Over at the Harvard LSFOCGAFR, Stephen Cooke, partner and head of the Mergers and Acquisitions practice at Slaughter and May, has posted a fascinating review of “10 Surprises for a US Bidder on a UK Takeover.”  It’s a bit long for a blog post (16 printed pages on my end), but well worth the time if you have any interest at all in the subject matter.  What follows is a very brief excerpt, which is really just a teaser in light of the excellent depth of treatment the post provides.  Given my latest project, “Corporate Social Responsibility & Concession Theory,” I find # 7 to be of particular interest.

Takeovers in the UK are in broad terms decided by the Target’s shareholders, with the Target Board rarely having decisive influence …. Unlike in the US, the Target Board is not the gatekeeper for offers. A Bidder may take its offer direct to shareholders and the Board has no power to block or delay an offer …. The Takeover Code (the “Code”) reflects this environment and, although changes were made post-Cadbury to reflect the interests of non-shareholder stakeholders, it remains a body of rules embodying the pre-eminence of shareholders….

1…. [I]n the UK: a potential Bidder may be publicly “outed” before it is ready to announce its offer; once outed, a potential Bidder is required to either announce a firm offer or withdraw (“put up or shut up”) within a specified period; and once a firm offer is made, there is a time limit within which the offer must succeed or fail….

2…. In the UK … you cannot combine … transaction structures and must either obtain 90% acceptances or proceed by way of the UK nearest equivalent to a merger…. There is no concept of statutory merger in the UK…. Therefore, any acquisition of a UK public company takes place through the acquisition of shares in the Target by the Bidder. This is effected either by a tender offer (referred to in the UK simply as “an offer”) or by the nearest UK analogue of a US-style merger, a “scheme of arrangement”.

3…. [I]n the UK … rules on equality of information require that any information or access to management provided by a Target to one Bidder or potential Bidder is made available on request to any other Bidder or bona fide potential Bidder, whether or not welcome….

4…. In … 2011, the Panel introduced a general prohibition on break fees (along with various other deal protection measures) in UK takeovers as part of its response to the demands from some quarters (following the Kraft/Cadbury takeover) that the balance of negotiation power be shifted away from Bidders and in favour of Targets….

6…. In the UK … financing conditions [are] prohibited (except in very limited circumstances) ….

7…. In the UK … a Bidder is required to disclose its intentions as regards the future of the Target’s business and the impact its bid may have on the Target’s employees in its offer document. In addition, the Bidder must make equivalent disclosures in respect of its own future business, employees and places of business where these are affected by the offer…. [T]he Panel has signalled a tougher approach to enforcement in this area and has stated that it expects to investigate complaints from any interested person, which would include trade unions, employee representatives and political representatives. It is also worth noting that breaches of this section of the Code can attract criminal liability as well as the more usual range of Panel disciplinary measures….

As I write this on Friday night (to be posted automatically on Saturday morning, during which time I will be in transit), ILEP’s latest symposium, Business Litigation and Regulatory Agency Review in the Era of the Roberts Court, is just concluding (you can see a list of the papers presented here, which I believe will all eventually be published in the Arizona Law review).

The biggest subject for discussion was basically the future of the securities class action – or any kind of business litigation, really – given not only the potential of Halliburton to eliminate or severely restrict securities class actions, but given recent decisions like this one upholding a mandatory arbitration provision unilaterally adopted into a REIT’s bylaw. 

The final panel, and thus the one freshest in my mind, explored whether states have the ability under the Federal Arbitration Act to limit the power of corporations to impose mandatory arbitration to resolve shareholder disputes.  I think that’s a really interesting question – whether either states can, as a function of their ability to regulate corporations, flatly forbid the adoption of mandatory arbitration agreements in corporate charters and bylaws, in the same way they otherwise regulate corporate governance matters.  The FAA’s nondiscrimination provisions only apply to contracts, so states’ power in this regard turns on whether regulation of corporate governance and the limits of directorial power counts as a type of contractual regulation, or not.  There was also a lot of discussion about whether the fact that directors have fiduciary obligations to shareholders – rather than a mere contractual relationship – gives states more of a regulatory power over their behavior (and their ability to adopt arbitration provisions) than the FAA might otherwise prohibit.

The only real question is how quickly this question gets answered.  On the one hand, there seemed to be a sense of the room that it will take time for these issues to bubble up throught the courts – and maybe that’s right, especially if multiple states’ law has to be interpreted.  And of course, the above-linked case arose in the context of the Commonwealth REIT – except the trustees’ adoption of the mandatory arbitration bylaw did not, in fact, work out well for them, and may serve as a cautionary tale for corporate directors considering similar actions in the immediate future. 

On the other hand, sometimes the law is developed much more quickly than anyone expects – witness the gay marriage cases, which no one would have predicted a few years ago.  This immediate decision from the District of Massachusetts upholding the REIT bylaw (and the Maryland decision on which it rests) may be the proverbial camel’s nose….

Tyler Cowen has more on the value of high-frequency trading here.

By the way, if you’re not familiar with Tyler Cowen’s blog, Marginal Revolution, you should check it out. Cowen is an economist at George Mason University and he always has interesting things to say on issues of public policy. I don’t always agree with him, but his comments are always thought-provoking.

On Monday, I posted links to books and articles on high-speed, computerized trading and its effect on securities markets.  A reader has made me aware of another recent law review article on the phenomenon. It’s The New Financial Industry, by Tom C. W. Lin, available here.

Or at least that appears to be the thesis of Wharton professor Adam Grant’s (relatively) new book Give and Take (2013).  (Disclosure: I received a free copy from the publisher).

According to Professor Grant, giving, matching, and taking “are three fundamental styles of social interaction.”  Givers give without thought of what they will get in return; givers are generous, other-focused, and give without keeping score.  Matchers give expecting quid pro quo; matchers “believe in tit for tat…and believe in an even exchange of favors.”  Takers give expecting a positive return; takers put “their own interests ahead of others’ needs.” (pgs. 4-5). 

Grant is quick to admit that, “the lines between [giving, taking, and matching] are not hard and fast.” (pg. 5)  Most of us fall somewhere in the middle, as more exacting or less exacting “matchers.”

In his book, Grant cites studies of medical students, engineers, salespeople, and others to support his thesis that the “worst performers and the best performers are givers; takers and matchers are more likely to land in the middle.” (pg. 7) (emphasis added).  (While Grant cites a number of academic studies, this book is written for a popular audience.)

If “givers” end up at both ends of the success spectrum, the key question becomes:  what distinguishes successful givers from unsuccessful givers? 

Grant claims that successful givers switch to a matching strategy when they interact with takers (to avoid becoming doormats for the takers), but the successful givers only make the switch to “generous tit for tat” not an unforgiving version of tit for tat.  Successful givers also draw appropriate boundaries.  See below for Professor Grant’s video clip on avoiding the doormat effect:

 

Grant’s thesis likely holds for professors.  I know a number of givers who have risen to the top of the professorial ranks.  I am less optimistic about large law firm partners, though I know a small handful of partners who have done well as givers.

A related Authors at Google talk by Professor Grant is below.  (Side note, I wish more companies did events like Authors at Google…and posted them for us to watch.)

     

As regular readers of this blog may know, I sit on the Department of Labor’s Whistleblower Protection Advisory Committee. The Occupational Health and Safety Administration, a division of the Department of Labor, may not be the first agency that many people think of when it comes to protecting whistleblowers, but in fact the agency enforces almost two dozen laws, including Sarbanes-Oxley and the Consumer Financial Protection Bureau’s law on whistleblowers.  The Consumer Financial Protection Act was promulgated on July 21, 2010 to protect employees against retaliation by entities that offer or provide consumer financial products.

Today OSHA released its interim regulations for protecting CFPB whistleblowers.  The regulation defines a “covered person” as “any person that engages in offering or providing a consumer financial product or service.” A “covered employee” is “any individual performing tasks related to the offering or provision of a consumer financial product or service.” A “consumer financial product or service” includes, but is not limited to, a product or service offered to consumers for personal, family, or household purposes, such as residential mortgage lending and servicing, private student lending and servicing, payday lending, prepaid debit cards, consumer credit reporting, credit cards and related activities. The Consumer Financial Protection Act protects “covered employees” of “covered persons” from retaliation who report violations of the law to their employer, the CFPB, or any other federal, state, or local government authority or law enforcement agency. Employees are also protected from retaliation for testifying about violations, filing reports or refusing to violate the law.

Retaliation is broadly defined as firing or laying off, reducing pay or hours, reassigning, demoting, denying overtime or promotion, disciplining, denying benefits, failing to hire or rehire, blacklisting, intimidating, and making threats. An employee or representative who believes that s/he has suffered retaliation must bring a claim within 180 days after the alleged retaliatory action. If OSHA finds that the complaint has merit, the agency will issue an order requiring the employer to put the employee back to work, pay lost wages, restore benefits, and provide other relief. Either party can request a full hearing before an ALJ of the Department of Labor. A final decision from an  ALJ may be appealed to the Department’s Administrative Review Board and an employee may also file a complaint in federal court if the Department of Labor does not issue a final decision within certain time limits.

Although the statute is part of Dodd-Frank, the CFPB whistleblowers don’t get the same monetary benefits as Dodd-Frank whistleblowers who go to the SEC. The SEC Dodd-Frank whistleblower rule allows the recovery of between 10-30% of any monetary award of more then $1million of any SEC enforcement action to those individuals who provide original information to the agency. The SEC announced that in 2013 it awarded $14,831,965.64 during its fiscal year to 4 whistleblowers based on 3,238 tips. The vast majority—more than $14 million went to a single individual.  The top three allegations involved corporate disclosures and financials (17.2%), offering fraud (17.1%) and manipulation (16.2%). 

Should there be such a disparity between those whistleblowers who protect consumers and those who protect investors? Maybe not, but studies consistently show that whistleblowers don’t report to government agencies for the money so perhaps the absence of a large financial reward won’t be a deterrence. Time will tell as to whether any of these whistleblower laws will prevent the next financial crisis. But at least those who work in the financial sector will have some protection.

 

 

 

I seem to have reached the unfortunate age where one begins to lose friends and colleagues. Not long ago, my good friend and colleague John Gradwohl died. Now, my first academic mentor, Alan Bromberg, a long-time professor at SMU’s School of Law, has died. His obituary is here.

Many of you know Alan as an outstanding scholar of securities and partnership law. I can’t count the number of times I have turned to his treatises on securities fraud and partnership. But I owe Alan a personal debt I could never repay. Alan was the person most responsible for my entry into the profession I love, legal academia.

Alan was of counsel to the Dallas firm for which I worked when I decided to become a law professor. He advised me, served as a reference, and helped me obtain my first academic job—a visiting position at SMU. He continued to advise me and often provided feedback on the reprints I sent him. I called on Alan several times during the course of my career, and he always went out of his way to help.

Alan was a great scholar, but, more important than that, he was an extremely kind and gentle man. His death is a great loss, and not just to legal education.

Alberto Gonzales has been named the new dean of Belmont University’s College of Law.  He is currently on the Belmont law school faculty, and his appointment is effective June 1, 2014.

The Tennessean story is here.

While Alberto Gonzales is certainly a controversial figure in some circles, I believe that people should be given multiple chances in life.  He brings a wealth of high level experience to his new position, including:

  • Partner at Vinson & Elkins, 
  • Justice on the Texas Supreme Court,
  • Texas Secretary of State,
  • General Counsel to the Governor of Texas,
  • Counsel to the President of the United States,
  • 80th Attorney General of the United States, and
  • Visiting Professor at Texas Tech University

My office is across campus at Belmont University’s business school, but I will teach Business Associations in the law school this fall (in addition to my courses in the business school), and I look forward to interacting with our new law school dean. 

Fellow BLPB contributor and friend, Haskell Murray, bravely posted his view of FOMA and Family yesterday.  I am contributing to the conversation with my own view of the issues he raised.  Both of our posts are born of conversations we have been having off line for the past several months.

FOMA

We are approaching (if not there already) the point in the semester when I typically feel overloaded by remaining materials for class and year-end administrative responsibilities, fatigue from spring writing deadlines and travel, and a little puzzled by how a summer that isn’t even here yet, already feels “full”.   I know that I haven’t struck the right balance, especially not with an infant at home.  And yet, if the phone rang tomorrow with an opportunity that I couldn’t pass up, I would instantly add it into the mix subtracting from “free” time and further bloating the scheduled column.  I know that I am not alone. 

 I want to explore two ideas:  “opportunities that can’t be passed up” and “free time”.

The bottom line is that I am grateful to have a job that is rewarding, engaging, flexible, and ultimately fun.  I look at the pool of candidates we bring in each fall and consider myself immeasurably lucky to be on this side of the vote.  At the base of my gratitude is a sneaking suspicion that maybe I don’t belong and that a mistake or an oversight was made in hiring me.  So I work very hard to hide that unscratchable itch of doubt in myself and to allay it, should it arise, in any colleagues.  From this place of uncertainty all opportunities, any opportunity, can look like one that can’t be passed up or turned down.  I have confessed to Haskell that I feel like if I say no that it will turn the tide of good fortune against me, and I will lose all of the good luck that brought me to this profession, and to my school.  And so I say yes.  To everything.

I want to adopt a lens that helps me view opportunities as what they are—a potential path, not a destination.  Opportunities and invitations are not things to be hoarded, gobbling up as many as I can count.  Invitations are not validation.  [Note that as I write this, I am gripped with the fear that someone reading this was thinking about inviting me to something and now they won’t…is it too contradictory to ask that you still consider inviting me?].  Invitations to present or to collaborate are an opportunity to move in a direction.  But we can’t move in all directions at once: we must focus on where it is we actually want to go.

And this brings me to free time. Leaving  personal free time aside (and my desire to spend one morning a week with my son over the summer), I want to focus on something even less discussed:  professional free time. I want to carve out space to be contemplative about my direction and the steps that I need to take in order to develop my scholarship. I don’t mean setting a writing deadline for my next article, but I mean thinking broadly about what I want to do with my research.  Of course we all want to do good work, and outside of tenure standards, individually we make our own value judgments about what “good work” means.  Instead of writing the next article as an act of self-propelling force driven by submission cycles and symposiums, I want to revisit the notion of a scholarly agenda like the ones provided by candidates each fall.  I want to map out where I need to go and the skills necessary to get there.  I think that if I let my FOMA drive me to commit to everything that I will remain a slave to the schedule and fail to stake out my own path, set my own course, and pick the right opportunities to take me where I want to go.  Only if I regain a bit of control over my schedule, can I ever hope to strike the right balance professionally and for my family.

So I turn the question to you—do you experience professional FOMA and how do you counter it? 

 -Anne Tucker

A friend with two small children recently told me that he has a bad case of FOMO (“fear of missing out”) at work because of his obligations at home.  His comment struck a chord with me because I recently turned down an opportunity to present a paper because the conference falls on my son’s upcoming first birthday.  Last year, I passed on another wonderful opportunity because it was extremely close to my son’s due date.  (Privileged, first world problems, I realize).  Unlike some of our readers, I am not usually inundated with requests to speak, so both of these opportunities were difficult to turn down. 

Do not get me wrong, the flexibility provided by a career as a professor is fabulous for raising a family.  However, while the baseline day-to-day work requirements for professors are relatively limited, the possible uses of our time are infinite.  For Type-A people like me (and most business and law professors I know), it can be difficult to know where to draw the line at work.  And even when we do draw the line, like I did in the two cases mentioned above, there can be nagging feelings that we are missing out, that those types of opportunities will not surface again, and that we will “fall behind” our peers.

My FOMO is exacerbated by the fear that I am simply not good enough.  Surrounded by brilliant Harvard-Yale-Stanford graduates, I have a gigantic state-school chip on my shoulder.  With no disrespect to my alma mater intended, every time I am introduced at a conference as a graduate of Georgia State University School of Law – usually surrounded by people with much more impressive resumes – I fear I will be taken a bit (or a lot) less seriously than others.  I am also (constantly) reminded how incredibly fortunate I am to have a tenure-track professor position. 

I have plenty on my plate for the rest of 2014, but missed opportunities still eat at me. 

Yes, I know, I am experiencing only a very small fraction of what female professors experience.  I do not approach Professor Usha Rodrigues’ schedule and sacrifices that she blogged about in January 2013.  That said, as a man who wants to be deeply involved at home, but also wants to excel as a professor—I live in that family-work tension.