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Founder Worship, Effective Altruism, And Corporate Governance, Jennifer S. Fan, Xuan-Thao Nguyen

Kentucky Law Journal

No abstract provided.

Ai Governance And Algorithmic Auditing In Financial Institutions: Lessons From Singapore, Nydia Remolina Leon

Research Collection Yong Pung How School Of Law

This paper examines the role of algorithmic auditing as a mechanism for responsible AI development and deployment in the financial sector, with a particular focus on Singapore’s regulatory and institutional initiatives. Against the backdrop of fragmented global artificial intelligence (AI) governance frameworks, the study analyses how Singapore has developed operational tools — such as the Veritas Toolkit, AI Verify, Project Moonshot and Project Mindforge — that go beyond abstract ethical principles to provide measurable, use-case-specific standards for auditing AI systems. These initiatives contribute to standardising audit practices, enhancing transparency and bridging trust gaps between financial institutions, regulators and stakeholders. The …

Capital Formation, The Sec, And Accredited Investors, Neal F. Newman, Lawrence J. Trautman, Brian Elzweig

Faculty Scholarship

Protecting the investing public, while simultaneously facilitating the efficient flow of capital needed by all new and growing businesses continues as a primary responsibility of the U.S. Securities and Exchange Commission (SEC). Enhancing the capital formation process is a necessary step in the creation of jobs and growth of any economy. Central to the SEC’s regulatory schematic is the proposition that some particularly sophisticated and wealthy investors require less protection than those with less knowledge, experience, and resources. During December 2023, for just the third time, the SEC staff issued a report examining the status of the natural person accredited …

Big Business As Gun Control, David B. Kopel, George A. Mocsary, Bhav Ninder Singh

Dickinson Law Review (2017-Present)

Gun control increasingly bypasses direct legislative enactments by co-opting the commercial marketplace. Financial institutions and insurers often face regulatory pressures, frequently articulated through vague notions of “reputational risk,” to terminate or restrict services for lawful firearms businesses and advocacy groups. The debanking tactic, seen in initiatives such as Operation Choke Point, can deny essential financial products to firearm owners, merchants, and organizations, curtailing the practical exercise of constitutionally protected rights. Simultaneously, government agencies sometimes pursue warrantless data collection from bank records and merchant category codes, building profiles of lawful purchasers and eroding privacy and due-process norms.

Social media platforms compound …

Criminal Investors, Andrew K. Jennings

Faculty Articles

This Article reassesses the culpability of those who invest in law-breaking firms. Prosecutors currently treat investors as victims of corporate wrongdoing rather than as actors who might bear responsibility for it. This Article observes, though, that investment can facilitate, and even cause, illicit corporate activity. When investors intentionally contribute to those effects, substantive criminal law imposes liability on them just the same as it does on accomplices, conspirators, or principals in other contexts. Despite this formal parity, however, investor criminal liability is more a theoretical proposition than a practical reality.

This Article questions that status quo by asking whether and …

Specialist Directors, Yaron Nili, Roy Shapira

Faculty Scholarship

What determines the effectiveness of corporate boards? Corporate legal scholars usually approach this question by focusing on directors’ incentives, such as counting how many directors are independent or whether the roles of the CEO and Chair are separated. Yet on the ground, the focus has been shifting to directors’ skill sets and experience. Investors, regulators, and courts are now pressuring companies to appoint directors with specific types of expertise. In response, more and more companies are adding what we term “specialist directors”: a DEI director, a climate director, a cyber director, and so on. These changes in board composition could …

A Bona Fide Dispute: Can Bankrupt Debtors Sell Assets Free And Clear Of Federal Civil Forfeiture Claims?, Joseph Peter Gomez

Fordham Journal of Corporate & Financial Law

Auctions are wheeling-dealing extravaganzas in which frenzies of bidders fight over shiny objects. What would happen if the government busted down the doors of the auction house, took the shiny objects, and sold them online? An asset sale through section 363(b) of the Bankruptcy Code provides a court-supervised opportunity to maximize economic value for the bankruptcy estate. To sell estate assets, the debtor must either (1) pay off each creditor holding an interest in the assets or (2) strip the creditor’s interest and attach it to the proceeds of the sale. When the government asserts a civil forfeiture claim against …

The Small Business Killer: How Fincen Enforcement Of The Cta Could Destroy The Last Bastion Of The American Dream, Samantha M. Alecozay

Faculty Articles

The Corporate Transparency Act (CTA), passed into law in 2021 and made effective January 1, 2024, mandates the creation of a nationwide database that collects owner information of certain legal entities to help combat money laundering and other illicit financial activities. The CTA requires that the legal entity owners provide necessary information directly to the federal government, rather than relying on state and/or federal government officials to collect the information on their behalf. Further, failure to comply may result in the legal entity and owners incurring significant civil penalties of up to $591 per day of violation and even criminal …

Founder Worship, Effective Altruism, And Corporate Governance, Jennifer S. Fan, Xuan-Thao Nguyen

Articles

Founders are the heart of any startup. Oftentimes, they are given considerable latitude in managing a company, particularly if they are hailed as a visionary founder in a pathbreaking new industry. Additionally, it is assumed that underpinning their actions is the desire to do good. Unfortunately, sometimes this leads to what we term founder worship where the promise of the founder and the innovation may lead to perverse outcomes because too much control is ceded to the founder and there is a lack (or sometimes complete absence of) corporate governance. When unlimited control is coupled with "do gooderism," which in …

Conflicts Of Interest At An Organization’S Highest Authority: How The District Of Columbia’S Rules Of Professional Conduct Can Fail To Protect Private Organizations, Christopher Deubert

Catholic University Law Review

This Article examines how the District of Columbia’s incomplete incorporation of the Model Rules of Professional Conduct into its own Rules of Professional Conduct has created a scenario in which wrongdoing inside a private organization can flourish. In 2002, following the Enron scandal, the American Bar Association (ABA) revisited and revised its Model Rules of Professional Conduct. The ABA nevertheless took a conservative route, rejecting rules long proposed by experts which would have permitted attorneys aware of corporate crimes, fraud, and other wrongdoing to report their concerns to individuals or entities outside the organization’s reporting structure. Additional scandals unfolded contemporaneous …

Corporate Directors: Who They Are, What They Do, Cyber Risk And Other Challenges, Lawrence J. Trautman, Seletha Butler, Frederick R. Chang, Michele Hooper, Rom Mccray, Ruth Simmons

Buffalo Law Review

No abstract provided.

Crime And The Corporation: Making The Punishment Fit The Corporation, John C. Coffee Jr.

Faculty Scholarship

The debate over corporate criminal liability has long involved a fight between proponents who argue that corporate liability is necessary for effective deterrence and opponents who claim that it “punishes the innocent.” This Article agrees and disagrees with both sides. Corporate criminal liability could play a critical role in establishing an effective deterrent to organizational misconduct, but today it largely fails. Currently, we have a system that combines Deferred Prosecution Agreements, Non-Prosecution Agreements, and extraordinarily generous sentencing credits for compliance plans that have failed, and the result is a system that is more carrots than sticks. The evidence seems clear …

The Alchemy Of Effective Auditor Regulation, Sarah J. Williams

Lewis & Clark Law Review

The audit profession has repeatedly failed in its obligation to accurately opine on financial statements prepared by companies that trade in U.S. markets. The list of entities that have contributed to the quest for effective regulation of these auditors is long; it includes the American Institute of Certified Public Accountants (AICPA), the U.S. Securities and Exchange Commission (SEC), Congress, outside directors of public companies, and the Public Company Accounting Oversight Board (PCAOB), a recent congressional creation. Yet, despite 50 years of effort, the formula for efficacious oversight of the audit profession remains elusive.

This Article is the first in a …

Board Gatekeepers, Yaron Nili

Faculty Scholarship

For the last decade, investors, scholars, and regulators have turned to independent directors in key leadership positions as a means to safeguard corporate boards’ ability to serve as a robust check on management’s power. As a result, a vast majority of public companies’ boards are now led by an Independent Chair, or, alternatively, include a Lead Independent Director.

These ostensible outsiders—which this Article calls “board gatekeepers”—are meant to be even more empowered and detached from management compared to the rest of the board. This allows them to serve an independent gatekeeping function—a necessary guardrail against management’s ability to exert undue …

Reexamining The Vicarious Criminal Liability Of Corporations For The Willful Crimes Of Their Employees, Evan Tuttle

Cleveland State Law Review

Corporate compliance programs in the United States have evolved substantially in the past several decades, expanding exponentially in both number and scope. Yet, our legal standard of corporate criminal liability for the acts of employees has remained largely unchanged for the past fifty years. United States v. Hilton Hotels established that a corporation can be held liable for the acts of its employee, even though the employee’s conduct may be contrary to their actual instructions or contrary to the employer’s stated policies. That holding, cited with favor by the Supreme Court, was based on a deeply flawed interpretation of precedent, …

Whistleblowers: Implications For Corporate Governance, Deborah A. Demott

Faculty Scholarship

Often overlooked in academic accounts of corporate governance and the actors who populate governance structures, whistleblowers are no more visible in formal governance frameworks. Within a corporation, whistleblowers may be lower-rank employees, not directors or officers; they may report perceptions of wrongdoing to others within the corporation or inform governmental or other actors who are externally situated. Nonetheless, it is striking how often retrospective accounts of corporate scandals involve episodes of internal whistleblowing associated with governance and compliance failures. This paper argues that incorporating whistleblowers into formal governance structures could spur more proactive involvement by directors in monitoring compliance with …

Executive Pay Clawbacks And Their Taxation, David I. Walker

Faculty Scholarship

Executive pay clawback provisions require executives to repay previously received compensation under certain circumstances, such as a downward adjustment to the financial results upon which their incentive pay was predicated. The use of these provisions is on the rise, and the SEC is expected to soon finalize rules implementing a mandatory, no-fault clawback requirement enacted as part of the Dodd-Frank legislation. The tax issue raised by clawbacks is this: should executives be allowed to recover taxes previously paid on compensation that is returned to the company as a result of a clawback provision? This Article argues that a full tax …

Door Shut And Ears Plugged: How Consumer Reporting Casts Identity Theft Victims Out Of Financial Society And How The Law Can Be Harmonized To Bring Them Back In, Ryan Bolger

Brooklyn Journal of Corporate, Financial & Commercial Law

Consumer Reporting Agencies (CRAs) are the gatekeepers to the American economy. As the chief informants for prospective lenders, landlords, and employers, they exert immense power over the day-to-day decisions of who gets what. Despite these high stakes, the CRAs run consumer reporting as an automated electronic process that causes a lot of reporting errors, disqualifying consumers from essential goods, services, and opportunities. This is painfully true in the context of identity theft, where perverse incentives pollute the integrity of consumer reporting, piling undue harm onto identity theft victims. The law provides a remedy for this problem, but circuit courts are …

How Does The Capability Of Top Management Influence Financial Reporting Fraud?, Michael Wojcikiewicz

Honors Projects in Finance

This study examines the attributes which capture the capability of a perpetrator to engage in financial reporting fraud. Fraudulent financial reporting can be devastating for a company and its employees. Capability includes such measures as the person’s position and the function in which they work. The study reveals how capability influences the occurrence of fraud, the amount of the fraud, and whether capability interacts with concealing the fraud from an audit. The results of the thesis should assist fraud professionals, investors, and regulators as well as stakeholders of corporations by examining publicly available data and highlighting characteristics that can contribute …

Legal Transplants, Law Books, And Anglo-American Corporate Fiduciary Duties, Victoria Barnes

UC Law Business Journal

This Article explores legal transplants and divergences in Anglo- American corporate fiduciary law. The internal management rule in English law acts to restrict judicial interference in corporate governance disputes. It is conceptually similar to the business judgment rule but the two remain distinct. This Article explains why Anglo-American corporate law developed differently, despite its shared roots. It pinpoints the origins of the internal management rule to Lord Lindley’s work, which was written in the late nineteenth century. Lord Lindley was central to the development of corporate law in England and other common law jurisdictions within the British Empire, but his …

Securities Exchange Act Section 4e(A): Toothless "Internal-Timing Directive" Or Statute Of Limitation?, Richard E. Brodsky

William & Mary Business Law Review

The Securities and Exchange Commission has a problem, and everyone knows it: its investigative process suffers from excessive delay, which harms both individuals and entity it investigates and its own enforcement program. This problem has long been recognized and complained about, but never remedied.

In 2010, Congress passed a law specifically designed to solve the problem of excessive delay but, the way the SEC has read the law—which has been acquiesced in by the courts and ignored by subsequent Congresses—has rendered it toothless and essentially meaningless. This has been accomplished, first, by the Commission’s cabined interpretation of the purpose of …

A Theory Of The Business Trust, Eric C. Chaffee

University of Cincinnati Law Review

No abstract provided.

Indenture Trustee Duties: The Pre-Default Puzzle, Steven L. Schwarcz

University of Cincinnati Law Review

This Article addresses a topic at the intersection of finance, agency, contract, and trust law: the pre-default duties of an indenture trustee for bondholders. The existing scholarship on indenture trustee duties focuses on the post-default scenario, when the indenture trustee is required to act as a prudent person in like circumstances on behalf of the bondholders. No prior scholarship addresses an indenture trustee’s pre-default duties. It is critical to try to define those duties because activist investors in the $42-trillion-plus bond market increasingly are making pre-default demands on indenture trustees, requiring them to know how to respond.

Detecting Corporate Environmental Cheating, Seema Kakade, Matt Haber

Faculty Scholarship

As evidenced by the Volkswagen diesel emissions scandal, corporations cheat on environmental regulations. Such scandals have created a surge in the academic literature in a wide range of areas, including corporate law, administrative law, and deterrence theory. This article furthers that literature by focusing on one particular area of corporate cheating—the ability to learn of the cheating in the first place. Detecting corporate cheating requires significant information about corporate behavior, activity, and output. Indeed, most agencies have broad statutory authority to collect such information from corporations, through targeted records requests, and inspection. However, authority is different from ability. The corporate …

Prosecuting Foreign Bribery In National Projects: A Multi-Phased Approach To Reduce Corruption, Julia E. Johnson

American University Business Law Review

The gradual establishment of an international mechanism to review and prosecute allegations of corruption could help to deter fraudulent conduct. Fraudulent conduct often reduces the economic benefits associated with large-scale development or investment projects. These projects are generally awarded through contract bidding; the bidding outcome may be dictated by bribery and other corrupt behaviors by local officials overseeing the project. The money earmarked for the project may in turn be siphoned off to the bribe recipients for private gain, leaving citizens unable to appreciate the fruits of any such project. For this reason, reducing corruption should remain a key priority. …

The United Postal Service—The One Word That Makes All The Difference, Jena Martin, Matthew Titolo

Law Faculty Scholarship

In recent months, the United States Postal Service (USPS) has taken center stage on a number of intersecting issues in our society: the pandemic; the upcoming election (through mail-in voting) and the controversy surrounding the appointment of Louis DeJoy to the position of Postmaster General. President Donald Trump has frequently made derogatory remarks regarding the Postal Service, calling it a “joke,” and has made repeated statements encouraging its privatization. However, President Trump’s rhetoric (as well as the rhetoric of others before him) obfuscates the critical mission of the USPS – to provide service to every American in the country; not …

Complex Compliance Investigations, Veronica Root Martinez

Faculty Scholarship

Whether it is a financial institution like Wells Fargo, an automotive company like General Motors, a transportation company like Uber, or a religious organization like the Catholic Church, failing to properly prevent, detect, investigate, and remediate misconduct within an organization’s ranks can have devastating results. The importance of the compliance function is accepted within corporations, but the reality is that all types of organizations—private or public—must ensure their members com­ply with legal and regulatory mandates, industry standards, and internal norms and expectations. They must police thousands of members’ compli­ance with hundreds of laws. And when compliance failures occur at these …

Addressing The Auditor Independence Puzzle: Regulatory Models And Proposal For Reform, Aurelio Gurrea-Martinez, Martin Gelter

Research Collection Yong Pung How School Of Law

Auditors play a major role in corporate governance and capital markets. They facilitate firms’ access to financing by creating trust among public investors with efforts to prevent misbehavior and financial fraud by corporate insiders. In order to fulfill these goals, however, in addition to having the adequate knowledge and expertise, auditors should perform their functions in an independent manner. Unfortunately, auditors are subject to conflicts of interest by, for example, providing non-audit services or the mere fact of being hired and paid by the audited company. Therefore, even if auditors act independently, investors have reason to think otherwise. This lack …

Nonprofit Governance: The Basics, Lawrence J. Trautman, Janet Ford

Akron Law Review

Nonprofit organizations are prevalent in today’s economy, and many are governed by individuals who have been chosen on the basis of their advocacy of or contributions to various nonprofit causes rather than on the basis of business experience or acumen. Yet effective nonprofit governance, while presenting concerns unique to nonprofits, also presents many of the same concerns as does governance of for-profit entities. This article seeks to provide a primer for nonprofit organizations that need to recruit effective governance talent. First, we discuss the nature of nonprofits, their impact on the business landscape, and their similarities to and differences from …

Unintentional Irony In Landmark Decisions Of The Delaware Supreme Court Regarding Corporate Law, Steven J. Cleveland

Michigan Business & Entrepreneurial Law Review

Three landmark decisions of the Delaware Supreme Court exhibit unintentional irony: Beam v. Stewart, Smith v. Van Gorkom, and Paramount Communications Inc. v. Time Inc. In Beam, the court concluded that, regarding the decision of whether to seek remedy against Martha Stewart, her fellow directors would not have jeopardized their reputations for the minimal gain of continuing their business and personal relationships with her. Ironically, the court failed to acknowledge that Martha Stewart—in trading on material nonpublic information, which gave rise to the corporate claim against her—jeopardized her reputation (ultimately losing hundreds of millions of dollars and her freedom) for …