Securities Law Commons^™

Give Me Equity Or Give Me Death - The Role Of Competition And Compensation In Building Silicon Valley, Richard A. Booth

Working Paper Series

In this essay, I argue that the preeminence of Silicon Valley as an incubator of technology companies is attributable to equity compensation. Ronald Gilson, relying on the work of AnnaLee Saxenian and others who have noted the tendency of Silicon Valley employees to job hop, has suggested that California law prohibiting the enforcement of non-compete agreements was a major factor in the rise of Silicon Valley (and the demise of Route 128). I extend this line of thought by suggesting that California employers may have relied on equity compensation as a substitute way to bind employees. I argue further that …

Ex Ante Choices Of Law And Forum: An Empirical Analysis Of Corporate Merger Agreements, Theodore Eisenberg, Geoffrey P. Miller

Cornell Law Faculty Publications

Legal scholars have focused much attention on the incorporation puzzle—why business corporations so heavily favor Delaware as the site of incorporation. This paper suggests that the focus on the incorporation decision overlooks a broader but intimately related set of questions. The choice of Delaware as a situs of incorporation is, effectively, a choice of law decision. A company electing to charter in Delaware selects Delaware law (and authorizes Delaware courts to adjudicate legal disputes) regarding the allocation of governance authority within the firm. In this sense, the incorporation decision is fundamentally similar to any setting in which a company selects …

Ley Federal Del Procedimiento Contencioso Administrativo., Bruno L. Costantini García

Bruno L. Costantini García

Ponencia sobre la Ley Federal del Procedimiento Contencioso Administrativo, impartida por Bruno L. Costantini García.

A Complete Property Right Amendment, John H. Ryskamp

ExpressO

The trend of the eminent domain reform and "Kelo plus" initiatives is toward a comprehensive Constitutional property right incorporating the elements of level of review, nature of government action, and extent of compensation. This article contains a draft amendment which reflects these concerns.

Confidential Informants In Private Litigation: Balancing Interests In Anonymity And Disclosure, Ethan D. Wohl

ExpressO

Heightened pleading standards and limits on discovery in private securities fraud actions make confidential informants crucial in many cases. While courts have widely recognized the importance of confidential informants and the need to protect them from retaliation, they have not applied consistent standards for how informants must be identified in pleadings, and have failed to take into account substantial bodies of relevant caselaw when deciding whether to require that informants’ names be disclosed in discovery.

This article offers a framework for when and how confidential informants should be identified, taking into account the competing interests in anonymity and disclosure. It …

A Proposal To Revise The Sec Instructions For Reporting Waivers Of Corporate Codes Of Ethics For Conflicts Of Interest, Madoka Mori

ExpressO

Enron’s collapse focused attention on the application of that company’s Code of Ethics to related-party transactions. That focus produced Section 406 of the Sarbanes-Oxley Act of 2002, which intends to regulate conflicts of interest between officers and their companies through codes of ethics that public companies adopt. Pursuant to SOX Section 406(a), the Securities Exchange Commission issued new regulations requiring each public company to disclose whether it has a code of ethics, and if a company has not adopted such a code, to explain why it has chosen not to do so. SEC rules also require each company that has …

O Mercado De Capitais E O Desenvolvimento Econômico E Social, Luiz Rafael De Vargas Maluf

Luiz Rafael de Vargas Maluf

Este trabalho tem por objetivo apresentar ao leitor a importância dada ao mercado de capitais para o desenvolvimento econômico, assim como o bem estar social da nação que pode ser conseguido através de investimentos nesta área. Ao longo das próximas páginas será demonstrado brevemente a repercussão histórica do mercado de capitais para a economia brasileira nas últimas décadas, sendo posteriormente vista a sua importante relação para o desenvolvimento econômico-social do país. Por último serão trazidos alguns questionamentos e sugestões de possíveis iniciativas a serem adotadas para o seu crescimento em geral, desmistificando muitos conceitos criados ao longo dos últimos anos, …

Conscripting Attorneys To Battle Corporate Fraud Without Shields Or Armor? Reconsidering Retaliatory Discharge In Light Of Sarbanes-Oxley, Kim T. Vu

Michigan Law Review

This Note advocates that federal courts should allow attorneys to bring retaliatory discharge claims under SOX. Traditional rationales prohibiting the claims of retaliatory discharge by attorneys do not apply in the context of Sarbanes-Oxley. This Note contends that the Department of Labor and the federal courts should interpret the whistleblower provisions of § 806 as protecting attorneys who report under § 307. Assuring reporting attorneys that they have protection from retaliation will encourage them to whistleblow and thereby advance SOX's policy goal of ferreting out corporate fraud. Part I explores the legal landscape of retaliatory discharge suits by attorneys. This …

Re-Thinking Securities Regulation: A Comparative Study Of Asx, Nyse, And Sgx , Benedict Sheehy

ExpressO

This article approaches the issue of securities regulation starting with an examination of the nature and role of markets and financial markets. It next outlines the various arguments for and against regulation, and then looks at approaches taken by markets and their regulators. The approaches are government regulation, self-regulation and co-regulation, and the structural changes via demutualization and corporate governance. With this background, it turns to examine how these approaches have played out in the markets themselves. The article surveys the regulatory aspects of the ASX, NYSE and the SGX, and reviews the regulatory and financial performance of the markets. …

Comment: Corporate Governance And The "D-Word", Thomas W. Joo

Washington and Lee Law Review

No abstract provided.

Shareholders As Proxies: The Contours Of Shareholder Democracy, Dalia Tsuk Mitchell

Washington and Lee Law Review

No abstract provided.

The Separation Of Ownership And Control In Modem Corporations: Shareholder Democracy Or Shareholder Republic? A Commentary On Dalia Tsuk Mitchell's Shareholders As Proxies. The Contours Of Shareholder Democracy, Lucas E. Morel

Washington and Lee Law Review

No abstract provided.

Explaining The Value Of Transactional Lawyering, Steven L. Schwarcz

ExpressO

This article attempts, empirically, to explain the value that lawyers add when acting as counsel to parties in business transactions. Contrary to existing scholarship, which is based mostly on theory, this article shows that transactional lawyers add value primarily by reducing regulatory costs, thereby challenging the reigning models of transactional lawyers as “transaction cost engineers” and “reputational intermediaries.” This new model not only helps inform contract theory but also reveals a profoundly different vision than existing models for the future of legal education and the profession.

Compensation Representatives: A Prudent Solution To Excessive Ceo Pay, Lawton W. Hawkins

ExpressO

Currently, CEO pay is determined by a company’s board of directors, subject to limited shareholder approval in certain circumstances. However, as Lucian Bebchuk and Jesse Fried have demonstrated, boards of directors and CEOs do not necessarily engage in real arms length bargaining over CEO pay. Instead, CEOs may exert managerial power to extract economic rents above and beyond what they could have obtained in an arms length negotiation. To address the problem, Bebchuk and Fried have proposed that large shareholders be allowed to nominate candidates for the board, and that companies be required to pay the expenses for any proxy …

The Corporate Governance Industry, Paul Rose

ExpressO

This paper considers the role of the corporate governance industry as a voluntary regulator. The corporate governance industry influences (and in some cases effectively controls) the vote of trillions of dollars of equity, and affects the governance policies and fortunes of thousands of companies through proxy voting recommendations and governance ratings. This paper considers the increasing influence of the corporate governance industry, and argues that potential conflicts of interest within some governance firms cast doubt on the reliability of their proxy advice and governance ratings. Additionally, governance firms may be overstepping their expertise in proxy voting decisions and in governance …

Corporate Governance And The New Hedge Fund Activism: An Empirical Analysis, Thomas W. Briggs

ExpressO

Hedge funds are not normal institutional investors. They launch proxy fights for corporate control. Their recent successes and wolf pack tactics have garnered headlines but leave us with a question: what does hedge fund activism mean for corporate governance in the United States? This Article undertakes a legal, empirical, and theoretical study in an effort to answer this questioin. The heart of the Article is an empirical study of obtainable instances of hedge fund activism during 2005 and the 2006 proxy season. The Article starts by showing that the SEC opened the door to hedge fund activism when it stopped …

Reassessing Damages In Securities Fraud Class Actions, Elizabeth C. Burch

ExpressO

No coherent doctrinal statement exists for calculating open-market damages for securities fraud class actions. Instead, courts have tried in vain to fashion common-law deceit and misrepresentation remedies to fit open-market fraud. The result is a relatively ineffective system with a hallmark feature: unpredictable damage awards. This poses a significant fraud deterrence problem from both a practical and a theoretical standpoint.

In 2005, the Supreme Court had the opportunity to clarify open-market damage principles and to facilitate earlier dismissal of cases without compensable economic losses. Instead, in Dura Pharmaceuticals v. Broudo, it further confused the damage issue by (1) perpetuating the …

The Case Against Mandatory Annual Director Elections And Shareholders' Meetings, William K. Sjostrom

ExpressO

The article examines the mandatory requirement under state corporate law and stock exchange listing standards that public corporations hold annual shareholders’ meetings for the election of directors. Specifically, I question the value of requiring corporations to (1) elect directors annually, and (2) hold shareholders’ meetings annually. I critique the various justifications for these requirements and find none of them persuasive. I then explore a different approach taken by Minnesota with respect to the frequency of director elections and shareholders’ meetings and conclude that the approach is superior to the current scheme. Recognizing, however, that any less strict state approach is …

Ringing The Bell On The Nyse: Might A Nonprofit Stock Exchange Have Been Efficient?, Stephen F. Diamond

ExpressO

Abstract

This spring the New York Stock Exchange, Inc. (Exchange or NYSE) completed an historic restructuring. On March 7, 2006, the NYSE completed its merger with Archipelago Holdings Inc. (Archipelago), a publicly traded electronic trading platform. As a result, the old NYSE itself became the New York Stock Exchange LLC, a wholly owned subsidiary of NYSE Group, Inc. (NYSE Group). The former members, or seat holders, of the NYSE received one of three forms of consideration: all cash, all stock in NYSE Group, or a package of cash and stock. The NYSE Group then allowed those former members to offer …

Primer Congreso Nacional De Organismos Públicos Autónomos, Bruno L. Costantini García

Bruno L. Costantini García

Memorias del Primer Congreso Nacional de Organismos Públicos Autonomos

Bond Repudiation, Tax Codes, The Appropriations Process And Restitution Post-Eminent Domain Reform, John H. Ryskamp

ExpressO

This brief comment suggests where the anti-eminent domain movement might be heading next.

Dialectical Regulation, Robert B. Ahdieh

Faculty Scholarship

While theories of regulation abound, woefully inadequate attention has been given to growing patterns of "intersystemic" and "dialectical" regulation in the world today. In this rapidly expanding universe of interactions, independent regulatory agencies, born of autonomous jurisdictions, nonetheless face a combination of jurisdictional overlap with, and regulatory dependence on, one another. Here, the cross-jurisdictional interaction of regulators is no longer the voluntary interaction embraced by transnationalists; it is, instead, an unavoidable reality of acknowledgement and engagement, potentially culminating in the integration of discrete sets of regulatory rules into a collective whole.

Such patterns of regulatory engagement are increasingly evident, across …

Brand New Deal: The Branding Effect Of Corporate Deal Structures, Victor Fleischer

Michigan Law Review

Consider the unusual legal structures of the following four deals: When Google went public in 2004, it used an Internet auction to sell its stock to shareholders. When Ben & Jerry's went public in 1984, it sold its stock only to Vermont residents. Steve Jobs's contract with Apple entitles him to an annual cash salary of exactly one dollar. Stanley Works, a Connecticut toolmaker, considered reincorporating in Bermuda to reduce its tax liability. Under public pressure, it changed its mind and remains legally incorporated in Connecticut. What do these deals have in common? In each case, the legal infrastructure of …

Take It Slow: A Novel Concept In The Life Of Sarbanes-Oxley, D. Skylar Rosenbloom

Washington and Lee Law Review

No abstract provided.

Megasubsidiaries And Asset Sales Under Section 271: Which Shareholders Must Approve Subsidiary Asset Sales, Yaman Shukairy

Michigan Law Review

Corporate law statutes determine the nature of the relationship between shareholders, the principal owners of the corporation, and the board of directors, those w ho run and operate the corporation. Under the Delaware General Corporation Law ("DGCL"), many of the powers are delegated to the board of directors. More specifically, under section 141, "the business and affairs of every corporation . . . [are] managed by or under the direction of a board of directors . . . ." The Delaware courts have interpreted this provision by deferring to decisions by directors and their designated management under the business judgment …

The Chameleon Effect: Beyond The Bonding Hypothesis For Cross-Listed Securities, Cally Jordan

ExpressO

This paper is based on a presentation made at the New York Stock Exchange Conference on the Future of Global Equity Trading, March 12, 2004, Sarasota, FL.

Looking back, was it a momentary enthusiasm? The dramatic increase in cross-listed securities, particularly in the United States, was one of the remarkable phenomena of the 1990s capital markets. The bonding, or corporate governance, hypothesis was one of the more intriguing theories to surface to explain the phenomenon. Cross-listing, the hypothesis suggested, might be a bonding mechanism by which firms, incorporated in a jurisdiction with “weak protection” of minority shareholder rights or poor …

Managing Risk On A $25 Million Bet: Venture Capital, Agency Costs, And The False Dichotomy Of The Corporation, Robert P. Bartlett Iii

ExpressO

An implicit dichotomy of the corporation exists in legal scholarship. On one side of the dichotomy rests the publicly-held corporation suffering from a significant conflict of interest between its managers and dispersed shareholders; on the other side, the closely-held corporation plagued by inter-shareholder conflict.

This Article argues that understanding the agency problems that can exist within a firm demands a rejection of this traditional dichotomy and the theories of the firm built upon it. Using venture capital finance, this Article demonstrates for the first time how this dichotomy obscures how all firms - public and private - often face the …

Realigning The Corporate-Stockholder Relationship: Facilitating Stockholder Communications During Active Proxy Solicitations, Michael Burgoyne

Vanderbilt Law Review

The bankruptcy of the Enron Corporation in December of 2001 "sent shock waves throughout the country" that forced both Wall Street and the average investor to rethink our system of corporate governance. WorldCom, the second-largest long distance carrier in the United States, topped Enron by filing an even larger bankruptcy in 2002 with pre-petition assets estimated at a staggering $103,914,000,000. Although these were two of the largest bankruptcy filings in United States history, Enron and WorldCom were merely the tip of the iceberg. Similar scandals at Adelphia Communications, Arthur Andersen, Global Crossing, HealthSouth, Qwest, Rite Aid, Tyco, and Xerox represent …

Doing Deals In Japan: An Analysis Of Recent Trends & Developments For The U.S. Practitioner, Christopher T. Hines, Tatsuya Tanigawa, Andrew P. Hughes

ExpressO

This article examines the process which is currently being played out in Japan by: (i) analyzing the recent changes in Japanese law of relevance to M&A deals, (ii) discussing some recent contested deals in Japan that may shed some light on current market practices, and (iii) providing an overview of the key issues that a U.S. practitioner will likely face when working on a Japanese deal…A good starting point in better understanding the remarkable changes in the Japanese M&A markets is to review the recent amendments to Japanese law, certain policy initiatives by the functional regulators, and other guidelines issued …

Voluntary Adoption Of Corporate Governance Mechanisms, Anita I. Anand, Frank Milne, Lynnette Purda

ExpressO

We examine the extent to which firms adopt recommended but not required corporate governance guidelines and establish that firms voluntarily implement suggested domestic best practices and the mandatory practices of neighboring countries as well. Drawing on the intuition of a principal-agent model in which the entrepreneur cannot fund all positive NPV projects, we hypothesize that access to capital is a primary determinant of the willingness of firms to voluntarily adopt corporate governance mechanisms. Our empirical results provide significant evidence that firms voluntarily adopt corporate governance guidelines. These results suggest that global competition for capital encourages firms to voluntarily adopt governance …