A few weeks ago, Tim Carney wrote a piece in the Washington Examiner that is stuck in my mind. The piece titled Conservatives, big government and the duty to care for the poor discusses what Carney sees as a shift in the rhetoric conservatives are using in reference to the poor and other vulnerable populations.  Carney notes that Senate Minority Leader Mitch McConnell (R-KY) recently referenced a “shared responsibility for the weak.”  Carney continues:

Step away from policy debates and think about that phrase. Do you have a responsibility to help the weak? Do you have a responsibility to feed the hungry? To aid the poor?

 I think I do. I think everyone does. The Catholic Church teaches us we do.

Conservatives sometimes shy away from this idea, though. One reason is a strong (and overblown) distaste to “helping the lazy.” Another reason is that conservatives fear it implies the Left’s answer: big federal programs.

But, in fact, you can grant that you have a duty to the poor and the weak, and then have a really good debate:

Is that duty individual, or some sort of a communal duty?

Does the government have the legitimate right to transfer wealth to satisfy that duty, or is it solely an individual responsibility to fulfill that duty.

If aiding the poor is a legitimate government role, at what level is the aid appropriately delivered — local, state, federal?

I really don’t see this as a new debate, but I agree it is a shift from the poverty debate I have seen over the past decade or so. This shift, though, goes back (at least) to the debates of what I remember in the 1980s and early 1990s. The question then, as I recall my vigorous (sometimes informed) college and early career discussions, was not whether the poor needed help. The question was how best to provide that help.  (I’ll note that even then, conservatives were likely to call me liberal, and liberals often called me conservative. Some things remain the same, I guess.)  

Carney frames the conversation appropriately, and asks the right questions because it starts with the right assumption: that helping the poor is required.  He notes: 

Then there’s plenty of very practical debates: Are federal programs inevitably too bloated and inflexible? Or alternatively, maybe only the federal government has the economies of scale (and ability to make its own money) needed to run a safety net, particularly in economic downturns.

So, what does this have to do with business law? Well, in part, if we agree there is a duty, we must talk about whose duty it is.  Is it individual? Is it a communal governmental duty? A communal non-governmental duty?  Is it a duty of all people, including corporate persons?  To what extent? 

Further, the role of government in protecting the weak extends beyond poverty programs. It applies to securities regulation, environmental regulation, and tax policy, all of which are directly, or at least very closely, related to business law.  In all of these cases, I think the question of the poverty debate carries through: how do we carry out, as Sen. McConnell put it, our “shared responsibility for the weak?”

The conversation that follows that question is a good one because it does not reduce all arguments to some version of “caveat emptor” or only the “government/market will fix it.”  Instead, the questions can be, for example: Does less regulation increase risks to vulnerable parties or increase access to opportunities for such parties?  If the answer is both, as it often is, how do we balance those risks and opportunities?  

The market is often the best solution, but one still needs to explain why that’s true, rather than blindly relying on some amorphous, all-knowing “market.”  And as those of us who work closely with regulated industries know, we need to acknowledge that all markets have rules (public and/or private), and those rules impact how effective that market will be and for whom. As such, the poverty debate is also largely a regulatory debate.  In all cases, if we start in the right place, better policy is likely to follow.  

 

Today, we finished two days of amazingly rich discourse on business law issues at the Association of American Law Schools (AALS) Workshop on Blurring Boundaries in Financial and Corporate Law in Washington, DC.  (Full disclosure:  I chaired the planning committee for this AALS midyear meeting.)  All of the proceedings have been phenomenally interesting.  I have learned so many things and been forced to think about so much . . . .  For those of you who couldn’t be there, I tried to faithfully pick up a bunch of salient points from the talks and discussions on Twitter using #AALSBB2014.  Moreover, some of the meeting was recorded.  I will try to remember to let you know when, to whom, and how those recordings are being made available. (Feel free to remind me if I forget . . . .)

One idea shared at the workshop that I am particularly intrigued by is the use of a new standard in federal securities regulation, suggested by Tom Lin in his talk as part of this morning’s plenary panel on “Complexity”.  He argues for an “algorithmic investor” standard (working off/refining the concept of the reasonable investor) in light of the growth of algorithmic trading.  It’s  predictable that I would be interested in this idea, given that I write about materiality in securities regulation (especially insider trading law, in articles posted here and here), in which the reasonable investor standard is central.  (In fact, Tom was kind enough to mention my work on  the resonable investor standard in his talk.)

Tom is not the first to argue for a securities regulation standard that better serves specific investor populations.  Memorable in this regard, at least for me, is Maggie Sachs’s paper arguing for a standard focused on the “least sophisticated investor”.  But many other fine works contending with materiality or the concept of the reasonable investor in securities regulation also question (among other things) the clarity and efficacy of the reasonable investor standard in specific contexts.

Continue Reading Complexity and Securities Regulation’s “Reasonable Investor” Standard

Today, rather than my usual profound insights, I’m going to pose a question to our readers. (What do you mean, what “usual profound insights”?)

I have been thinking about applying for a Fulbright to teach overseas. The problem is that Fulbright applications are country-specific and I’m having trouble deciding where I would like to teach.

There are several ways to approach this problem. The first approach would be to look for the greatest possible geographical distance from Lincoln, Nebraska. I think this would be my Dean’s preference. But, as my Dean will tell you, pleasing her is almost never one of my criteria.

The second approach would be to choose the place with the greatest beach. This seems like a sound approach to me, but there seems to be a serious shortage of teaching opportunities in places like Tahiti.

That leaves but one possibility—choosing a location that best fits my particular teaching and research interests. My primary focus is securities regulation, particularly the application of securities law to small businesses. Given that focus what would be the best country to visit? Where would I find both (1) interesting things going on in securities regulation of small businesses and (2) people interested in learning about the U.S. approach to these issues?

China is an obvious choice, but what other countries would make sense? (I’m a coward, so please don’t suggest any countries that would require me to dodge bullets.)

Here’s your chance, blog readers: tell me where to go. (Keep it nice.)

The following comes to us from Maximilian Martin, Ph.D., the founder and global managing director of Impact Economy, an impact investment and strategy firm based in Lausanne, Switzerland, and the author of the report “Driving Innovation through Corporate Impact Venturing.”

In 2010, despite the then-recent economic downturn, an overwhelming majority of corporate CEOs in the UN Global Compact-Accenture CEO Study on Sustainability—93 percent—responded that sustainability will be critical to the future success of their companies. What’s more, they believed that a tipping point could be reached that fully meshes sustainability with core business within a decade, fundamentally transforming core business capabilities, processes, and systems throughout global supply chains and subsidiaries. Three years later, a new 2013 edition of the study argued that many corporate CEOs have found themselves stuck on the ascent towards sustainability.

Radical change in market structures and systems is needed, and a bolder path for industry transformation needs to be charted, at a time when the logic of value creation is changing. The days of traditional corporate social responsibility (CSR)—the bolt-on approach that is compliance driven, costs money, and produces limited reputational benefits—are fast coming to an end, because sustainability is now increasingly driving value creation itself. Assessing joint opportunities for financial and social returns is the way forward.

[CONTINUE AFTER THE BREAK]

Continue Reading Corporate Impact Venturing: Using Investments to Enable Sustainable Value Creation

On Thursday, the First Circuit handed down its opinion in In re Genzyme Corp. Securities Litigation(.pdf), affirming the dismissal of the complaint.  The decision highlights an issue that’s particularly important in securities cases – although, full disclosure, I was very involved with the Genzyme case on the plaintiffs’ side before I left practice to teach, so I’m not an unbiased observer.  Take that as you will.

[More after the jump]

Continue Reading Amended Pleadings in Securities Cases

Today, Delaware governor Jack Markell announced his nomination of Skadden partner Karen Valihura for the open Delaware Supreme Court position.

Delaware Public Media reports:

Gov. Jack Markell is tapping Karen Valihura for a spot on the Delaware Supreme Court.

 

Markell announced his choice of the corporate lawyer Friday afternoon.

 

If confirmed by the state Senate, the 51-year old Valihura will become only the second woman to serve on Delaware’s highest court and will replace retiring Justice Jack Jacobs, who is set to step down June 24th.

 

Valihura is a partner at Skadden, Arps, Slate, Meagher and Flom, LLP, a private Wilmington law firm, where she’s practiced since 1989, dealing with corporate mergers, acquisitions and fraud claims.

 

In a statement, Markell touted Valihura’s record of community service and called her an attorney of “uncommon skill, intelligence and integrity.” 

Read the remainder of the article here.

ALSB

For those interested in the Academy of Legal Studies in Business (“ALSB”) conference in Seattle (August 4-7), the deadline to upload papers is June 29, and early-bird conference registration ends on July 1. 

More information is available at the ALSB website.  The ALSB conference is the national conference for legal studies professors in business schools, though I believe that interested practitioners and law professors would also be welcome. 

Hope to see some of our readers in Seattle. 

If you were designing a massive open online course (a “MOOC”), how would you make it as effective as possible? 

This week I am not looking at how MOOCs compare to in-person courses, but rather I am looking at how various MOOCs compare to one another. 

A few of my thoughts are below. 

Studio Filming.  Some of the earlier MOOCs, like Ben Polak’s Game Theory class at Yale, simply set a camera in the room and recorded the class.  Even with a dynamic professor like Polak, this strategy did not seem to fit the medium well.  Later MOOCs, like Northwestern University’s Law & Entrepreneurship course, were filmed specially for the MOOC, in what appears to be a studio of sorts.  The studio, edited versions of a course seem to produce a much more efficient and engaging experience.  To increase engagement even further, some have asked whether celebrities like Matt Damon should teach MOOCs (presumably from a script prepared by professors in the field)…or maybe professors should take acting classes.

Deadlines and Certificates.  It is well-known that the completion rate for MOOCs is miserable.  The completion rate has been reported as less than 7%.  I imagine that rate would increase significantly if the online courses were not free.  Also, while I have not seen the data, I think MOOCs with deadlines for various sections of the course and courses with certificates encourage students to stay on track and finish classes they start.  

Assessments.  I preferred the MOOCs that had online questions as you went along with the video lectures (every 10-15 minutes) rather than those that just had questions at the end, but this can be overdone if it cuts up the flow of the lecture too much. I did not mind if the MOOC had questions during both the presentations and at the end of the unit, and it was probably good to be tested on the same material twice. 

Focused Discussion Boards.  The discussion boards I have seen on MOOCs seem to be mostly a waste of time, at least the way the vast majority of the boards are currently configured.  The discussion boards are mostly the blind leading the blind and there is too much noise and too little value.  Perhaps the discussion boards could be divided by geographic location or level of education.  I’d be interested in a discussion board of MOOC users in middle Tennessee (perhaps the group would meet in person once or twice) or in a discussion board of academics from around the world.  Perhaps they could still have the “all-comers” discussion board for those who wanted to engage with the entire class, but I would have found a more limited and selected group to be more useful. 

Next week, I will talk about MOOCs v. In-Person Courses.  The New York Times recently looked at this issue in the context of Harvard Business School; I will dig into the issue and the article next week.

Last week I posted about proxy advisory firm ISS and its recommendations regarding Wal-Mart and Target.

This week the US Chamber of Commerce weighed in on the two main proxy advisory firms, what the organization sees as their potential conflict of interests and the lack of transparency, and the SEC’s imminent release of guidance on the firms. It’s worth a read and has some great links.

Next week I will be blogging from Salvador, Brazil where I will be enjoying the World Cup. I will post a brief recap of some of the business-related Law and Society sessions I attended in Minneapolis last weekend. With all of the controversy that invariably surrounds a large sporting event in a country that scores high on the corruption perception index, I may even be inspired to write a law review article on the FCPA.