitization was over 60% of the market in 2006. Yet investors have recovered only 38% of that which the GSEs/FHFA have recovered, and most of that is from the trustee settlements or proposed settlements (I’m not sure that any have actually closed). Private securities litigation has recovered a mere 4% of what the GSEs/FHFA have recovered. 

The real question is whether investors have learned that they cannot rely on either trustees or the securities laws to protect them from fraud, and if they have, what they plan to do about it. One sensible thing would be simply to invest in other asset classes. The other would be to try and reform the trustee system and/or the securities laws.

I’m sure there are many reasons for the disparity, but I think one major contributor is a series of rulings narrowing the definition of standing in the class action context. 

 

(okay, that was my attempt to jazz up a procedural post)

Anyway, these standing issues are now pending – sort of – before the Supreme Court, as I previously posted.  What’s interesting is that these standing rulings have had a dramatic effect on private investors’ ability to bring claims, but they aren’t usually mentioned in the same breath as other, more obvious, limitations on securities class actions. 

[More under the jump]

Continue Reading MBS Settlements – The Money Got Lost in Standing

Cal western
A California Western faculty member provided me with the announcement below (the emphasis is mine for the benefit of our readers):

CALIFORNIA WESTERN SCHOOL OF LAW in San Diego invites applications for an entry-level, tenure-track faculty position to begin in the fall of 2015.  Our curricular needs are in Family Law, Business Law, and Clinical Teaching.  We are particularly, though not exclusively, interested in candidates who are interested in teaching in our Clinical Internship Program, as well as in one of the above-mentioned subject areas.   Candidates who would contribute to the diversity of our faculty are strongly encouraged to apply.  Interested candidates should email their materials to Professor Scott Ehrlich, Chair of the Faculty Appointments Committee, at sbe@cwsl.edu.  California Western is San Diego’s oldest law school.  We are an independent, ABA-approved, not-for-profit law school committed to producing practice-ready lawyers.  California Western is an equal opportunity employer.

BPLB’s own Joshua Fershee, Professor of Law with the Center for Energy and Sustainable Development at West Virginia University College of Law, was quoted in a Greenwire story on the Kinder Morgan deal.  You can read an excerpt below

Kinder Morgan deal leaves questions for investors

      Mike Lee, E&E reporter  Published: Thursday, August 28, 2014

Kinder Morgan Inc. may have to do more to convince its investors that its proposed $44 billion merger with its subsidiaries is in their best interest.

The company — the nation’s biggest operator of oil and gas pipelines — took a series of steps to ensure there were no conflicts of interest during the negotiations, and the subsidiaries negotiated for a higher bid from the parent, Kinder Morgan said in a filing<http://www.sec.gov/Archives/edgar/data/1506307/000104746914007230/a2221196zs-4.htm>intended to persuade investors to vote for the merger.

The question will be: Did the company go far enough? Kinder Morgan faced similar questions when it went private in 2007 and when it bought El Paso Corp. in 2011.

…..

The market’s reaction — prices for all three companies have risen since the deal was announced — shows that investors are willing to overlook a temporary downside if a company has a long-term plan, said Joshua Fershee, a law professor at West Virginia University.

Kinder Morgan’s CEO “knows what he’s doing, and he’s articulated a plan that says upfront, ‘Here’s where we’re going to take the hit,'” Fershee said.

 

Posted in M&A

Rebecca Schuman authored a recent article in Slate entitled Syllabus Tyrannus: The decline and fall of the American university is written in 25-page course syllabi.

In the article Schuman complains that in the last twenty years syllabi have grown from 1-2 page simple documents with only the course location, required books, and assignments to “Ten, 15, even 20 pages of policies, rubrics, and required administrative boilerplate, some so ludicrous (“course-specific expected learning outcomes”) that I myself have never actually read parts of my own syllabi all the way through.”

While I won’t go as far as Professor Paul Horwitz goes in criticizing Schuman’s writing, I do want to push back a bit on her critique of “course-specific expected learning outcomes.” 

I admit that bloated syllabi can be a bit cumbersome, but drafting what we at Belmont call “course objectives” can be a helpful process and can lead to important changes in the course. Believe it or not, each semester I look at my course objectives, evaluate whether they were met, and revise my courses as necessary. My course objectives have reminded me that I shouldn’t drop that undergraduate group presentation assignment, no matter how difficult it gets logistically. My course objectives have also reminded me that I just can’t switch to all multiple-choice exams, even if those tests are incredibly common in undergraduate courses today. (To be fair to those who teach undergraduate courses, they typically have 4-8 assessments in a course as opposed to 1-2 in a law school course). 

Anyway, I think some of Schuman’s comments on syllabi bloat are valid, but this increase in disclosure is seen throughout our society as shown in Ben-Shahar & Schneider’s More than You Wanted to Know. While some of the disclosures may be a waste of time and resources, I found the drafting of course objectives helpful and think it will benefit the students through the more thoughtful structure of my courses (even if the students do not take the time to read the objectives themselves). 

Finally and somewhat related, Professor Jennifer Bard notes (with some helpful links) that the ABA is now requiring law schools to draft learning outcomes. If law schools take this process seriously, I think it could be a useful exercise. If law schools just see it as another drain on resources and complete it mindlessly, then it is unlikely that those law schools or their students will benefit.    

Job Description

The Boston University School of Management invites applications for a full-time, non-tenure-track Clinical Professor in Ethics, effective July 1, 2015. We seek to appoint a senior faculty member who possesses an international reputation in business ethics. Applicants are welcome from business academic disciplines including: accounting, organizational behavior, finance, business law, information systems, marketing, strategy and strategic management, and operations management. The position will be housed in a department within the School based upon the successful candidate’s discipline.

We anticipate that this position will serve as the inaugural Academic Director for the newly created Harry Susilo Institute for Ethics in a Global Economy (http://www.bu.edu/today/2014/harry-susilo-institute-for-ethics-in-a-global-economy/), as well as serve as advisor to other institutional organizations. 
 
Required Skills

Successful candidates will have an established record of teaching and writing in the area of ethics that may include any business discipline; demonstrated teaching abilities at the graduate level; and a terminal degree in business, management, or related areas.

DO NOT APPLY THROUGH THE BOSTON UNIVERSITY HR WEBSITE.

We are an equal opportunity employer and all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, national origin, disability status, protected veteran status, or any other characteristic protected by law. We are a VEVRAA Federal Contractor.

Application Information

Interested candidates should electronically submit a letter of application and curriculum vita by November 15, 2014 via smgfacac@bu.edu  and addressed to: 

Professor Karen Golden-Biddle, Chair

Globalization Search Committee

Boston University School of Management

595 Commonwealth Avenue

Boston, MA  02215

 

Thanks for your informative post, Anne.  I started drafting this post as a comment to yours, and then I realized it was its own post.   [sigh]

It seems to me that the U.S. Department of HHS and any commentators must grapple with what has been a difficult, fact-based question in determining how to define “closely held” to effectuate the Supreme Court’s intent in as expressed in the Hobby Lobby opinion.  That question?  What “control” means in this context.

The Court said in the Hobby Lobby opinion:  “The companies in the cases before us are closely held corporations, each owned and controlled by members of a single family, and no one has disputed the sincerity of their religious beliefs.”  More specifically, the Court notes that the Hahns (owners of shares in Conestoga) “control its board of directors and hold all of its voting shares” and notes that Hobby Lobby and Mardel “remain closely held, and David, Barbara, and their children retain exclusive control of both companies.”  [Emphasis has been added by me in each quote.]

The definition of “control” primarily has been a question of fact in business law, making the task of defining it here somewhat difficult.  Some questions and considerations to grapple with are set forth below the fold.  I am sure that others can come up with more.  I am posting these as a way of getting the collective juices flowing.

Continue Reading More on “Closely Held” in the Hobby Lobby Regulatory Context

As I have pointed out in earlier posts on this blog, the June decision in Hobby Lobby failed to define closely-held business for purposes of the religious exemption.  On August 22nd, the U.S. Department of Health and Human Services (HHS) issued proposed rules, open for comments for 60 days, that include a definition of closely-held under one of two approaches borrowed from state law definitions like with S corporations and from IRS regulations.

In common understanding, a closely held corporation – a term often used interchangeably with a “close” or “closed” corporation – is a corporation the stock of which is owned by a small number of persons and for which no active trading market exists. ….Under the first proposed approach, a qualifying closely held for-profit entity would be an entity where none of the ownership interests in the entity is publicly traded and where the entity has fewer than a specified number of shareholders or owners….

Under a second, alternative approach, a qualifying closely held entity would be a forprofit entity in which the ownership interests are not publicly traded, and in which a specified fraction of the ownership interest is concentrated in a limited and specified number of owners.

HHS invites comments on the proposed definitions, the preferred approach, and the threshold cut offs for ownership concentration or numbers of owners.

Importantly, and answering a question raised in several posts in the on line symposium at The Conglomerate, the proposed rules would require a valid corporate action, taken in accordance with state law, to assert that the owners’ religious views form the basis of the entity’s objection.   HHS also invites comments “on whether to require documentation of the decision-making process and disclosure of the decision.”

-Anne Tucker