Law Commons^™

The Undercivilization Of Corporate Law, A. Christine Hurt

Faculty Scholarship

No abstract provided.

The Dystopian Potential Of Corporate Law, D. Gordon Smith

Faculty Scholarship

The community of corporate law scholars in the United States is fragmented. One group, heavily influenced by economic analysis of corporations, is exploring the merits of increasing shareholder power vis-a-vis directors. Another group, animated by concern for social justice, is challenging the traditional, shareholder-centric view of corporate law, arguing instead for a model of stakeholder governance. The current disagreement within corporate law is as fundamental as in any area of law, and the debate is more heated than at any time since the New Deal. This paper is part of a debate on the audacious question, Can Corporate Law Save …

Electronic Tax Fraud - Are There 'Sales Zappers' In Japan?, Richard Thompson Ainsworth

Faculty Scholarship

Although there is no public acknowledgement - in the press, in a court case, though any announcement by the Japanese National Tax Administration, or in any academic studies or papers - that Zappers and Phantom-ware are a fraud problem in Japan, a number of factors suggest that Japan may be very fertile ground for technology-assisted cash skimming fraud. Those factors include: (1) a high concentration of small to medium sized businesses; (2) the fact that the retail economy is highly cash-based; and (3) the high level of technology acceptance in the Japanese retail sector - electronic cash registers (ECRs) and …

Linkage And The Deterrence Of Corporate Fraud, Miriam Baer

Faculty Scholarship

No abstract provided.

Tales Of Two Regimes For Regulating Limited Liability Law Firms In The Us And Australia: Client Protection And Risk Management Lessons, Susan Saab Fortney

Faculty Scholarship

This essay contrasts the regimes that allow limited liability partnerships in the US and fully incorporated legal practices in Australia. The essay argues that Australia has taken advantage of an opportunity to develop innovative and necessary regulation of law firm ethical infrastructure with the introduction of incorporated legal practices, but the United States has not yet adequately addressed the consumer and ethical risks of limited liability partnerships. This essay raises the issue of whether Australia’s requirement that incorporated law firms should implement “appropriate management systems” to ensure ethical conduct is a model that could fruitfully be applied to all law …

Zappers And Phantom-Ware At The Fta: Are They Listening Now?, Richard Thompson Ainsworth

Faculty Scholarship

When the Federation of Tax Administrators (FTA) held a national Compliance and Education Workshop in Louisville, Kentucky (February 25-27, 2001) one of the invited speakers was Kevin Pratt, Manager, Underground Economy, Canadian Customs and Revenue Authority (CCRA). He spoke on Zappers.

To the best of anyone's present recollection, this was the first time zappers had been discussed with a large group of state-level US tax compliance professionals. However, most of the information that the CCRA presented to the FTA in 2001 was not its own - it was derivative. Zapper investigations were not an in-house specialty of the CCRA (although …

Insuring Corporate Crime, Miriam Baer

Faculty Scholarship

No abstract provided.

Zappers & Phantom-Ware: A Global Demand For Tax Fraud Technology, Richard Thompson Ainsworth

Faculty Scholarship

There is a demand-market for technology that facilitates tax fraud. By all accounts the providers in this market are working in a growth industry.

In the short term this is bad news for those concerned with tax policy and information privacy. In the long term however, the fight against technology-assisted fraud is stimulating the development of a more robust technology base within tax administrations, and this is good news for those who believe that a sophisticated technological infrastructure is needed to resolve difficult questions of tax design.

This paper focuses on two technology-accelerants of SME tax fraud - zappers and …

Private Investment Funds: Hedge Funds' Regulation By Size, Tamar Frankel

Faculty Scholarship

This Article focuses on hedge funds-a species of private investment funds. These funds appeared in the 1950s and remained active but small. Then, in a fairly short period, they grew enormously to over $1.5 trillion, although the estimates vary.¹ Hedge fund managers engage in more than twenty-five different categories of investment strategies.² Since 2002, the number of hedge funds has more than doubled to an estimated 9,000 funds,³ and their assets have grown by 400% to an estimated $1.4 trillion since 1999.⁴ Other estimates are higher, suggesting current hedge fund assets at $2 trillion and their …

Mtic (Carousel) Fraud: Twelve Ways Forward; Two Ways 'Preferred' - Has The Technology-Based Administrative Solution Been Rejected?, Richard Thompson Ainsworth

Faculty Scholarship

In a May 31, 2006 Communication to the Council, the European Parliament, and the European Economic and Social Committee, the European Commission indicated a need to develop a co-ordinated strategy to improve the fight against fiscal fraud [COM(2006) 254 final]. Although the Communication considers fiscal fraud broadly (VAT, excise duties and direct taxes) the most pressing need seems to be for a VAT strategy that will effectively deal with MTIC (Missing Trader Intra-Community) or carousel fraud. To this end the Commission hosted a conference: Fiscal Fraud - Tackling VAT Fraud: Possible Ways Forward. The March 29, 2007 conference was constructed …

Zappers: Tax Fraud, Technology And Terrorist Funding, Richard Thompson Ainsworth

Faculty Scholarship

"Zappers," or automated sales suppression devices, have brought unheard of efficiencies and economies of scale to a very simple tax fraud - skimming cash sales at point of sale (POS) terminals (electronic cash registers). Until recently the largest tax fraud case in Connecticut, also the "largest computer driven tax-evasion case in the nation," was a zapper case. Stew Leonard's Dairy in Norwalk Connecticut skimmed $17 million in receipts and hid the cash in St. Martin (a Caribbean island). Talal Chahine and his wife, Elfat El Aouar, owners of the La Shish restaurant chain in Detroit Michigan have the dubious honor …

It-Apas - Vertical Harmonization Of Transfer - Pricing Standards, Richard Thompson Ainsworth

Faculty Scholarship

The World Customs Organization (WCO) and the Organization of Economic Cooperation and Development (OECD) have begun considering the harmonization of transfer pricing norms among income tax, customs and VAT regimes. Two conferences have been organized in May of 2006 and 2007.

These conferences have concluded so far: (a) that more analysis is needed; (b) that harmonization will require adjustments on all sides; and (c) that pilot projects (real world statutory and administrative efforts to harmonize) or case studies in harmonization (hypothetical fact patterns) are needed to facilitate consideration. This paper assesses the three basic paths being pursued at the present …

Corporate Ethics, Agency, And The Theory Of The Firm, Robert J. Rhee

Faculty Scholarship

This conference paper suggests that the problem of corporate ethics cannot be reduced to the autonomous person. Although the greatest influence on action and choice is one's moral constitution, it does not follow that the agent's behavior is the same within or without the firm. Ethics is a function of corporate form. The theory of agency cannot dismiss the firm as a fiction or metaphorical shorthand since that which does not exist should not be able to cause ethical breakdowns in corporate action. Thus, the theory of the firm, which emphasizes profit and wealth maximization, should incorporate a richer, more …

The Impact Of The Sarbanes-Oxley Act On Non-Shareholder Constituents: A Silver Lining, But Will It Endure?, Lisa M. Fairfax

Faculty Scholarship

No abstract provided.

Understanding The ‘Corporate’ In Corporate Social Responsibility, Barak D. Richman, Aaron K. Chatterji

Faculty Scholarship

No abstract provided.

Irrevocable Proxies, Deborah A. Demott

Faculty Scholarship

This short article explores the circumstances under which the power to vote shares owned by another may be made irrevocable. Irrevocable proxies often serve as integral ingredients within corporate governance arrangements because they serve as mechanisms that enable alliances among shareowners or enhance the holder’s voting power in disproportion to the holder’s residual economic interest in the corporation. The rights and duties of holders of irrevocable proxies are best understood against a background of common-law agency relationships, in which agent and principal always have the power–albeit having contracted otherwise–to terminate their relationship and the agent’s actual authority. Courts in the …

Do Patents Perform Like Property?, Michael J. Meurer, James Bessen

Faculty Scholarship

Do patents provide critical incentives to encourage investment in innovation? Or, instead, do patents impose legal risks and burdens on innovators that discourage innovation, as some critics now claim? This paper reviews empirical economic evidence on how well patents perform as a property system.

The Problems Of Securitizing Sub-Prime Loans, Tamar Frankel

Faculty Scholarship

In October 2007, the board of directors of Merrill-Lynch, Smith & Fenner, one of the largest if not the largest brokerage houses in the United States, accepted the request for early retirement of its Chief Executive Officer. The brokerage firm disclosed that it has lost over $8 billion on its investments in sub-prime mortgage loans.¹ Merrill Lynch was not the only financial giant to sustain enormous losses. The losses caused market liquidity to dry up. The U.S. government took steps to ease the pressure.² But the high leverage of the system is still unravelling. The effect of these …

Corporate Boards Of Directors: Advisors Or Supervisors, Tamar Frankel

Faculty Scholarship

What makes for a well-functioning corporate board? In this Article I argue that one important condition is that board members must understand and agree upon the group's objectives and its roles. If a corporate board of directors (Board) does not agree on what it is supposed to do; or, worse still, if Board members disagree about the Board's mission and its implementation, then the Board is likely to become dysfunctional-inefficient and ineffective. The Board's missions, however, may be mixed and their forms of implementation may conflict. In this case, the balance between the two missions must be established, and it …

Dirty Dancing: The Fda Stumbles On The Chevron Two-Step, Gary S. Lawson

Faculty Scholarship

Professor Lars Noah deserves much credit for exposing some of the myriad ways in which the Food and Drug Administration (FDA) has consistently sought to expand its authority through questionable, and perhaps in some cases abusive, legal practices.' As Professor Noah observes, there are signs that the federal courts' century-long honeymoon with the FDA may be ending 2 -and perhaps the FDA never deserved the solicitude that it has traditionally received from both the judiciary and Congress. 3 If Professor Noah can hasten the onset of a more realistic legal and public attitude toward the FDA, he will have performed …

A Requiem For Sam's Bank, Ronald J. Mann

Faculty Scholarship

This paper situates Wal-Mart's failed application to form a banking subsidiary in the context of payments policy. Generally, I argue that permitting Wal-Mart to have a bank would have a salutary effect on the relatively uncompetitive market for payment networks. The dominant position of Visa and MasterCard, in which payments are priced above cost to subsidize credit, inevitably will give way to a world in which payment services are priced at cost, or even below cost as a loss-leader to attract customers to other goods and services. Entry into this market by Wal-Mart would be likely to spur more robust …

Preventive Law: A Strategy For Internal Corporate Lawyers To Advise Managers Of Their Ethical Obligations, Z. Jill Barclift

Faculty Scholarship

This article examines the efficacy of Preventive Law jurisprudence to internal corporate law practice. The article compares internal corporate law practice to the practice approach of Preventive Law. The article explores the benefits of Preventive Law jurisprudence to internal corporate law practice. Part I discusses the history and various vectors of Preventive Law. Part II examines the responsibilities of corporate law departments. Part III compares Preventive Law practice skills to internal corporate law practice, and explores the utility of Barton’s problem solving approaches to internal corporate law practice. Finally, the article concludes arguing internal corporate law practice is Preventive Law …

Signaling Through Board Diversity: Is Anyone Listening?, Kimberly D. Krawiec, Lissa Lamkin Broome

Faculty Scholarship

The ethnic and gender make-up of corporate boards has been the subject of intense public and regulatory focus in many countries, including the United States, in recent years. Of particular interest has been quantitative research on the impact, if any, of board diversity on corporate performance. This body of work leaves substantial gaps in our understanding of the precise mechanisms by which board diversity may alter the corporate environment, if indeed it does. In this Symposium, we discuss some preliminary findings from our first thirty-five of a series of confidential, semi-structured interviews of 45 to 90 minutes in length with …

Corporate Policing And Corporate Governance: What Can We Learn From Hewlett-Packard's Pretexting Scandal, Miriam Baer

Faculty Scholarship

No abstract provided.

The Continuing Need For Broker-Dealer Professionalism In Ipos, James A. Fanto

Faculty Scholarship

No abstract provided.

Forming Entities To Negotiate Community Benefits Agreements, Debra Bechtel

Faculty Scholarship

No abstract provided.

How The Merits Matter: Directors' And Officers' Insurance And Securities Settlements, Tom Baker, Sean J. Griffith

Faculty Scholarship

This Article seeks what may be the holy grail of securities law scholarship—the role of the "merits" in securities class actions--by investigating the relationship between settlements and directors' and officers' (D&O) liability insurance. Drawing upon in-depth interviews with plaintiffs' and defense lawyers, D&O insurance claims managers, monitoring counsel, brokers, mediators, and testifying experts, we elucidate the key factors influencing settlement and examine the relationship between these factors and notions of merit in civil litigation. We find that, although securities settlements are influenced by some factors that are arguably merit related, such as the "sex appeal" of a claim's liability elements, …

Assessing Interest Groups: A Playing Field Approach, Paul Stancil

Faculty Scholarship

Despite general public antipathy toward the political influence exerted by corporations, industries, and other special interests, prescriptive applications of interest group theory have not gained much traction. This is primarily a function of previous commentators' inability to solve two difficult and related problems: (1) development of a consensus normative framework in which to apply interest group theory; and (2) development of a meaningful, objective, and workable approach to measuring interest group dynamics in the real world. The article offers solutions to both.

The article first proposes workably competitive pluralism as a norm to which the regulatory process should aspire in …

Proxy Contests In An Era Of Increasing Shareholder Power: Forget Issuer Proxy Access And Focus On E-Proxy, Jeffrey N. Gordon

Faculty Scholarship

The current debate over shareholder access to the issuer's proxy statement for the purpose of making director nominations is both overstated in its importance and misses the serious issue in question. The Securities and Exchange Commission's ("SEC's") new e- proxy rules, which permit reliance on proxy materials posted on a website, should substantially reduce the production and distribution cost differences between a meaningful contest waged via the issuer's proxy and a freestanding proxy solicitation. No matter which avenue is used, however, the serious question relates to the appropriate disclosure required of a shareholder nominator. Should the nominator be subject to …

Gatekeeper Failures: Why Important, What To Do, Merritt B. Fox

Faculty Scholarship

The United States was hit by a wave of corporate scandals that crested between late 2001 and the end of 2002. Some were traditional scandals involving insiders looting company assets – the most prominent being Tyco, HealthSouth, and Adelphia. But most were what might be called "financial scandals": attempts by an issuer to maximize the market price of its securities by creating misimpressions as to what its future cash flows were likely to be. Enron and WorldCom were the most spectacular examples of these financial scandals. In scores of additional cases, the companies involved and their executives were sued by …