Business Organizations Law Commons^™

Caselaw Developments 2015, William O. Fisher

Law Faculty Publications

This report was prepared for the ABA Business Law Section’s Federal Regulation of Securities Committee, Subcommittee on Annual Review. The paper contains sections on relevant Supreme Court decisions, SEC rulemaking, SEC enforcement actions, proxy solicitation, forward-looking statements, insider trading, materiality, duty to disclose, Scienter and scienter pleading, and the Securities Litigation Uniform Standards Act ("SLUSA").

On Maximizing Deterrence Per Dollar: Thoughts Inspired By Peter Reilly, Andrew B. Spalding

Law Faculty Publications

Professor Peter Reilly addresses concerns that practitioners in this space have privately and publicly debated for years. What exactly is cooperation credit? Can we quantify it? The government promises that self-reporting is in our self-interest, but the government’s interest in saying so is obvious enough. What evidence can the government provide?

The difficulty of measuring this credit is somewhat ironic, given the government’s dependence on cooperation. As this essay will show, our modern enforcement regime, which has four components—the internal or independent investigation, voluntary disclosure, cooperation credit, and a negotiated settlement—is the government’s method of maximizing general deterrence with finite …

A Wolf In Sheep's Clothing: Unocal And The Defensive Mechanism Hidden In Corporate Benefit Purpose, Sean W. Brownridge

Villanova Law Review (1956 - )

No abstract provided.

Investment Accelerators, Brad Bernthal

Publications

This Article documents and explains the legal and extralegal dimensions of Investment Accelerator (IA) systems. Accelerators are a new class of institution that supports entrepreneurs and early stage startups. Investment Accelerators take an ownership stake in companies that participate in an intensive, time-limited program. Interviews reveal the surprising extent to which parties in many Investment Accelerators exchange economic value in the absence of formal agreement. Startups share proprietary information with highly accomplished mentors who, in turn, contribute their time and connections without direct compensation. This under-contracted and informal arrangement raises concerns about opportunism. Data from an original investigation presents a …

The Underground Rulification Of The Ordinary Business Operations Exclusion, Reilly S. Steel

Faculty Scholarship

In its landmark Cracker Barrel no-action letter, the SEC staff an­nounced a bright-line rule permitting exclusion of any shareholder pro­posal pertaining to a company’s management of its general workforce, even if focused on a significant social policy issue such as employment discrimination, under the “ordinary business operations” exclusion. The SEC reversed Cracker Barrel in 1998, returning to a case-specific approach to determining whether proposals fall under the exclusion. This Note examines 250 no-action letters from the 2015 proxy season and finds evidence indicating that the staff has, contrary to official SEC policy, returned to a rule-like approach to the ordinary …

The Abstract Void In Practice: Has The Statutory Business Judgment Rule Changed The ‘Acoustic Separation’ Between Conduct And Decision Rules For Directors’ Duty Of Care?, Sergio Alberto Gramitto Ricci, Jake Miyairi

Faculty Works

A recent outpouring of director sentiment claims that the stringency of directors’ duty of care is stifling entrepreneurial growth. This article explores whether the statutory business judgment rule has enhanced directors’ protection for legitimate commercial decisions, or clarified their liability for due care — the two express justifications behind its enactment. Directors’ protection for entrepreneurial decision-making cannot be amplified without broadening the pre-existing abstract void between the duty of care — as a conduct rule — and the general law ‘business judgment principle’ — as a decision rule. But Parliament’s desire to clarify and confirm the existing general law business …

New Kids On The Blockchain: How Bitcoin’S Technology Could Reinvent The Stock Market, Larissa Lee

UC Law Business Journal

Bitcoin is the first and most successful digital currency in the world. It polarizes the news almost daily, with either glowing reviews of the many benefits of an alternative and international currency, or doomsday predictions of anarchy, deflation, and another tulip bubble.

This article focuses on the truly innovative aspect of Bitcoin - and that which has gone mostly unnoticed since its inception - the technological platform used to transfer Bitcoin from one party to another. This technology is called the Blockchain. The Blockchain eschews a bank or other intermediary and allows parties to transfer funds directly to one another, …

Fully And Barely Clothed: Case Studies In Gender And Religious Employment Discrimination In The Wake Of Citizens United And Hobby Lobby, Suneal Bedi

UC Law Business Journal

In 2010, the Supreme Court handed down its decision in Citizens United v. Federal Election Commission. The Court held that for-profit corporations could receive First Amendment protection for political speech. Then, in 2014, the Court held in Burwell v. Hobby Lobby that closely held for-profit corporations could be considered persons under the Religious Freedom Restoration Act. These cases have spurred much scholarship focusing on the treatment of corporations as people and citizens. While supporters argue that these cases are consistent with corporate and First Amendment law, critics argue that the implications of these decisions could be perverse.

This article contributes …

The Elephant In The Room: An Empirical Study Of Piercing The Corporate Veil In The Jurisdictional Context, King Fung Tsang

UC Law Business Journal

No abstract provided.

Credit Bidding: Expanding The “For Cause” Exception Under Section 363(K) Of The Bankruptcy Code, Austin Harms

UC Law Business Journal

As auctions have become more prominent in Chapter 11 proceedings, credit bidding has bolstered the multi-decade trend of secured creditor dominance, which the Supreme Court sustained in 2012. Since this 2012 decision, bankruptcy courts have attempted to level the playing field by progressively expanding the interpretation of Section 363(k) of the Bankruptcy Code, which permits courts to limit secured creditors' ability to credit bid "for cause." The conflict between the Supreme Court's 2012 decision and the bankruptcy courts' recent interpretation of Section 363(k) created an uncertainty that currently plagues the market for secured claims of distressed companies. This Note reviews …

The Restatement (Fourth) Of Foreign Relations Law: Discouraging State Courts From Recognizing Foreign- Country Money Judgments In Absence Of Debtor’S Assets, Debashish Bakshi

UC Law Business Journal

No abstract provided.

The "New Insiders": Rethinking Independent Directors' Tenure, Yaron Nili

Faculty Scholarship

Director independence is a cornerstone of modern corporate governance. Regulators, scholars, companies and shareholders have all placed a strong emphasis on director independence as a means to ensure that investors’ interests in their companies are well served. But what makes a director independent? While regulators and stock exchanges have tackled this elusive standard in different ways, the end goal is always the same – ensuring that the director is able to exercise truly independent judgment and further the best interests of shareholders. Surprisingly, these regulatory bodies have failed to consider the impact board tenure might have on director independence. This …

The Freedom To Pursue A Common Calling: Applying Intermediate Scrutiny To Occupational Licensing Statutes (Note), Alexandra L. Klein

Faculty Articles

After the devastation of Hurricane Katrina, the monks at St. Joseph Abbey in Louisiana sought a new source of income. They began producing simple wooden coffins priced at much lower rates than caskets sold in funeral homes. After the Abbey had made a large investment in its business, St. Joseph Woodworks, the Louisiana State Board of Embalmers and Funeral Directors ordered it to close. Although the monks did not provide funeral or embalming services, a Louisiana statute regulating the funeral industry prohibited the monks from selling coffins.

Under the statute, "funeral directing" included "any service whatsoever connected with... the purchase …

Between Scylla And Charybdis: Taxing Corporations Or Shareholders (Or Both), David M. Schizer

Faculty Scholarship

The United States taxes both corporations and shareholders on corporate profits. In principle, the United States could rely on only one of these taxes, as many commentators have suggested. Although choosing to tax the corporation or its owners may seem like taking money from one pocket or the other, this Essay emphasizes a key difference: These taxes prompt different planning. Relying on one or the other mitigates some distortions and leaks, while exacerbating others. As a result, choosing which to impose is like navigating between Scylla and Charybdis.

In response, this Essay recommends using both taxes for three reasons. First, …

Corporate Control And Idiosyncratic Vision, Zohar Goshen, Assaf Hamdani

Faculty Scholarship

This Article offers a novel theory of corporate control. It does so by shedding new light on corporate-ownership structures and challenging the prevailing model of controlling shareholders as essentially opportunistic actors who seek to reap private benefits at the expense of minority shareholders. Our core claim is that entrepreneurs value corporate control because it allows them to pursue their vision (i.e., any business strategy that the entrepreneur genuinely believes will produce an above-market rate of return) in the manner they see fit. We call the subjective value an entrepreneur attaches to her vision the entrepreneur’s idiosyncratic vision. Our framework identifies …

Do The Merits Matter: Empirical Evidence On Shareholder Suits From Options Backdating Litigation, Minor Myers, Q. Curtis

Faculty Scholarship

No abstract provided.

The Pendulum Swings: Reconsidering Corporate Criminal Prosecution, David M. Uhlmann

Articles

Corporate crime continues to occur at an alarming rate, yet disagreement persists among scholars and practitioners about the role of corporate criminal prosecution. Some argue that corporations should face criminal prosecution for their misconduct, while others would reserve criminal prosecution for individual corporate officials. Perhaps as a result of this conflict, there has been a dramatic increase over the last decade in the use of deferred prosecution and non-prosecution agreements for some corporate crimes, even as the government continues to bring criminal charges for other corporate crimes. To move beyond our erratic approach to corporate crime, we need a better …

The Challenge Of Fiduciary Regulation: The Investment Advisors Act After Seventy-Five Years, Roberta S. Karmel

Brooklyn Journal of Corporate, Financial & Commercial Law

Seventy-five years after its enactment the Investment Advisers Act of 1940 has advanced from a relatively weak statute merely registering advisers with the Securities and Exchange Commission (SEC) to a more robust law imposing fiduciary responsibilities on advisers. Over the years, the number of investment advisers and the number of their clients have increased greatly. The SEC therefore has been pressured by Congress to develop a harmonized fiduciary standard for broker-dealers and advisers and also to develop and enforce a greater degree of oversight over the advisory industry. These developments have raised the questions of how to fund such efforts …

Open Sesame: The Myth Of Alibaba's Extreme Corporate Governance And Control, Yu-Hsin Lin, Thomas Mehaffy

Brooklyn Journal of Corporate, Financial & Commercial Law

In September 2014, Alibaba Group Holding Limited (Alibaba) successfully launched a $25 billion initial public offering (IPO), the largest IPO ever, on New York Stock Exchange. Alibaba’s IPO success witnessed a wave among Chinese Internet companies to raise capital in U.S capital markets. A significant number of these companies have employed a novel, but poorly understood corporate ownership and control mechanism—the variable interest entity (VIE) structure and/or the disproportional control structure. The VIE structure was created in response to the Chinese restriction on foreign investments; however, it carries the risk of being declared illegal under Chinese law. The disproportional control …

Another Bite At The Apple For Trade Secret Protection: Why Stronger Federal Laws Are Needed To Protect A Corporation's Most Valuable Property, Alissa Cardillo

Brooklyn Journal of Corporate, Financial & Commercial Law

Trade secrets are one of a corporation’s most valuable assets. However, they lack adequate protection under federal law, leaving them vulnerable to theft and misappropriation. As technology advances, it becomes easier and less time consuming for individuals and entities to access and steal trade secrets to a corporation’s detriment. Most often these thefts involve stealing trade secrets in an intangible form. Current legislation fails to adequately protect intangible trade secrets, leaving them vulnerable to theft. An amendment to the National Stolen Property Act that encompasses intangible trade secrets would close a loophole that currently exists relating to intangible assets, allowing …