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I recently came across a couple of seemingly related items
that I thought might be of interest to our readers:

Awrey, Blair & Kershaw on the “Role for Culture and
Ethics in Financial Regulation”

Dan Awrey, William Blair, and David Kershaw have posted “Between
Law and Markets: Is There a Role for Culture and Ethics in Financial
Regulation?” on SSRN.  Here is a portion
of the abstract:

The limits of markets as mechanisms for constraining
socially suboptimal behavior are well documented. Simultaneously, conventional
approaches toward the law and regulation are often crude and ineffective
mechanisms for containing the social costs of market failure. So where do we
turn when both law and markets fail to live up to their social promise? Two
possible answers are culture and ethics. In theory, both can help constrain
socially undesirable behavior in the vacuum between law and markets. In
practice, however, both exhibit manifest shortcomings.

To many, this analysis may portend the end of the story.
From our perspective, however, it represents a useful point of departure. While
neither law nor markets may be particularly well suited to serving as "the
conscience of the Square Mile," it may nevertheless be possible…

Ethan J. Leib, David L. Ponet, and Michael Serota have
posted “Mapping Public Fiduciary Relationships” on SSRN.  Here is the abstract:

Fiduciary political theorists have neglected to explore
sufficiently the difficulty of mapping fiduciary-beneficiary relationships in
the public sphere. This oversight is quite surprising given that the proper
mapping of fiduciary-beneficiary relationships in the private sphere is one of
the most longstanding and strongly contested debates within corporate law.
After decades of case law and scholarship directed towards the question of to
whom do a corporation’s directors or managers serve as fiduciaries, private law
theorists remain deeply divided. This debate within private law should be of
perennial interest to public fiduciary theorists because the cartography of
public fiduciary relationships is essential to operationalizing the project.
After all, it is only through identifying the relevant fiduciary and
beneficiary that one is able to determine the precise contours of the fiduciary
framework’s ethical architecture. As such, loose mapping of
fiduciary-beneficiary relationships in the public sphere precludes a clear
understanding of whose interests are pertinent to the public fiduciary’s
representation, and what the public fiduciary is to do when beneficiaries’
interests collide. The purpose of this chapter, then, is to

As I mentioned in my opening post, I’m a big fan of Jay
Brown.  So, I plan on routinely passing
on what he’s blogging about.  This week,
I’ve got two items:

In Corporate Governance, the SEC, and the Declining
Importance of Delaware Law, Jay suggests that “the SEC, rather than Delaware,
may increasingly be the driving force behind the development of substantive
duties for directors.”  Here’s an
excerpt:

[In] In re Alderman … the Commission settled an action
against directors of a mutual fund.  The
Commission first found a duty — 
"Under the Investment Company Act, directors had an obligation to
make good faith efforts to ensure that certain below-investment grade debt
securities for which market quotations were not readily available were valued at fair
value."  The Commission then
concluded that this duty had not been fulfilled…. Likewise, the Commission has
sanctioned companies and boards for failing to adequately disclose the process
used in reaching a decision…. Unlike the law in Delaware where less board
involvement usually reduces the risk of liability (and encourages the ostrich
approach to governance), these cases suggest that greater involvement by
directors will in fact reduce the risk

…