In this week’s Shareholder Primacy podcast (here at Apple, here at Spotify, here at YouTube), Mike Levin and I talk about the all-of-government war on proxy advisors.

Which was timely, because – as we didn’t know when we recorded – ISS just created a new website, www.protectshareholders.com, apparently aimed at making the case for proxy advisors and fighting back against all of the political attacks.

My initial social media reaction was, “OMG,” which apparently was inscrutable to many, so I’ll elaborate here.

To me, ISS’s website does not appear to be a targeted lobbying approach aimed at asset managers or politicians; it appears to be directed at largely a general audience, like public-facing PR. Certainly not geared toward low-information voters, but maybe toward reporters who will communicate to a general audience, or other general audiences who may have sway with politicians. And it is surprising – shocking – to me when a technical matter of corporate governance reaches that level of political salience. Which happened, for example, in the context of SB 21, when I posted that this kind of controversy was unequivocally bad for Delaware.

Now, back in the day – the “day” meaning late 1800s, early 1900s – corporate law was very much a matter of general political concern, and that’s largely because corporate law was the only mechanism to regulate corporate behavior. Beginning in, oh, the 1920s or so, states began to hive out substantive corporate regulation from corporate law – leading to the illusion (and I do mean illusion) that corporate law was something not regulatory, and therefore removed from ordinary political considerations.

So in some ways, the move back almost feels like the natural order; but it also represents a deep lack of faith in the efficacy of the regulatory state, which is why the turn to corporate governance as a substitute.

That said, my suspicion is that this particular effort by ISS is misguided, because – if they’re targeting something like a general audience – most normal people are unlikely to be persuaded by a message that protecting institutional shareholders is a moral imperative. The structural role that ISS plays is by organizing a force that has the heft to push back against oligarchic control of America’s economic resources. That is a message that the public can understand and, I think, support, but it’s not a message that ISS, as a representative of institutions with fiduciary obligations to maximize equity value, can deliver.

Or maybe that’s just a me thing.

I’ve blogged several times about the unduly narrow concept of “standing” and the “purchaser-seller” rule that courts have been applying in the context of Section 10(b).  (Most recent post discussing it is here; there is a link to earlier posts).

We have a new case that adds to the mix.

Toronto Dominion Bank signed an agreement to purchase the stock of First Horizon, which of course caused First Horizon’s price to trade upward.  Eventually, TD got into regulatory trouble and the merger fell through, which caused First Horizon’s stock to fall.  Purchasers of First Horizon stock sued First Horizon, but they also sued TD Bank, alleging that its false representations of regulatory compliance made the merger seem more plausible and inflated First Horizon’s stock price.

Careful readers will recognize that this is, more or less, exactly what happened in Semerenko v. Cendant Corp., 223 F.3d 165 (3d Cir. 2000).  There, the defendants argued that statements about the acquirer (in this case, the acquirer’s audit opinion) were not made “in connection with” the purchase or sale of the target’s securities, as Section 10(b) requires.  The Third Circuit held that that statements about the would-be acquirer were made “in connection with” purchases of the target’s securities, because they were material and publicly disseminated.  The only limitation that the court added was that, to sue a particular defendant, plaintiffs would have show that it was foreseeable that the defendant’s statements would be relied upon by traders in the relevant securities.  Therefore, with that additional caveat, purchasers of the target’s securities could sue the acquirer’s auditor.

The TD Bank case was filed in the District of New Jersey, which would make Cendant precedent, but the district court nonetheless dismissed the plaintiffs’ claims, on the ground that the plaintiffs were not purchasers or sellers of TD Bank securities and had no standing to sue.  The court reasoned:

True, the fact pattern in Cendant is similar to the case before it.  Critically, however, Cendant did not address statutory standing or the purchaser-seller rule at all, relevant here.  Instead, it focused on a separate requirement of a Section 10(b) claim, namely that the alleged misrepresentation be “in connection with” the purchase or sale of a security.  The defendants argued that “the alleged misrepresentations must speak directly to the investment value of the security that is bought or sold, and that they must have been made in with the specific purpose or objective of influencing an investor’s decision.”  The plaintiffs, in turn, argued that “the ‘in connection with’ requirement is satisfied whenever a misrepresentation was made in a manner that is reasonably calculated to influence the investment decisions of market participants.”… The Court will not read an implicit ruling on statutory standing into Cendant.  Cendant plainly did not address the purchaser-seller rule or statutory standing.

In re Toronto-Dominion Bank / First Horizon Corp. Sec. Litig., 2025 U.S. Dist. LEXIS 232405 (D.N.J. Nov. 26, 2025).

I have a question.

Where, exactly, does the court think the purchaser-seller rule comes from?

Because, to me, the purchaser-seller rule was articulated in Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723 (1975), citing the Second Circuit’s decision in Birnbaum v. Newport Steel Corp., 193 F.2d 461 (2d Cir. 1952).  And that rule was explicitly an interpretation of what it means for a fraud to be committed “in connection with” the purchase or sale of a security.  See Blue Chip, 421 U.S. at 731 (“The panel which decided Birnbaum consisted of Chief Judge Swan and Judges Learned Hand and Augustus Hand: the opinion was written by the last named. Since both § 10(b) and Rule 10b-5 proscribed only fraud ‘in connection with the purchase or sale’ of securities, and since the history of § 10(b) revealed no congressional intention to extend a private civil remedy for money damages to other than defrauded purchasers or sellers of securities, in contrast to the express civil remedy provided by § 16(b) of the 1934 Act, the court concluded that the plaintiff class in a Rule 10b-5 action was limited to actual purchasers and sellers.”). The rule, as articulated in Blue Chip, was that there needed to be an actual purchase or sale by a private plaintiff.

So when the Third Circuit in Cendant interpreted “in connection with” to extend to purchases or sales of a different, but related, company’s securities, it was looking at the exact same language and the exact same requirement – the plaintiff must have made a purchase or sale – and concluded that it was sufficient if the “purchase or sale” involved a security that would have been foreseeably affected by the defendant’s fraud.  This scenario was precisely what the Third Circuit had in mind.

This whole idea that somehow “in connection with” as articulated in Cendant is a different concept from the purchaser-seller rule or a standing rule is incoherent to me; it’s all interpretation of the same language, and it’s all the same question, namely, were these plaintiffs among the class of persons targeted by – and injured by – the fraud?  And the purportedly-bright line rule that some courts have announced – the statement must be “about” the traded security – is unworkable on its face; you cannot answer the question of what security a statement is “about” without addressing who the audience was. TD Bank’s representations about regulatory compliance, in the proxy statement and in statements about the merger itself, were at least as much addressed to a First Horizon shareholder audience as anyone else.

And while – as I’ve said before – I understand courts’ wariness about permitting too broad a connection (ultimately, every bit of information is connected to everything else), “had an explicit merger agreement” doesn’t seem like too difficult a line to draw.  We’re seconds away from an explicit pump and dump – fake tender offer so the fraudster can dump their shares at an inflated price – not being made “in connection with” the subject securities if the false statement is about, I dunno, the offeror’s financing, and that’s about the core of what Section 10(b) was supposed to prohibit in the first place.

There is no other thing.  Mike Levin and I took a Thanksgiving break this week from the Shareholder Primacy podcast; back soon!

I just had the privilege of participating in Columbia Law School’s M&A conference, on a panel with Ed Rock of NYU, Eduardo Gallardo of Paul Hastings, and John Mark Zeberkiewicz of RLF, moderated by Dorothy Lund of Columbia, to discuss SB 21 and its likely impact going forward.

In this post, I’ll elaborate on some stuff I said at the panel.

After SB 313 passed authorizing shareholder agreements – ostensibly to conform the law with “market practice” – Gladriel Shobe, Jarrod Shobe, and William Clayton found that the law in fact went much further than actual market practice to authorize a broad array of contracts that are somewhere between uncommon and nonexistent.

That kind of thing is what gives rise to the suspicion that when the Delaware Corporation Law Council recommends legislative amendments, it does so not as neutral arbiters, but as representatives specific clients who desire particular legislative outcomes. And while there is nothing new or surprising about lobbyists advocating for legal changes that benefit their clients, the CLC is not supposed to be acting as a lobbyist when it participates in the legislative process. In some ways, then, SB 313 always read to me as the “no client left behind act” – drafted to ensure that every individual client’s idiosyncratic contractual preferences would be authorized. Similarly, SB 21 appears to have various easter eggs that were added so that attorneys could preserve arguments on behalf of their clients, which raises the question whether, even if one concedes that some loosening of the cleansing standards was necessary to preserve Delaware’s franchise, every single bit of SB 21 was necessary, or whether the law went further than it needed to because the law firms were, well, conflicted fiduciaries (or, as Ed Rock proposed on the panel, some corporate governance entrepreneurs saw an opportunity to enact their preferred vision of how corporate law should operate). For example, at one point in the process of drafting SB 21, it was proposed that controlling shareholders be required to comply with dual cleansing mechanisms (shareholder vote and independent director vote) for any transaction that organically requires a shareholder vote, and that was rejected in favor of the narrower rule that only take privates require both cleansing mechanisms. Was it truly, absolutely necessary to reject the broader rule to preserve the franchise?

We don’t know, of course, but this is exactly why Charles Whitehead has proposed reforms to Delaware’s legislative drafting process to treat the CLC more like an administrative agency. Ed Rock and Marcel Kahan have also argued that when the legislature aggressively acts to overrule the courts, Delaware loses its legitimacy to make corporate law for the country – after all, if it’s just a legislative process rather than a technocratic judicial one, there’s no reason it can’t be done at the federal level.

Further to that point, the legislature’s recent aggression may very well have functioned as an invitation for SEC Chair Paul Atkins to start making his own demands of Delaware. And if Delaware is simply going to enact whatever is asked by the SEC, then there’s really very little purpose to Delaware playing the role that it does.

Anyway, on that note, a plug! My paper, The Legitimation of Shareholder Primacy has been published in the Journal of Corporation Law, and the completed version is now available online. You may recall that it was originally posted before SB 21 had been proposed; the final version incorporates discussion of those amendments and other developments since then. Read it again, for the first time.

And another thing. New Shareholder Primacy podcast! This week, Mike Levin talks to Kyle Pinder about shareholder proposals and Delaware law. Here at Spotify, here at Apple, and here at Youtube.

With the 2026 National Business Law Scholars Conference coming to the William S. Boyd School of Law at the University of Nevada, Las Vegas on May 26-27 next year, I have some suggestions on accommodation options.

My suggestion is that you should book your rooms now because there are some great deals available. As I’m writing this, the all-in prices for the following properties are exceptionally reasonable:

• Bellagio – $198/night
• Aria – $170/night
• Vdara (non-gaming) – $142/night
• Park MGM – $113/night
• NoMad Hotel @ ParkMGM – $185/night
• Cosmopolitan – $215/night

I understand that some folks have already booked at the Bellagio. It’s a good deal and a bit cheaper still if you join MGM Rewards. If you wanted the Bellagio this weekend, the current price is over $1,000 a night. Of course, F-1 is in town and we’re not going to be competing with that for NBLSC. Candidly, I live here and these prices are making me think about locking in a stay-cation around the same time.

The properties listed above are all MGM Resorts properties within easy walking distance of each other. Clustering this way makes it easier to meet for dinners, drinks, or just catching rides over to UNLV together. If you want the closest possible non-gaming option to UNLV, there is the Embassy Suites. Current price is $127/night. Virgin is the closest gaming property and has a rate of about $128/night now. I would pick Bellagio or NoMad personally.

Although many schools will often do room blocks at certain hotels with guaranteed prices, this doesn’t work well for Vegas and UNLV isn’t able to guarantee particular room rates or contract with hotels to guarantee that a particular number of rooms will be booked. There are lots of hotels to chose from, but I would be surprised if you see better deals.