October 20, 2015
icon Lisa Fairfax to the SEC
Posted by Gordon Smith

Our own Lisa Fairfax has been nominated to fill an opening on the Securities and Exchange Commission. Congratulations, Lisa! Well done, President Obama! Now Senate, do your part.

See the story here.

Permalink | Administrative, Securities | Comments (View) | Bookmark

October 19, 2015
icon Enforcement Discretion At The SEC, Over At The HarvCorpGovFor
Posted by David Zaring

I blogged a little more about the SEC and its ALJs at the Harvard Corporate Governance Forum.  Do check it out!

Permalink | Administrative Law, Securities | Comments (View) | Bookmark

October 15, 2015
icon AB InBev Gets Even Bigger
Posted by Matt Bodie

The board at SABMiller PLC has formally accepted (right under the wire) the buyout offer from Anheuser-Busch InBev NV for £44 a share, or about $106 billion.  Aside from having too many names smushed together (will the new company be ABInBevSABM?), the company will be a global giant in beer production, with about a 30% share of world beer sales.  The WSJ has a really nice piece about how the deal finally came together.  A few thoughts:

  • There was a fair amount of intrigue between the first offer and the final agreement, as big SAB shareholder Altria Group came out in favor of a £42.15 deal that the board rejected.  But the board was right -- there was more money to be had from Brito et al.
  • A-B InBev would owe a $3 billion breakup fee if the deal fails to go through.  Is that the highest on record, or am I behind the times?
  • It seems like a foregone conclusion that the new company will have to dump its portion of the MillerCoors joint venture with Molson Coors.  That has to help Molson's bargaining position, no?  The Toronto Star seems to agree.  A good day for the Great White North yesterday!
  • Even if the new company jettisons Milller Lite & Coors Light, will the company still face antitrust scrutiny?  This Fortune article thinks beer drinkers will lose overall on the deal.  And AB InBev is getting scrutiny on another front -- the acquisition of some of their California distributors.  It could mean issues ahead -- anything from small speedbumps to a total roadblock.  I'm interested to see what the folks at the Truth have to say about it.  

Permalink | Corporate Law, M&A | Comments (View) | Bookmark

October 13, 2015
icon UGA Grad Picked as Next Vice Chancellor
Posted by Usha Rodrigues

Rarely do I get a scoop, but I found out about this at lunch today.  As I told Tamika, it might be the best lunch I've ever had.  Talking inside baseball politics with the awesome Bill Chandler and his delightful wife Gayle, AND learning that Delaware Governor has picked one of our grads to be the next vice chancellor of the Chancery Court?   Forget about it!   I am thrilled for Tamika, for UGA, and for Delaware.  

Update: I was 99% sure, and now can confirm that Tamika would be the first African-American to serve on the Chancery Court. From Law 360:

If confirmed, Montgomery-Reeves would be the first African-American judge and only the second woman to sit on the Chancery Court bench, where some of the nation's highest-octane corporate disputes are decided. Former Delaware Supreme Court Justice Carolyn Berger was the first woman confirmed to the court, in the mid-1980s, and about a decade later became the first woman to sit on the First State's high court.

We could not be more proud of her here at UGA Law!

Permalink | Delaware | Comments (View) | Bookmark

October 12, 2015
icon Hello and Congrats to Angus Deaton
Posted by Matt Bodie

Hello!  Many thanks to Christine for her warm welcome post, and thanks to all the bloggers at the Glom for letting me hop on board.  I had a terrific time blogging at PrawfsBlawg, but it has been a while since I did much blogging on corporate and employment law subjects.  There is a ton going on in business law right now, and I look forward to digging into these issues on a more regular basis. 

And it's an auspicious day for me to begin blogging here, as Angus Deaton has just won the Nobel (Riksbank) Prize for Economics.  Deaton is a professor at my alma mater, as well as the father of my classmate and friend Rebecca Deaton.  It looks like the university had a nice celebration for him this afternoon.

You might expect that the choice of Deaton would be lauded by progressive scholars, as Deaton's recent work focuses on issues of poverty and inequality.  And you'd be right.  But Marginal Revolution's Tabarrok and Cowen also sing Deaton's praises.  They highlight not only his earlier technical work, such as the Almost Ideal Demand System and the Deaton Paradox, but also his emphasis on careful empirical work in understanding and measuring world poverty.  His work shows that investigating the scope and depth of global poverty is not just for wild-eyed leftists.

I've had Deaton's popular book "The Great Escape" in my nightstand pile for a while.  Part of the point of Nobel recognition, I think, is that it will prompt a wider audience to take a look at his work.  I look forward to reading it.

Permalink | Books, Current Affairs, Economics | Comments (View) | Bookmark

icon Welcome Matt Bodie!
Posted by Christine Hurt

This is not a guest blogger announcement.  This is an announcement that Conglomerate is adding a new permanent blogger to our ranks!!  Please welcome Matt Bodie --  long-time friend of the Glom and long-time blogger at Prawfsblawg.

Matt is the Callis Family Professor of Law and Director of the Master of Science in Human Resources Program at St. Louis University School of Law.  Matt has blogged for the past ten years at Prawfs, and you can read his farewell post here.  The blawgosphere has changed a lot since 2005, but I definitely remember those early days fondly.  Matt has been a big part of the law blog universe, and getting to know him and the other early bloggers was a big plus to starting Conglomerate.  We are glad that he has decided to join us as we strive to remain relevant in the 2015 era.

Welcome, Matt!

Permalink | Administrative | Comments (View) | Bookmark

October 08, 2015
icon Position Announcement: Boise State
Posted by David Zaring

The call is after the jump.


more ...

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October 07, 2015
icon One for the Casebooks: Del. County Emples. Ret. Fund v. Sanchez
Posted by Usha Rodrigues

Speaking of casebooks, here's a pitch to my casebook author friends: include Del. County Emples. Ret. Fund v. Sanchez.  What's not to love about this opinion?  First, it's a Delaware Supreme Court opinion.  Second, it's short and sweet--clocking in at a mere 13 pages (I'm looking at you, Steve Bainbridge).  Third, it takes on a topic of interest to law professors and law students alike: friendship.  Fourth, it makes human one of the most challenging topics for the new student of corporate law: the derivative suit.

I know from experience that the derivative suit is a challenge in the classroom. Amounting to a lawsuit about whether there should be a lawsuit, it's a foreign concept to the uninitiated.  Aronson v Lewis provides guidance on how to balance the fact that per DGCL 141 the board is in charge of corporate decisions (including the decision about when to sue) against the point that in the derivative context the plaintiffs usually allege that some subset of the board itself, or the whole board, should be liable.  So the derivative suit is about how to sift the meritorious suits from the nuisance ones.

Aronson's first prong says such suits get to go forward if the majority of the board is interested or not independent.  Interested is easy--financial interest.  Independence is far more tricky--and therefore far more fun.  I spent my first article as a law professor puzzling over what independence means, and how Delaware's version of it is situational, rather than the SOX/SRO status-based definition.

Strine's jurisprudence, in particular, while he was on the Chancery Court did a terrific job of limning the nuances of independence.  Here's Fetishization of Independence on Delaware cases discussing independence in the context of familial relationships. Strine is all over it:

In one case, for example, Vice Chancellor Strine observed that (wholly apart from significant financial ties) he was “incredulous” about the independence of a director who was the CEO's brother-in-law on the question whether the corporation should sue the CEO. Nevertheless, Delaware courts do not always find that bare familial relationships suffice to prove a lack of independence. In Seibert v. Harper & Row, Publishers, Inc., the Delaware Chancery Court found that the mere fact that a director was the cousin of an interested director, “without more,” was not enough to show domination or control.
Delaware's approach to familial relationships is thus more flexible than an ex ante status-based approach. In Mizel v. Connelly, Vice Chancellor Strine found that a grandson was not independent for the purpose of deciding whether the corporation should  sue his grandfather for rescission of an interested transaction, calling the grandfather/grandson relationship “of great consequence.” Interestingly, in a footnote the Vice Chancellor noted that the ALI's Principles of Corporate Governance: Analysis and Recommendations “do not include grandparents in their definitions of ‘related persons”’ that trigger a label of interestedness. Thus, Delaware's transaction-specific, contextual inquiry can produce a more textured and probing analysis than the corporate governance model of what having an interest (and thus lacking independence) actually means. As Vice Chancellor Strine observed, a grandchild's relationship with his grandfather can be a close one: “I could not consider impartially such a demand as to my own grandfather . . . .”

So it's nice to see Chief Justice Strine doing what he does best--writing a clear, accessible opinion acknowledging that independence is complicated and contextual. In my opinion Oracle, Beam v. Stewart, and Sanchez now make up the triumverate of cases on this issue.  Here's Strine in Sanchez:

Here, the plaintiffs did not plead the kind of thin social-circle friendship, for want of a better way to put it, which was at issue in Beam. In that case, we held that allegations that directors “moved in the same social circles, attended the same weddings, developed business relationships before joining the board, and described each other as friends, ‟ . . . are insufficient, without more, to rebut the presumption of independence.”

In saying that, we did not suggest that deeper human friendships could not exist that would have the effect of compromising a director’s independence. When, as here, a plaintiff has pled that a director has been close friends with an interested party for a half century, the plaintiff has pled facts quite different from those at issue in Beam.  Close friendships of that duration are likely considered precious by many  people, and are rare. People drift apart for many reasons, and when a close relationship endures for that long, a pleading stage inference arises that it is important to the parties.

True, Chief Justice Strine acknowledges in the next paragraph the economic dependence that the director in question also allegedly had to the defendant.  But it is his eloquent defense of friendship that resonates for me. Just last week I paraphrased the Beam court as holding that "friendship alone is not enough."  But I asked students if they would feel unbiased if they were a director and the defendant and fellow boardmember was their college roommate. Their answer was an emphatic no.  I hazard that Chief Justice Strine might agree.

Update: In my excitement I neglected to link to Ann Lipton's excellent post about Sanchez.  Give it a look, and the lively discussion from law profs in the comments.

Permalink | Delaware, Wisdom and Virtue | Comments (View) | Bookmark

October 06, 2015
icon Should Casebooks Include Statutes? Answer: No
Posted by Usha Rodrigues

Steven Bradford asks the titular question.  And his answer, like mine, is a clarion "No!" 

But it makes no sense in courses like Business Associations or Securities Regulation, where students will be looking at dozens, even hundreds, of pages of statutory and regulatory material. The students in those courses will still have to buy a statute book; including some of the same statutory material in the casebook just increases the size (and cost) of the casebook.

In the comments casebook author David Epstein defends the inclusion of statutes:

Obviously, different authors have answered that question differently, My answer is that business associations casebooks should include the most important parts of the most important statutory provisions. Here is why.

I want students to have read and thought about the most important provisions of RUPA, the MBCA and/or the Delaware General Corporation Statute BEFORE CLASS. That is very important to what we can then accomplish together in class, In my experience, more students are more likely to have read and thought about the most important statutory provisions if those provisions (and only those provisions) are excerpted in the casebook.

I understand that there are costs to including the most important statutory provisions in a casebook, First, it might marginally increase the cost of the book. Second, it might make it less likely that students will, prior to class, read the other relevant statutory provisions that are not included in the casebook. And, I guess, some might make a "pandering" argument.

I guess I'm raising my hand on that last one.  I wouldn't characterize including large chunks of statute as "pandering," though.  I'd call it "frustrating one of my chief pedagogic goals."  After a few years teaching BA, my goals became pretty modest.  I want students to walk away understanding fiduciary duty, the business judgment rule, and that there are inevitable tradeoffs between the various forms of business organization.  But, most of all, I want them to take away one thing:

Look it up in the code

I teach BA as a code-based class.  My students have to hunt for provisions in the RUPA, the MBCA, the DGCL, and RULLCA.  We cover the MBCA and Delaware not because Georgia is a Model Act state, but because I want to talk about the different ways they handles questions like conflict of interest or the derivative suit.  It's sure hard work getting students to flip between code provisions and wrestle with definitions.  But the practice of law requires it.  And I put my money where my mouth is on the exam, as well--every exam involves an issue we haven't covered in class before, that requires students not only to spot the issue but also to figure out the answer using the statute. 

So no, casebook authors, please don't put too much statutory material in the casebook itself.  I want students to look it up before class or in class.  Because that's what they'll have to do when they're practicing law.

Permalink | Education, Rants | Comments (View) | Bookmark

October 05, 2015
icon Chancery Court Likely to Add a Woman
Posted by Usha Rodrigues

The news from Delaware is that, for the first time ever the Judicial Nominating Commission recommended to Governor Jack Martell an all-female short list.  Unless the governor takes the big step of rejecting all three of the candidates put forward as qualified, the Chancery Court will add a woman to the bench.According to Delaware Online, the candidates are Abigail M. LeGrow, Elena C. Norman, and Tamika Montgomery-Reeves

I wish all the candidates well, but I'm pulling for Tamika.  She's smart, funny, and she's a Georgia Law alum. Tamika is coming to Athens to teach a short course in Advanced Corporations next week, along with her colleague and distinguished former Chancellor Bill Chandler.  But even though I do have a Dawg in this fight, more generally I'm pleased that we'll likely see a woman on the Chancery Court again. 21 years is a long time.

Hat tip: Jerrod Lukacs

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icon Should The CEO/Worker Pay Ratio Be Posted On Consumer Goods?
Posted by David Zaring

Mike Norton, Rohit Deshpande, and Bhayva Mohan, all affilated with HBS, think that it would affect purchasing choices, likely more than if it were simply published in an investor disclosure statement.  Indeed, they're running a field experiment at an online retailer to see if it would.  It would be difficult to require an energy saver style label on every good by regulation, but perhaps retailers will respond to consumer tastes?  Here are some preliminary surveys:


Permalink | Popular Culture, Securities | Comments (View) | Bookmark

October 01, 2015
icon Fed Whistleblower Loses Retaliation Suit
Posted by David Zaring

Here's the Second Circuit decision on the Carmen Segarra case.  She alleged that the Fed was too soft on Goldman Sachs, and secretly taped meetings between regulators and the bank in an effort to prove it.  And in some ways, she has influenced the policy debate more than you'd think any low level, very briefly employed bank examiner would, so she's already won something.

She lost her whistleblower suit, but that's not even a huge indictment of her.  She lost it because she tried to pull herself within the confines of the bank whistleblower statute by alleging that the Fed, and her supervisors (and her), were performing a service for the FDIC when they examined Goldman Sachs. The statute says, in the court's words, "if an individual is subject to liability under this statute, he or she must be '[a] person who is performing, directly or indirectly, [a] function or service on behalf of the [FDIC]."  The court said that it was "frankly silly" to suggest that Fed employees were working for the FDIC.  Put that way, it sort of sounds silly.

Is it so obvious, though?  In a complaint?  The purpose of the statute is to protect whistleblowers who work at among other things "Federal reserve bank[s]" who bring information to light about "gross mismanagement" in a way which performs a service to the FDIC, which (I think, the court didn't say) might insure Goldman (but wouldn't, I guess, if it doesn't have depositors; it is a bank holding company), would be involved in any trigger of orderly liquidation authority under Title II of Dodd-Frank, and, as a voting member of the Financial Stability Oversight Council, arguably oversees SIFIs, of which Goldman is one.  Segarra alleges that Goldman Sachs didn't have a conflict of interest policy, and her job was to examine the firm for safety and soundness.  The statute is supposed to be broadly construed.  Although I haven't yet been too convinced by Segarra, her argument is plausible enough.  One judge, who maybe agreed, but may be worried about the prospect of every bank examiner reporting, quitting, and suing, once wrongdoing is uncovered uttered a terse "I concur in the result."

Segarra's lawyers don't look classy, and her damages request was nuts, but I'm not quite sure why her claim has been given the back of the hand quite so tersely, in a per curiam opinion that doesn't enjoy the the support of all three members of the court.  And do let me know if I've missed something.

Post updated to clarify the FDIC-Goldman relationship

Another update - here's the district court opinion, which is more articulate about the problems with the complaint.  Courts don't like to regulate banking supervision, and the district court depends on a conclusion that banking regulation is very informal, which would make a claim that a bank is ignoring a recommendation from supervisors not the same thing as a bank violating the law. It would have been nice if the Second Circuit had evaluated that part of the opinion, given that banking regulation is generally extremely informal.  It's not clear to me that Congress didn't want whistleblowers to police this sort of supervision.

Permalink | Finance, Financial Institutions | Comments (View) | Bookmark

September 29, 2015
icon Announcing New "Fiduciary Law" eJournal from SSRN
Posted by Gordon Smith

I am very pleased to be editing the new "Fiduciary Law" eJournal on SSRN. You can see a first cut at the papers in the journal here, and you can subscribe to the journal here. Below is a description of the contents of the journal and a list of our amazing Advisory Board!


Description: The Fiduciary Law eJournal includes working and accepted paper abstracts relating to fiduciary law in myriad private and public contexts. Fiduciary principles govern a remarkably broad and diverse set of relationships, offices, and institutions. They govern a wide array of professional relationships, including interactions between lawyers and clients, doctors and patients, and investment advisors and clients. They also underlie basic legal categories of relationship, including agency, trusts, and partnerships. They are the basis on which most private and public offices are held and executed. Not incidentally, they provide the core governance framework for the administration of private and public organizations, from corporations, charities, and hospitals to universities and school boards. Both U.S. political theory and international legal theory also share a rich tradition of employing fiduciary principles to explain and justify the exercise of state authority. Cutting across many varied fields of legal studies, the eJournal is designed to serve a cross-indexing function for legal scholars interested in fiduciary law, with the ultimate objective of stimulating communication and cross-fertilization. The eJournal welcomes a broad range of methodological approaches, including those drawn from economics, history, philosophy, political science, psychology, and sociology.

Advisory Board
William Donald Bain Family Professor of Corporate Law, Washington and Lee University School of Law

Professor of Commercial and Company Law, University of Luxembourg, European Corporate Governance Institute (ECGI)

Professor of Equity and Trusts, University of Sydney Faculty of Law

Professor of Law, William & Mary Law School

Professor of Law, UNSW Australia - Faculty of Law

David F. Cavers Professor of Law, Duke University School of Law

Allen & Overy Professor of Corporate Law, University of Oxford Faculty of Law, European Corporate Governance Institute (ECGI)

Michaels Faculty Research Scholar Professor of Law, Boston University School of Law

Bruce W. Nichols Visiting Professor of Law, Harvard Law School, Professor of Law, DePaul University College of Law

Professor of Law, Attorney at Law (New York), Humboldt University of Berlin - Faculty of Law

Senior Lecturer, Melbourne Law School

Associate Professor of Law, McGill University Faculty of Law

Reader in Private Law, King's College London, King's College London – The Dickson Poon School of Law

John L. Gray Professor of Law, Harvard Law School

Sir William C. Macdonald Professor of Law, McGill University, Faculty of Law, Paul-André Crépeau Centre for Private and Comparative Law, Professor of Private Law, King's College London - The Dickson Poon School ofLaw

Associate Professor of Law (with tenure), University of Notre Dame

Permalink | Fiduciary Law | Comments (View) | Bookmark

September 28, 2015
icon Conference: Contract, Status, and Fiduciary Law
Posted by Gordon Smith


I am very pleased to be writing a paper for this conference:

The McGill University Faculty of Law is pleased to announce the forthcoming conference - Contract, Status, and Fiduciary Law – to be held at McGill on 6-7 November 2015. The conference will feature papers by leading legal theorists exploring philosophical questions concerning relationships between contract law, moral and legal conceptions of status, and fiduciary law. The conference is being convened by Professors Paul B. Miller (McGill University) and Andrew S. Gold (DePaul University / Harvard University). A conference volume edited by Professors Miller and Gold will be published by Oxford University Press in 2016.

A conference schedule, list of presenters, and additional details may be found here

Permalink | Fiduciary Law | Comments (View) | Bookmark

icon Law and Entrepreneurship Association Call for Papers
Posted by Gordon Smith

The tenth annual meeting of the Law and Entrepreneurship Association (LEA) will occur on January 22-23, 2016 at the University of San Diego.

The LEA is a group of legal scholars interested in the topic of entrepreneurship—broadly construed. Scholars include those who write about corporate law and finance, securities, intellectual property, labor and employment law, tax, and other fields related to entrepreneurship and innovation policy.

Our annual conference is an intimate gathering where each participant is expected to read and actively engage with all of the pieces under discussion. We call for papers and proposals relating to the general topic of entrepreneurship and the law.

Proposals should be comprehensive enough to allow the LEA board to evaluate the aims and likely content of papers they propose. Papers may be accepted for publication but must not be published prior to the meeting. Works in progress, even those at a relatively early stage, are welcome. Junior scholars and those considering entering the legal academy are especially encouraged to participate.

To submit a presentation, email Professor Victor Fleischer at victor.fleischer@gmail.com with a proposal or paper by November 15, 2015. Please title the email “LEA Submission – {Name}.”

For additional information, please email Professor Victor Fleischer at victor.fleischer@gmail.com.

Permalink | Law & Entrepreneurship | Comments (View) | Bookmark

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