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The Influence Of Law-And-Economics On The Ideological Center Of Civil Society – The New American Formalism With A European Counterpoint, Sebastian Ciobotaru Jan 2019

The Influence Of Law-And-Economics On The Ideological Center Of Civil Society – The New American Formalism With A European Counterpoint, Sebastian Ciobotaru

Washington University Global Studies Law Review

Law-and-economics has been the dominant methodology in United States’ adjudication and law commentary for nearly 35 years. Because of its efficiency-only approach, law-and-economics has transformed the law itself from the impartial anchor of our social system into a political tool that legitimizes a new “false center.” Consequently, by failing in its role as a neutral force immune to political bias, the practice of law as advocated by law-and-economics constantly aids the neoliberal counter-revolution to commodify most aspects of our lives and foster a generation of corporate consumers bereft of traditional notions of liberty and autonomy. The main drive behind this ...


The Dragon And The Eagle: Reforming China’S Securities Ipo Laws In The U.S. Model, Pros And Cons, Stuart R. Cohn, Miao Yinzhi Jan 2018

The Dragon And The Eagle: Reforming China’S Securities Ipo Laws In The U.S. Model, Pros And Cons, Stuart R. Cohn, Miao Yinzhi

Washington University Global Studies Law Review

China is about to undergo a major reform of its securities offering and listing processes. Since the inception of China’s securities market in the early 1990s, the government has exercised tight control to determine which companies will be allowed to engage in initial public offerings and become listed on a national exchange. The system has led to both corruption and favoritism and has blocked numerable companies from access to capital markets. With the ascension in 2013 of Xi Jinping and Li Keqiang as the heads of the Chinese Communist Party and Premier, the government adopted reform of the market ...


Examining The Jpmorgan “Princeling” Settlement: Insight Into Current Foreign Corrupt Practices Act (Fcpa) Interpretation And Enforcement, Beverley Earle, Anita Cava Jan 2018

Examining The Jpmorgan “Princeling” Settlement: Insight Into Current Foreign Corrupt Practices Act (Fcpa) Interpretation And Enforcement, Beverley Earle, Anita Cava

Washington University Global Studies Law Review

Shortly after the November 2016 U.S. Presidential election, JP Morgan Chase and JP Morgan Securities (Asia Pacific) settled and signed a non-prosecution agreement (NPA) in which they agreed to pay over $264 million to the DOJ, SEC and the Federal Reserve. The entities acknowledged that they had engaged in quid pro quo arrangements with Chinese officials for a number of years, employing relatives deemed “princelings” in return for favored treatment. Although JP Morgan Chase had ended the program in 2013, evidence of willful and widespread violations of the FCPA resulted in little prosecutorial credit. We examine this and other ...


Corporate Short-Termism And Intertemporal Choice, Robert J. Rhee Jan 2018

Corporate Short-Termism And Intertemporal Choice, Robert J. Rhee

Washington University Law Review

This paper presents an intertemporal model of short-termism. Critics have portrayed short-termism in broad brushstrokes as the bane of corporate governance. But short-termism does not have a self-evident, efficiency-based normative value. A simple application of a well-accepted asset valuation theory shows that short-termism is not per se inefficient. If profitable enough, a short-term strategy would be better than a long-term strategy. This intuition is a mathematical and financial fact. The model presented here is tested in a case study of Air Products and Chemicals, Inc. v. Airgas, Inc., a prominent and legally significant Delaware hostile takeover battle. Short-termism was a ...


Algorithmic Entities, Lynn M. Lopucki Jan 2018

Algorithmic Entities, Lynn M. Lopucki

Washington University Law Review

In a 2014 article, Professor Shawn Bayern demonstrated that anyone can confer legal personhood on an autonomous computer algorithm by putting it in control of a limited liability company. Bayern’s demonstration coincided with the development of “autonomous” online businesses that operate independently of their human owners—accepting payments in online currencies and contracting with human agents to perform the off-line aspects of their businesses. About the same time, leading technologists Elon Musk, Bill Gates, and Stephen Hawking said that they regard human-level artificial intelligence as an existential threat to the human race.

This Article argues that algorithmic entities—legal ...


Decentralized Public Ledger Systems And Securities Law: New Applications Of Blockchain Technology And The Revitalization Of Sections 11 And 12(A)(2) Of The Securities Act Of 1933, Kelsey Bolin Jan 2018

Decentralized Public Ledger Systems And Securities Law: New Applications Of Blockchain Technology And The Revitalization Of Sections 11 And 12(A)(2) Of The Securities Act Of 1933, Kelsey Bolin

Washington University Law Review

When Bitcoin launched in 2009, it was the first virtual cryptocurrency to gain popularity and attain widespread use. Much attention has been paid to Bitcoin’s well-publicized advances and setbacks as the world’s foremost virtual currency. Less attention has been paid, however, to the decentralized public ledger technology that enables Bitcoin to function. That technology is just as innovative as Bitcoin itself. Decentralized public ledgers are a revolution in digital data storage and have the “potential to fundamentally shift the way in which society operates.”

This Note will examine one such societal shift—a change in how shareholders access ...


The Corporate Governance Of National Security, Andrew Verstein Jan 2018

The Corporate Governance Of National Security, Andrew Verstein

Washington University Law Review

At hundreds of companies, the government installs former spies and military officers to run the business without shareholder oversight, putting security before profits in order to protect vital projects from potentially treasonous influences. Through procedures I call “National Security Corporate Governance,” corporate boardrooms have quietly become instruments of national defense, marrying the efficiency norms of corporate law and the protective ambitions of national security. How is this achieved, and how successfully? Using a variety of research approaches – including Freedom of Information Act (FOIA) requests, archival searches, telephone interviews, and in-person conversations with industry insiders – this Article illuminates a secretive government ...


When It Comes To Business, The Right And Left Sides Of The Court Agree, Lee Epstein, William M. Landes, Richard A. Posner Jan 2017

When It Comes To Business, The Right And Left Sides Of The Court Agree, Lee Epstein, William M. Landes, Richard A. Posner

Washington University Journal of Law & Policy

This Article analyzes the voting trends among both liberal- and conservative-leaning Supreme Court justices in the Roberts Court in cases where corporations are a party on one side, either as petitioner or respondent. Epstein, Landes, and Posner show that business interests have had a strong presence in front of the Roberts Court, and in most cases, the Court has voted in favor of businesses. The Article notes that current liberal-leaning Justices are still less pro-business than their conservative colleagues, but Clinton/Obama-appointed liberals on the Roberts Court are still more pro-business than their Democratic predecessors appointed by previous presidents. The ...


Promoting A More Efficient Corporate Governance Model In Emerging Markets Through Corporate Law, Jingchen Zhao Jan 2016

Promoting A More Efficient Corporate Governance Model In Emerging Markets Through Corporate Law, Jingchen Zhao

Washington University Global Studies Law Review

If we group together corporate governance models in countries with emerging markets, it is worthwhile to consider if reform suggestions could be offered to these countries collectively to address their shared weak points from a legal perspective. This article attempts to find common characteristics in corporate governance models from countries with emerging markets, who suffer from similar problems and challenges. The article traces many dimensions through which corporate governance functions in emerging markets can be characterized, with an emphasis on the legal foundations and responses to problems especially within corporate law, in order to promote the soundness of corporate governance ...


The Declining Allure Of Being “American” And The Proliferation Of Corporate Tax Inversions: A Critical Analysis Of Regulatory Efforts To Curtail The Inversion Trend, John C. Hamlett Jan 2016

The Declining Allure Of Being “American” And The Proliferation Of Corporate Tax Inversions: A Critical Analysis Of Regulatory Efforts To Curtail The Inversion Trend, John C. Hamlett

Washington University Law Review

In the realm of tax policy, within which there is rarely broad-based consensus, there are few topics as polarizing as corporate tax inversions. An inversion is a paper transaction in which a US corporation reincorporates abroad to realize strategic tax benefits, without actually transplanting its operations overseas. These transactions necessarily reduce the US corporate income tax base, because although an inverted corporation is still taxed the same amount on income earned within the United States, it will no longer have to remit tax payments to the US Department of the Treasury (“Treasury”) for income earned abroad. This reduction in the ...


Why Firrea And Civil Enforcement Cannot Replace Individual Criminal Liability, Timothy Ly Jan 2016

Why Firrea And Civil Enforcement Cannot Replace Individual Criminal Liability, Timothy Ly

Washington University Journal of Law & Policy

This Note addresses the high burden of proving specific criminal intent within the context of the 2008 financial crisis. Ly analyzes the Department of Justice’s use of civil penalties under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) and addresses their impact on deterring illegal behavior. Ly argues that FIRREA has failed to adequately deter illegal behavior and proposes a financial mismanagement law that would lower the criminal burden from specific intent to recklessness.


Incentive For Sale: § 503(C) And Asset Sales Within The Southern District Of New York, Christopher Scavone Jan 2016

Incentive For Sale: § 503(C) And Asset Sales Within The Southern District Of New York, Christopher Scavone

Washington University Journal of Law & Policy

This Note examines the recent shift towards rejecting proposed Key Employee Incentive Plans within the Southern District of New York as highlighted by the Hawker and Residential Capital decisions, and why the current standard is inadequate to address the special concerns that arose in those two cases. Scavone first examines the historical basis for executive compensation in bankruptcy, the formulation of the 2005 BAPCPA amendments, and the cases that followed. Scavone then presents the Hawker and Residential Capital cases, followed by an analysis of why the application of § 503(c) as it currently stands was inadequate for the proposed asset ...


Constitutional Mixologists: Muddling The Analysis Of Protectionist Alcoholic Beverage Laws After Granholm V. Heald, Paul Knettel Jan 2016

Constitutional Mixologists: Muddling The Analysis Of Protectionist Alcoholic Beverage Laws After Granholm V. Heald, Paul Knettel

Washington University Law Review

In its 2005 decision in Granholm v. Heald, the U.S. Supreme Court declared that state alcoholic beverage laws that discriminate against out-of-state entities are unconstitutional restrictions of interstate trade under the dormant Commerce Clause. Despite this holding, lower courts have split in their analyses and conclusions regarding protectionist alcoholic beverage laws. Specifically, the Eighth Circuit recently upheld Missouri’s residency requirements for alcoholic beverage distributors. Meanwhile, a district court in Michigan has found that a similar law imposing residency requirements on alcoholic beverage retailers was an unconstitutional restriction of interstate commerce. This confusion adversely affects both consumers and smaller ...


Corporate Identity And Group Dignity, Konstantin Tretyakov Jan 2016

Corporate Identity And Group Dignity, Konstantin Tretyakov

Washington University Jurisprudence Review

Every time a decision needs to be made about corporate rights, the theoretical difficulties of corporate identity and personhood have to be overcome. In this article, I analyze these problems from the perspectives of moral philosophy and law, examining how the theories of the former inform and influence legal discourse and practices (including the recent cases of Citizens United and Hobby Lobby); my main point there is that the philosophical and legal understandings of personhood are analytically distinct and should not be confused. Based on my findings, I focus upon one particular teaching about corporate identity—the real entity theory ...


Abandoning The ‘Mosaic Theory’: Why The ‘Mosaic Theory’ Of Securities Analysis Constitutes Illegal Insider Trading And What To Do About It, Aaron S. Davidowitz Jan 2015

Abandoning The ‘Mosaic Theory’: Why The ‘Mosaic Theory’ Of Securities Analysis Constitutes Illegal Insider Trading And What To Do About It, Aaron S. Davidowitz

Washington University Journal of Law & Policy

This Note proposes that the mosaic theory is an unlawful method of securities analysis constituting illegal insider trading based on the tipper/tippee theory of liability established in Dirks v. SEC. This Note addresses the meaning and history of the mosaic theory as it has evolved over time and discusses the history of insider trading law in the United States in an effort to understand why the mosaic theory violates those laws. It analyzes the confluence of insider trading law and the mosaic theory, showing why the mosaic theory violates insider trading law. Finally, this Note identifies the costs and ...


Transactional Legal Services, Triage, And Access To Justice, Paul R. Tremblay Jan 2015

Transactional Legal Services, Triage, And Access To Justice, Paul R. Tremblay

Washington University Journal of Law & Policy

Public interest law is traditionally thought of in the context of litigation services for underserved communities. This Article focuses on the expansion of free transactional legal services (TLS) to serve yet another under-attended subset of the population: entrepreneurs and small businesses. Tremblay analyzes arguments both for and against devoting limited and valuable legal services to entrepreneurs and small businesses. This Article explores the three likely sources of TLS—law firm pro bono work, law school clinics, and public interest firms—and starts the discussion about whether such allocation of valuable legal aid is the best use of transactional legal services.


Say On Pay Around The World, Randall S. Thomas, Christoph Van Der Elst Jan 2015

Say On Pay Around The World, Randall S. Thomas, Christoph Van Der Elst

Washington University Law Review

Shareholders have long complained that top executives are overpaid by corporate boards irrespective of their performance. Investors have traditionally been powerless to prevent these perceived abuses and have sought a way to gain greater influence over directors’ compensation decisions. Many governments responded by increasing the level of corporate disclosures on compensation packages and policies, and occasionally tinkering with tax policies in efforts to reduce pay levels, but none of these changes has had much impact.

However, investors have continued to put pressure on governments to change the status quo. In 2002, these efforts led the U.K. to adopt legislation ...


Price Impact, Materiality, And Halliburton Ii, Allen Ferrell, Andrew Roper Jan 2015

Price Impact, Materiality, And Halliburton Ii, Allen Ferrell, Andrew Roper

Washington University Law Review

The Supreme Court decision in Halliburton Co. v. Erica P. John Fund, Inc., 134 S. Ct. 2398 (2014), reaffirmed the availability of the fraud-on-the-market presumption of “reliance” for purposes of a Rule 10b-5 class certification. At the same time, the Court held that defendants could rebut the presumption if they could provide “direct evidence” that the alleged misrepresentations did not in fact impact the price of the security (i.e., a lack of price impact). In this Article we discuss various issues that have arisen in lower court rulings that have addressed Halliburton price impact arguments. These issues include the ...


Appraisal Arbitrage And The Future Of Public Company M&A, Charles R. Korsmo, Minor Myers Jan 2015

Appraisal Arbitrage And The Future Of Public Company M&A, Charles R. Korsmo, Minor Myers

Washington University Law Review

In this Article, we demonstrate that the stockholder’s appraisal remedy—long-dismissed in corporate law scholarship as useless or worse—is in the middle of a renaissance in public company mergers. We argue that this surge in appraisal activity promises to benefit public shareholders in circumstances where they are most vulnerable.

We first show a sea change in the use of appraisal in Delaware. Relying on our hand-collected data, we document sharp recent increases in the incidence of appraisal petitions, in the size of the petitioners’ holdings, and in the sophistication of the petitioners targeting public deals. These litigants appear ...


Event Studies In Securities Litigation: Low Power, Confounding Effects, And Bias, Alon Brav, J. B. Heaton Jan 2015

Event Studies In Securities Litigation: Low Power, Confounding Effects, And Bias, Alon Brav, J. B. Heaton

Washington University Law Review

An event study is a statistical method for determining whether some event—such as the announcement of earnings or the announcement of a proposed merger—is associated with a statistically significant change in the price of a company’s stock. The main inputs to an event study are historical stock returns for the companies under study, benchmark returns like the return to the broader stock market, and standard statistical tests like t-tests that are used to test for statistical significance. In securities litigation and regulation, event studies are used primarily to detect the impact of disclosures of alleged fraud on ...


Corporate Law And The Limits Of Private Ordering, James D. Cox Jan 2015

Corporate Law And The Limits Of Private Ordering, James D. Cox

Washington University Law Review

The Delaware legislature in 2015 amended the Delaware General Corporation Law to authorize forum-selection bylaws and to prohibit charter or bylaw provisions that would shift to the plaintiff defense costs incurred in connection with shareholder suits that were not successfully concluded. In so acting, the legislature gave managers something they wanted, a way to deal with the scourge of multi-forum litigation, while pacifying the local bar that feared lucrative shareholder suits would disappear because of the chilling effect of a loser-pays rule for shareholder suits.

The legislature acted after the Delaware Court of Chancery held in Boilermakers Local 154 Retirement ...


The Intersection Of Fee-Shifting Bylaws And Securities Fraud Litigation, William K. Sjostrom Jr. Jan 2015

The Intersection Of Fee-Shifting Bylaws And Securities Fraud Litigation, William K. Sjostrom Jr.

Washington University Law Review

This Article examines the intersection of fee-shifting bylaws and federal private securities fraud suits. Specifically, this Article hypothesizes about the effects fee-shifting bylaws would have, if enforceable, on private securities fraud litigation. It then turns to the validity of fee-shifting bylaws under federal law and concludes that they are invalid as applied to securities fraud claims. In light of this conclusion, this Article considers whether Congress should pass legislation to validate fee-shifting bylaws and determines that it should not.


Mandatory Disclosure And Individual Investors: Evidence From The Jobs Act, Colleen Honigsberg, Robert J. Jackson Jr., Yu-Ting Forester Wong Jan 2015

Mandatory Disclosure And Individual Investors: Evidence From The Jobs Act, Colleen Honigsberg, Robert J. Jackson Jr., Yu-Ting Forester Wong

Washington University Law Review

One prominent justification for the mandatory disclosure rules that define modern securities law is that these rules encourage individual investors to participate in stock markets. Mandatory disclosure, the theory goes, gives individual investors access to information that puts them on a more equal playing field with sophisticated institutional shareholders. Although this reasoning has long been cited by regulators and commentators as a basis for mandating disclosure, recent work has questioned its validity. In particular, recent studies contend that individual investors are overwhelmed by the amount of information required to be disclosed under current law, and thus they cannot—and do ...


Federal Securities Fraud Litigation As A Lawmaking Partnership, Jill E. Fisch Jan 2015

Federal Securities Fraud Litigation As A Lawmaking Partnership, Jill E. Fisch

Washington University Law Review

In its most recent Halliburton II decision, the Supreme Court rejected an effort to overrule its prior decision in Basic Inc. v. Levinson. The Court reasoned that adherence to Basic was warranted by principles of stare decisis that operate with “special force” in the context of statutory interpretation. This Article offers an alternative justification for adhering to Basic—the collaboration between the Court and Congress that has led to the development of the private class action for federal securities fraud. The Article characterizes this collaboration as a lawmaking partnership and argues that such a partnership offers distinctive lawmaking advantages.

Halliburton ...


Market Intermediation, Publicness, And Securities Class Actions, Hillary A. Sale, Robert B. Thompson Jan 2015

Market Intermediation, Publicness, And Securities Class Actions, Hillary A. Sale, Robert B. Thompson

Washington University Law Review

Securities class actions play a crucial, if contested, role in the policing of securities fraud and the protection of securities markets. The theoretical understanding of these private enforcement claims needs to evolve to encompass the broader set of goals that underlie the securities regulatory impulse and the publicness of those goals. Further, a clear grasp of the modern securities class action also requires an updated understanding of how the role of market intermediation in securities transactions has reshaped the realities of securities litigation in public companies and the evolution of the fraud cause of action in the context of open-market ...


Paving The Delaware Way: Legislative And Equitable Limits On Bylaws After Atp, Michael J. Kaufman, John M. Wunderlich Jan 2015

Paving The Delaware Way: Legislative And Equitable Limits On Bylaws After Atp, Michael J. Kaufman, John M. Wunderlich

Washington University Law Review

In ATP Tour, Inc. v. Deutscher Tennis Bund, the Delaware Supreme Court held that a private company’s fee-shifting bylaw was facially valid. And before that decision, Delaware courts similarly upheld companies’ use of forum-selection bylaws requiring that intra-corporate disputes be litigated in a single designated forum. Many interpreted these holdings as broad endoresements of bylaws that could regulate the litigation process itself and a move by the Delaware courts to curtail shareholder litigation. Indeed, the Delaware legislature itself responded to ATP, amending the state’s corporate law to explicitly prohibit Delaware companies from adopting fee-shifting bylaws for shareholder litigation ...


Slouching Towards Monell: The Disappearance Of Vicarious Liability Under Section 10(B), Ann M. Lipton Jan 2015

Slouching Towards Monell: The Disappearance Of Vicarious Liability Under Section 10(B), Ann M. Lipton

Washington University Law Review

Liability under section 10(b) of the Securities Exchange Act is one of the primary mechanisms for enforcing the federal securities laws. Section 10(b), however, prohibits only intentional or reckless deception, and there has never been consensus as to how to determine whether an organization, rather than a natural person, harbors the relevant mens rea. Traditionally, organizational liability under federal law is determined according to agency principles, and most courts pay lip service to the notion that agency principles govern under section 10(b). As this Article demonstrates, they do not.

Many section 10(b) actions involve “open-market” frauds ...


The Evolution Of Federal Courts’ Healthcare Antitrust Analysis: Does The Ppaca Spell The End To Hospital Mergers?, Collin Z. Groebe Jan 2015

The Evolution Of Federal Courts’ Healthcare Antitrust Analysis: Does The Ppaca Spell The End To Hospital Mergers?, Collin Z. Groebe

Washington University Law Review

Traditionally, hospital mergers were seen as a benefit to consumers. That is no longer the case. After years of nonprofit hospitals engaging in price inflation and misreporting charity care, new hospital mergers will be more heavily scrutinized. Specifically, the United States government has implemented policies that are intended to shrink the relevant market, separate hospital services into individual lines, and require more than a good faith standard for evidence of proposed efficiencies. These policies were created as a response to the findings in antitrust court cases that hospital executives were increasing prices as a monopolist. These cases have worked to ...


Distortion Other Than Price Distortion, Urska Velikonja Jan 2015

Distortion Other Than Price Distortion, Urska Velikonja

Washington University Law Review

The fraud-on-the-market doctrine adopted in Basic Inc. v. Levinson (“Basic”) allows the plaintiff suing under Rule 10b-5 to satisfy the reliance requirement by showing that the market in which the security was traded was efficient and that she purchased the security at the market price during the period of the misrepresentation. If she succeeds, the plaintiff is entitled to two presumptions: first, that the misrepresentation distorted the price of that security, and second, that she purchased the security in reliance on that misrepresentation.

In Halliburton Co. v. Erica P. John Fund, Inc. (“Halliburton II”), the Supreme Court considered a direct ...


Social Enterprise As Commitment: A Roadmap, Alicia E. Plerhoples Jan 2015

Social Enterprise As Commitment: A Roadmap, Alicia E. Plerhoples

Washington University Journal of Law & Policy

At the nexus of law, business, and social justice there are a number of for-profit entities with underlying social missions. Such “hybrid” entities—low-profit limited liability companies, benefit limited liability companies, benefit corporations, public benefit corporations, and social purpose corporations—borrow principles from both the charitable and corporate sectors. Despite their hybrid nature these entities lack a clear accountability mechanism, putting such entities at risk of mismanagement, self-enrichment, and corporate waste. This Article presents a commitment approach to social enterprise governance within the bounds of existing social enterprise laws. Pherhoples argues that a commitment approach will facilitate an organization’s ...