Business Organizations Law Commons^™

The Costs Of Liquidity Enhancement: Transparency Cost, Risk Alteration, And Coordination Problems, Edward J. Janger

Faculty Scholarship

No abstract provided.

The Decisions Of The Corporate Special Litigation Committees: An Empirical Investigation, Minor Myers

Indiana Law Journal

Using an original data set gathered from filings with the U.S. Securities and Exchange Commission, this Article tests the prevailing view in corporate law that special litigation committees invariably decide to dismiss shareholder derivative litigation. It demonstrates that (1) special litigation committees decide to pursue or settle claims much more frequently than heretofore recognized; (2) special litigation committees do not otherwise let defendants off the hook when pursuing or settling claims, in view of the financial recovery to the company in either scenario; (3) most shareholder claims subject to the authority of special litigation committees end up settled, not dismissed,- …

Regulate Otc Derivatives By Deregulating Them: Response To Comments, Lynn A. Stout

Cornell Law Faculty Publications

Response to comments by Jean Helwege, Peter Wallison, and Craig Pirrong on the author's article, "Regulate OTC Derivatives By Deregulating Them." Article predates the author's affiliation with Cornell Law School.

Regulate Otc Derivatives By Deregulating Them, Lynn A. Stout

Cornell Law Faculty Publications

When credit markets froze up in the fall of 2008, many economists pronounced the crisis inexplicable and unforeseeable. Lawyers who specialize in financial regulation, and especially the small cadre who specialize in derivatives regulation, knew better.That's because the roots of the catastrophe lay not in changes in the markets, but changes in the law. In particular, the credit crisis can be traced to Congress's 2000 passage of the Commodity Futures Modernization Act, which radically altered the traditional legal approach to financial derivatives.

This shift in the legal treatment of financial derivatives has brought the banking system to its knees. The …

Failure Of A "Basic Assumption": The Emerging Standard For Excuse Under Mae Provisions, Nathan Somogie

Michigan Law Review

The onset of the current economic crisis has led many strategic and financial acquirers to reconsider the desirability of transactions to which they had previously agreed. Because many of these agreements contain substantial termination fees, buyers have increasingly sought to be excused from their contractual obligations by invoking Material Adverse Effect ("MAE") provisions. Reliance on MAE clauses as a basis for termination has historically been risky due to a lack of clarity in the case law regarding the standard for excuse under such provisions. A recent decision by the Delaware Chancery Court, Hexion v. Huntsman, the third in a …

Facebook 2 Blackberry And Database Trading Systems: Morphing Social Networking To Business Growth In A Global Recession, Roger M. Groves

West Virginia Law Review

No abstract provided.

Governing Corporate Compliance, Miriam H. Baer

Faculty Scholarship

No abstract provided.

Void Contracts And The Applicability Of Choice Of Law Clauses To Consequential Restitutionary Claims: Cimb Bank Bhd V Dresdner Kleinwort Ltd [2008] 4 Slr 543, Adeline Swee Ling Chong

Research Collection Yong Pung How School Of Law

This note examines the Singapore Court of Appeal’s judgment in CIMB Bank Bhd v Dresdner Kleinwort Ltd, focusing specifically on what role, if any, should be played by a choice of law clause contained in a void contract in relation to the restitutionary aftermath of voidness.

The Company And Its Directors As Co-Conspirators, Pey Woan Lee

Research Collection Yong Pung How School Of Law

In Nagase Singapore Pte Ltd v Ching Kai Huat and Lim Leong Huat v Chip Hup Hup Kee Construction Pte Ltd, the High Court of Singapore affirmed the proposition that a company may, like a natural person, conspire with its director to inflict harm on a third person even if the latter is its “directing mind and will”. In both cases, the courts’ focus was directed at a conceptual enquiry, ie, whether a company, whose “mind” is the same as that of its director, could properly be said to have “combined” or “agreed” to conspire. This article argues, however, that …

Mtic Fraud Infects Tradable Carbon Permits, Richard Thompson Ainsworth

Faculty Scholarship

Missing trader intra-community (MTIC) fraud has been slowly morphing from cell phones and computer chips to other commodities. In the last few months however MTIC made a dramatic appearance in tradable CO2 permits. It closed exchanges and prompted France and the Netherlands to unilaterally change their tax treatment of CO2 trades. The UK has followed the French treatment in large measure. On Monday June 8, 2009 rumors of MTIC fraud in carbon emission permits closed the main European exchange for spot trading of European Union carbon emissions permits and Kyoto offsets. When BlueNext began trading permits again on Wednesday, June …

The Supreme Court’S Impact On Securities Class Actions: An Empirical Assessment Of Tellabs, Adam C. Pritchard, Stephen Choi

Law & Economics Working Papers Archive: 2003-2009

Using a sample of securities fraud class actions filed between 2003 and 2007, we study the impact of a widely-followed Supreme Court decision from that period, Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007). This decision clarified the law with respect to one of the most hotly contested issues in securities litigation: pleading scienter. The Tellabs decision reversed a very lenient Seventh Circuit decision with respect to pleading scienter, but replaced it with a standard that is nonetheless relatively generous to plaintiffs. Looking at opinions resolving motions to dismiss decided before and after that decision, we …

Common Challenges Facing Shareholder Suits In Europe And The United States, Randall Thomas, James D. Cox

Vanderbilt Law School Faculty Publications

Episodic and even sometimes systematic misbehavior by businessmen and corporate entities is ubiquitous. While Enron and WorldCom were the battle cries for corporate reform in the U.S. so it was with Ahold and Parmalat across Europe. No country is free of concern that company officers will misbehave thereby injuring investors, consumers and destroying shareholder value. Thus, this symposium issue collects the recent experiences across Europe in strengthening shareholder suits. Most recent legislative efforts in Europe, and hence the comments in the symposium, are focused on the derivative suit. Just as the American experience with class actions, reviewed separately in this …

Families For Tax Purposes: What About The Steps, Wendy G. Gerzog

All Faculty Scholarship

At least 4.4 million families in the U.S. are blended ones that include step-children and step-parents. For tax purposes, these steps receive preferential treatment for their status because they are on the one hand included as family members for many income tax benefit sections, but on the other hand excluded as family members for business entity attribution purposes and for gift and estate tax anti-abuse provisions. In the interests of fairness and uniformity, steps should be treated as family members for all tax purposes where steps have in fact voluntarily acted as their biological or adoptive counterparts, both when such …

Complex Bundled Discounts And Antitrust Policy, Herbert Hovenkamp, Erik Hovenkamp

Buffalo Law Review

No abstract provided.

Give Smaller Companies A Choice: Solving Sarbanes-Oxley Section 404 Inefficiency, Paul P. Arnold

University of Michigan Journal of Law Reform

This Note argues that smaller public companies should have the option to opt out of Section 404 of the Sarbanes-Oxley Act of 2002. Optional compliance is economically preferable to the current approach of mandatory compliance. Companies that choose to comply with Section 404 will send a signal to the financial markets that their internal controls meet the high standards Section 404 demands, and investors will reward such companies if they actually value the benefit of that company's additional controls. Similarly, companies that benefit less from additional internal accounting will be able to avoid Section 404's high costs. To clarify the …

Peoples, Bce, And The Good Corporate "Citizen", Edward J. Waitzer, Johnny Jaswal

Osgoode Hall Law Journal

This article considers the use of various legal instruments to advance a more expansive but well-defined view of directors' duties and discretion--a view which focuses on the longer-term interests of the corporation. We begin with an attempt to clarify the nature of directors' statutory duties under Canadian corporate law. We then consider the recent decisions of the Supreme Court of Canada in Peoples Department Stores Inc. (Trustee of) v. Wise and BCE v. 1976 Debentureholders, in which the Court took a broad view of corporate purpose, but failed to provide clear logic or operational guidance as to consequential directorial responsibilities. …

Art Deaccessions And The Limits Of Fiduciary Duty, Sue Chen

Duke Law Student Papers Series

Art deaccessions prompt lawsuits against museums, and some commentators advocate using the stricter trust standard of care, instead of the prevailing corporate standard (business judgment rule), to evaluate the conduct of non‑profit museum boards. This Article explores the consequences of adopting the trust standard by applying it to previously unavailable deaccession policies of prominent art museums. It finds that so long as museum boards adhere to these policies, their decisions would satisfy the trust standard. This outcome illustrates an important limitation of fiduciary law: the trust standard evaluates procedural care but cannot assess deaccessions on their merits. Yet this limitation, …

Data Devolution: Corporate Information Security, Consumers, And Future Of Regulation, Andrea M. Matwyshyn

Chicago-Kent Law Review

No abstract provided.

Trade Secrets, Data Security And Employees, Elizabeth Rowe

Chicago-Kent Law Review

This essay argues that data security is important to the protection of trade secret information, and that trusted employees on the inside pose the biggest threat to the protection of trade secrets. While investments in technical measures such as firewalls and encryption are important, it is also necessary for companies to consider the internal threats from employees when creating corporate security programs. Ultimately, a more comprehensive approach that includes technical and human elements, as well as consideration of inside and outside threats is likely to be more effective in the battle to secure data.

Patenting Cryptographic Technology, Greg Vetter

Chicago-Kent Law Review

The policy concerns intersecting patent law and cryptographic technology relate to the technology's beneficial uses in securing information in a commercial and social fabric that increasingly relies on computing and electronic communications for its makeup. The presence of patenting in a technology can impact diffusion of interoperable technology. Standardized embeddable cryptography facilitates its supply. Patent law for several decades has waxed and waned in its embrace of software implemented inventions rooted in abstract ideas such as the mathematics and mathematical algorithms underlying modern cryptography. This article documents the growth of cryptographic patenting. Then, in light of this growth and patent …

The Duty Of Care And The Data Control Systems In The Wake Of Sarbanes-Oxley, Michael R. Siebecker

Chicago-Kent Law Review

The essay examines the wisdom of exempting small public companies from Section 404 of the Sarbanes-Oxley Act of 2002 (SOX), which requires companies to provide management assessment and external auditing of a company's internal control systems over financial data. In particular, the essay questions whether a fiduciary duty of care might require officers and directors to adopt internal control systems, perhaps substantially similar to those envisioned by SOX, even if small public companies were exempt from the ambit of the statute.

Data Collection And Leakage, Philip Howard, Kris Erickson

Chicago-Kent Law Review

Every year millions of digital records containing personally identifiable information are exposed. When are malicious hackers to blame, and when is it organizational malfeasance? Which kinds of organizations—private firms, government agencies, or educational institutions—lose the most data? With over 1.9 billion records lost (on average that's 9 records per U.S. adult), a surprising number of breaches can be attributed to organizational practices.

Massachusetts Zappers - Collecting The Sales Tax That Has Already Been Paid, Richard Thompson Ainsworth

Faculty Scholarship

No other New England state is as vulnerable to Zappers as is the State of Massachusetts. Zappers and related software programming, Phantom-ware, facilitate an old tax fraud – skimming cash receipts. In this instance skimming is performed with modern electronic cash registers (ECRs).

Zappers are a global revenue problem, but to the best of this author’s knowledge they have not been uncovered in Massachusetts. A global perspective says: it is highly unlikely that Zappers are not in the Commonwealth – we just need to find them. In fact, using a Quebec template, tax losses from Zappers and related frauds in …

Summary Of Hartford Fire Ins. Co.; Hartford Accident & Indem. Co.; & Richardson Constr., Inc. V. Tr. Of The Const. Indus. & Laborers Health & Welfare Trust; Tr. Of The Constr. Indus. & Laborers Joint Pension Trust; & Tr. Of The Constr. Indus. & Laborers Vacation Tru, 125 Nev. Adv. Op. No. 16, Elham Roohani

Nevada Supreme Court Summaries

Acceptance of the Ninth Circuit’s two certified questions: whether trustees must provide notice to recover on (1) payment bonds against surety and (2) against the general contractor.

London As Delaware?, Adam C. Pritchard

Law & Economics Working Papers Archive: 2003-2009

Regulatory competition has long driven the path of corporate law in the federal system of the United States. Now, jurisdictional competition has spread to exchange listings. New York took an early lead in that competition in the 1990s, but has now been overtaken by London. Can London prevail in the competition for stock listings in the long term? This essay explores that question through the insights offered by Delaware’s dominance in the market for corporate listings. Delaware has prevailed by offering corporate directors a predictable body of that credibly shields directors from the vagaries of political backlash in times of …

Direct And Derivative Claims In Securities Fraud Litigation, Richard A. Booth

Working Paper Series

In the typical securities fraud class action under Rule 10b-5, the plaintiff class consists of buyers who seek damages equal to the difference between the price paid for the stock during the fraud period and the lower price that prevails after corrective disclosure. The argument here is that this claim is really an amalgam of direct and derivative claims and that the derivative claims should result in recovery by the corporation for the benefit of all stockholders. There are three types of losses that arise in the typical stock-drop action. First, part of the loss may be attributable to lower …

Obama's International Tax Plan: A Major Step Forward, Reuven S. Avi-Yonah

Articles

President Barack Obama last week personally introduced a set of proposals to reform U.S. international taxation that are the most significant advance toward preserving the income tax on cross-border transactions since the enactment of the subpart F rules by the Kennedy administration in 1962. (For prior coverage, see Doc 2009-10047 or 2009 TNT 84-1.) In essence, the Obama proposals introduce a 21stcentury version of the vision begun by Thomas Adams in 1918 and continued by Stanley Surrey in 1961: a world in which source and residence taxation are coordinated so as to achieve the underlying goals of the international tax …

Mitigating Dysfunctional Deference Through Improvements In Board Composition And Board Effectiveness, Marc Goldstein

NULR Online

No abstract provided.

The Hollowing Out Of Corporate Canada: Implications For Transnational Labor Law, Policy And Practice, Harry Arthurs

Buffalo Law Review

No abstract provided.

Arrow's Theorem And The Exclusive Shareholder Franchise, Grant Hayden, Matthew Bodie

Vanderbilt Law Review

The doctrine of shareholder primacy has received substantial attention from its legions of proponents, its indefatigable opponents, and even its disinterested observers. The notion that a corporation should be run in the interests of its shareholders is the theoretical foundation upon which modern corporate law stands. Almost all empirical study in corporate law is premised on a notion of shareholder primacy, and these results would lose much of their meaning if the theory were somehow disproved. Perhaps most importantly, shareholders do in fact have primacy of place within the corporation, as they alone generally have the right to elect the …