Two summers ago, a group of well-known law professors (no Glommers) submitted a proposal to the SEC to require disclosure of political contributions by Exchange Act filers.  The arguments for new rulemaking were valid and persuasive:  investors are increasingly interested in the political contributions corporations make; even a diligent investor would have a difficult time finding this information independently; many corporations voluntarily disclose such information; and disclosure rules have historically evolved to require disclosure in various areas.

Wedneady, the NYT ominously declared that "S.E.C. officials have indicated that they could propose a new disclosure rule by the end of April, setting up a major battle with business groups that oppose the proposal and are preparing for a fierce counterattack if the agency’s staff moves ahead."  That sounds very dramatic.  The article reports that half a million comments have been submitted to the proposal; I did not count, but you can try here.  The NYT also reports that the majority of the comments are in favor of the proposal; again, feel free to count yourself!

The proposal's authors are correct in stating that investors want to know this information.  On the SEC website, I searched for 14a-8 shareholder proposals that related to political activities and came up with many requests from companies to exclude proposals relating to political contributions and lobbying activities.  In March alone, the SEC responded to requests for no-action letters relating to excluding political contribution proposals from Target; CVS Caremark (no letter given); Western Union (no letter given); Bank of America (no letter given); JP Morgan (included voluntarily); Goldman Sachs (no letter given); Bristol-Myers; Exxon-Mobil (proposal withdrawn); and CBS Corp. (shareholder ineligible).  According to this post on the HLS Forum on Corporate Governance and Financial Regulation,  this Spring has seen a "renewed blitz of resolutions on corporate campaign finance, particularly indirect lobbying activities, following the record spending in the 2012 election cycle."

But, as the NYT not-so-subtly-hints, a lot of groups, perhaps groups that receive the monies, vehemently oppose the bill, including Americans for Prosperity, the U.S. Chamber of Commerce, the American Gaming ASsociation, the National Retail Federation, and the National Mining Association.  The arguments against, though, just aren't that compelling.  As you might imagine, saying "our shareholders don't need to know this" or "we don't want our shareholders to know this because then they might sell" doesn't sound very good. 

One argument is that the amount of money involved is "immaterial to the company's bottom line."   I have two responses.  First, executive compensation may be immaterial to the company's bottom line, at least the top 5 compensated that are disclosed under Item 402.  Second, in reading the requests for no-action letters from companies that want to exclude shareholder proposals for political activity disclosure, no company cited 14a-8(i)(5), which allows proposals to be excluded if amounts "account for less than 5 percent of the company's total assets" or "net earnings and gross sales" and "is ot otherwise significantly related to the company's business."  Companies moved to exclude proposals because they were vague or misleanding (i)(3) or duplicative of past, failed resolutions (i)(11).  So, I'm not convinced either that the amounts are immaterial or whether quantitative materiality is necessary.

The other argument is, of course, free speech.  I love free speech, but that argument doesn't ring true to me.  The SEC wouldn't be limiting or prohibiting political speech, just mandating that corporations tell their owners about it.  Their owners.  Now, when publicly-held corporations communicate with their owners, that information becomes public, so the mechanism is not perfect.  Not only will current and prospective owners know about political activity, but so will consumers and the public at large.  But arguing against this potential rule seems to fall under the "protests too much" category.

Finally, last Thursday, the House of Representatives passed the "Focusing the SEC on its Mission Act," to prohibit the SEC from requiring corporations to disclose information regarding political activities.  Apparently, that is the SEC's mission -- to not require corporations to disclose information regarding political activities.

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The University of Illinois College of Law and the University of Richmond School of Law invite submissions for the First Annual Workshop for Corporate & Securities Litigation. This workshop will be held on Friday, November 8, 2013, in Chicago, Illinois.

OVERVIEW: This annual workshop will bring together scholars focused on corporate and securities litigation to present their works-in-progress. Papers addressing any aspect of corporate and securities litigation or enforcement are eligible. Appropriate topics include, but are not limited to, securities litigation, fiduciary duty litigation, or comparative approaches to business litigation. We welcome scholars working in a variety of methodologies, including empirical analysis, law and economics, law and sociology, and traditional doctrinal analysis. Authors whose papers are selected will be invited to present their work at a workshop hosted by the University of Illinois College of Law in Chicago, Illinois, on Friday November 8, 2013. Local costs (lodging and workshop meals) will be covered. Participants are asked to pay for their own travel expenses. The workshop is designed to maximize discussion and feedback. All participants will have read the selected papers. The author will provide a brief introduction to the paper, but the majority of the individual sessions will be devoted to collective discussion of the paper involved.

SUBMISSION PROCEDURE: If you are interested in participating, please send an abstract of the paper you would like to present to Jessica Erickson at jerickso@richmond.edu not later than Friday, May 31, 2013. Please include your name, current position, and contact information in the e-mail accompanying the submission. Authors of accepted papers will be notified by Friday, June 28.

QUESTIONS: Any questions concerning the workshop should be directed to the organizers—Professor Verity Winship (vwinship@illinois.edu) and Professor Jessica Erickson (jerickso@richmond.edu).

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I vividly remember learning about 10b5-1 plans while in practice: they struck me then as an elegant and sensible way to insulate yourself from insider trading liability.  Even when I don't cover insider trading in Business Associations, I always make sure to mention them.  For those unfamiliar, 10b5-1 plans take the trading discretion away from corporate insiders, either by setting some type of formula or prearranged schedule for when to buy or sell company shares, or by vesting the power of decision with a third party that lacks inside knowledge.  When done correctly, this "set it and forget it" style investing works great.  "I don't know why everyone doesn't set up these plans," I tell my students every year.

Well, apparently many insiders agree--and are doing them the wrong way.  The WSJ had an article last November detailing executives setting up plans and then trading almost immediately--when they likely had material nonpublic information.  Or, rather than "setting and forgetting," modifying the plan repeatedly.  

Today's WSJ has another front page article on 10b5-1 plans, this one focusing on outside directors .  The article implies that nonexecutive directors using these plans is in itself questionable, which seems wrong to me: what's good for the goose is good for the gander, and outside directors should be able to protect their personal trading as well as insiders.  But the chief problematic examples the article cites involve directors who represent hedge funds, with the hedge fund using the trading plan and trading soon after adopting or modifying it. Take this one:

Double-Take Software... adopted a "cautious stance" about its future financial results on Oct. 27, 2009, according to securities analysts' reports at the time.

Shortly before that, the company briefed board members on its business outlook, said a person familiar with the matter. Among those briefed, the person added, was Ashoke Goswami, a general partner of ABS Capital Partners, a Baltimore-based firm that invests in small, growing companies.

On Nov. 11, 2009, ABS amended a trading plan for Double-Take shares, a change Mr. Goswami disclosed in a regulatory filing. The director then reported the sale by ABS of $3.8 million in Double-Take stock, most of it under the revised plan, in trading from mid-December through Feb. 2, 2010.

On Feb. 3, Double-Take released earnings guidance below analysts' estimates. The stock plunged 21% in a day.

Last week Brian Breheny of Skadden posted some thoughts on these plans over at the Harvard Law School Forum on Corporate Governance and Financial Regulation.  He reports that the Council of Institutional Investors recommends that the SEC

• limit the time period for adoption of Rule 10b5-1 trading plans to the issuer’s open trading window;
• prohibit the adoption of multiple, overlapping trading plans;
• require a mandatory three-month or longer delay between plan adoption and the execution of the first trade pursuant to the plan; and
• limit the frequency of modifications and cancellations of trading plans.

Skadden takes issue with some of these recommendations, but the last two make good sense to me.  3 months might be overkill, but requring a delay between adoption and first trade would prevent a lot of of gaming, as would limiting modifications.

I'm not sure where I fall on making the terms of the plans themselves public--I can see that knowing when the CEO has to sell or buy shares would be valuable information, and there might well be good reasons to keep that from the market.  In any event, I expect we'll see more and more about these plans in the future.

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From my colleagues at the University of Illinois:

The University of Illinois College of Law and the Illinois Program on Law, Behavior & Social Science are hosting the Twelfth Annual Midwest Law & Economics Association on October 11 & 12, 2013 in Champaign, Illinois. Participants need not be an economist, a Midwesterner, or a Midwestern economist. The event consists of law professors and economists presenting papers with varying degrees of law-and-economics content, ranging from empirical analyses and formal economic modeling to legal philosophy and doctrinal papers infused with economic thinking. Presentations will begin Friday morning and end early- to mid-afternoon on Saturday. There is no membership fee or registration fee, but participants should expect to pay their own expenses. A block of rooms at the iHotel has been reserved for conference participants.

To submit a presentation, e-mail Robert Lawless at rlawless@illinois.edu with an abstract or paper by August 1, 2013. Presentation invitations will be sent out by August 15, 2013. A conference schedule and RSVP information for conference meals will be circulated closer to the conference date. Hotel contact info will be posted at this web page soon. Submission is open to all, so feel free to share this announcement with colleagues.

 The website is here.

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My family and I are a little late to see Oz the Great and Powerful.  We had seen the 4D Sneak Preview at Disneyland California Great Adventure in March, which really made us want to go see it.  And, so far, Oz is the greatest grossing film of 2013.  But, after watching it yesterday, I would say our feelings were mixed.

The movie walks a fine line between the book by Frank Baum and the 1939 movie, intending to be a logical prequel to that film, explaining how Oscar Diggs from Kansas becomes the Wizard of Oz.  (This is an almost impossible task given that the 1939 film was presented as Dorothy's dream and that the Wizard in the dream was really just a snake oil salesman in 1939, but we'll go with it.  Several characters in 1905 Kansas wind up in Oz as well, though it's not presented as a dream.)  Several online have speculated that Oscar's gingham-wearing sweetheart Annie, who is giving him up to marry John Gale, is meant to be the mother of Dorothy (Gale), who somehow ends up orphaned and living with Aunt Em and Uncle Henry.  For us, the first half of the movie was sort of boring.  After the 15 minutes in black-and-white, the next half hour or so is an amazing visual spectacle.  Oz is not showing in 3D here anymore, ceding theater space to Jurassic Park 3D, I guess.  But the first half is obviously meant to be an exhibition of 3D majesty.  However, the first half does not have a compelling plot.  Also, the acting is pretty bad.  Mila Kunis as the Wicked Witch of the West is just awful, and Michelle Williams as Glinda the Good Witch of the South (not North, as in the book/movie for some reason) appears with the same noblesse oblige as the most popular girl in class being asked to be in the school play because they need the prettiest princess. 

The second half picks up a little and has a few tricks and turns that were harder to spot than the thinly veiled secrets of the first half. 

My biggest unease about the film hit me in November when I saw the trailer.  I turned to my friend and said, "Why would witches need a wizard to come and save them and their people?"  And my uneasiness grew once Glinda acknowledges that Oz is a con man but says that he might still be the man they had been waiting for.  What?  You are a witch with magical powers, but you need a carnival magician to rouse your people to fight another witch?  What kind of craziness is that?  And it gets even worse -- a neutral witch is turned into a revenge-seeking green Wicked Witch (you know who I'm talking about now) because she wants Oz to marry her but realizes that he was toying with her affections.  Huh.  I was listening to an NPR story on the L. Frank Baum books, and one of the threads was that Dorothy was a feminist character.  She bravely leads these male misfits on a successful journey and defeats a witch.  But this movie is decidedly not feminist.  Glinda is not a coward, and deals the final blow (by accident), but she's not a proactive protagonist.  She is a protector, and she does see through Oz's blustery, but in the end she is the girl the hero gets, not a heroine.

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Yesterday, attorneys for the shareholders of News Corporation announced an agreement in principle to settle derivative claims filed in various U.S. jurisdictions, including Delaware, against officers and directors of the corporation for $139 million (minus attorney fees, TBD).  The payment will be made to the corporation from the various D&O insurance policies.  The Memorandum of Understanding is here.  The amended complaint is here.  The parties agreed to file a stipulation with the Delaware Chancery Court within 14 days for approval.  Kevin La Croix's expert commentary on the D & O issues is here.

So, what were the claims?  The claims fall roughly into two big groups, both under the Duty of Loyalty:  (1) the conflicted $615 million acquisition by News Corp. of an entity owned by (controlling shareholder, CEO and Chair) Rupert Murdoch's daughter; and (2) lack of oversight related to the illegal surveillance scandal involving News Corp.'s 100% owned subsidiary, News of the World.  Sprinkled around these claims are accusations of Murdoch using the corporation as a vehicle for supporting his political agenda.  The overarching thesis of the complaint is that the board allowed Murdoch to use News Corp. for his own personal purposes:  family and political.

Historically, conflict-of-interest claims have teeth; oversight (Caremark) claims do not: waste claims don't even have a mouth.  Something here had a lot of teeth given that the parties agreed to go to mediation prior to a ruling on a motion to dismiss and given the $139 million figure.  For those of us waiting to see a winning Caremark claim, failure to oversee an ongoing pattern of illegal news-gathering activity that was well-known internally might be it.  But, we may never know if the settlement is all about the acquisition or a little bit of both.  Perhaps the oral argument for the motion to dismiss last year held some clues that the court thought the oversight claim was not going to be dimissed, at least.

The remedy section of the MOU has not only the monetary award but also positive remedial changes, such as more compliance, a compliance officer, an independent Chairman of the Board, and new definitions of "independent" for board members, etc., that might match up to oversight if the money merely lines up with the acquisition.  And, interestingly, a new "Political Activity Policy": 

2. The Company has or will implement a policy requiring annual public disclosure to its shareholders of political conributions made directly by the Company to state or local candidates, political party committees, political committees (e.g., PACs) or other political organizations exempt from federal income taxes under Section 527 of the IRC; payments to any other entity that is earmarked to be used for independent expenditures for a candidate or political party; or to a ballot measure committee. . . .

3. The Company will notify the Board (for its information and not approval) on an annual basis of payments in excess of $25,000 (including special assessments) that are not deductible under Chapter 162(e) of the IRC . . . and are. . .made to any US-based trade association, Section 501(c)(4) organization, or Section 501(c)(3) organization that coordinates directly with the Company in drafting proposed legislation or grassroots lobbying activities. . . .

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Cross-posted at SocEntLaw.

This is the first of three posts analyzing the proposed Delaware Public Benefit Corporation (“PBC”) amendments.  The posts will compare the proposed PBC amendments to the Model Benefit Corporation Legislation (the “Model”). 

In a few key areas, the PBC allows more private ordering that the Model.  Perhaps the most striking difference is that the PBC does not require a third party standard for measuring public benefit (a cornerstone requirement of the Model) unless the requirement is included in the PBC’s certificate of incorporation or bylaws (§366(c)).  In some ways, Delaware’s approach in the benefit corporation debate reminds me of how it handled the proxy access debate:  expressly allow, but leave most of the details to the individual corporations.

That said, the PBC is not as flexible as the Flexible Purpose Corporation (“FPC”) (California) or the Social Purpose Corporation (“SPC”) (Washington); the PBC requires that the PBC be operated in a “responsible and sustainable manner” (§362(a)).  That broad general statement in the proposed PBC amendments, which is not present in the FPC or SPC statutes, seems to be one of the main reasons B Lab, the primary force behind the benefit corporation movement, has expressed public support for the PBC.  Whether B Lab is completely supportive of the PBC and all its deviations from the Model is not entirely clear.

Below, I compare and contrast some of the key provisions of the Delaware’s PBC and the Model.

• Benefit Director.  PBC – not mentioned.  Model – required for public companies. (§302(a)).
• Benefit Officer.  PBC – not mentioned.  Model – optional (§304(a)).
• Benefit Report (Preparing).  PBC – no less than biennially (§366(b) & (c)).  Model – annually (§401(c)).
• Benefit Report (Public Posting).  PBC - optional (§366(c)).   Model - required to post benefit report on company website; if no website must provide the benefit report for free to anyone who asks for a copy (§402).
• Identification of Specific Public Benefit Purpose(s).  PBC – required (§362(a)).  Model – optional (§201(b)).
• Minimum Ownership for Shareholder Standing in Derivative Lawsuits.  PBC – 2%; or if the PBC is publicly traded then the lesser of 2% and $2 million in market value (§367).  Model – 2% (§305(b)(2)(i)).
• Third Party Standard.  PBC – optional (§366(c)).  Model – mandatory (§§102 & 402).
• Third Party Certification.  PBC – optional (§366(c)).  Model – optional (§401(c)). 

The only area above where the PBC is less flexible than the Model is in requiring the identification of specific public benefit purpose(s), which will be discussed in the next post on director guidance.

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The past week has been a whirlwind of tragic loss, law enforcement drama, and catharsis in the wake of the Boston Marathon bombings.  As the machinery of the U.S. criminal law system ramps up to prosecute the surviving member of the bombing team, its civil side will have to address the human suffering left in the bombers' wake.

The torts system theoretically provides victims with a compensation scheme when bad actors harm them, but here, as happens regularly, the personal wealth of the bad actors will be woefully insufficient and any insurance, unavailable or nonexistent.  For recent mass tragedies, particularly politically heartbreaking ones, federal or state governments have created funds to help fill this vacuum.  The 9/11 Compensation Fund was the largest and most notable, but smaller ones were created after the Virginia Tech tragedy (by the State of Virginia) and the Aurora, CO shooting (state of CO and private donations).  One Fund Boston (city, state and private donations) promises to dwarf the latter two.  Ken Feinberg, compensation fund master of many of these past funds, including the BP fund, will oversee OFB.

The torts system generally calculates compensation in two ways.  For those who are killed by intentional acts, by replacing the future economic income stream of that person for dependents.  This is a morally chilling calculation and one that torts students are reluctant to embrace.  For those who are injured, torts damages try to reimburse past and future out-of-pocket costs for medical expenses, lost wages and limitations to daily activities.  For the severely injured, these costs/damages can be extraordinarily large.  For those who are killed, these damages can be small (of the three killed at the marathon, two had no income or dependents and one was a restaurant manager).  Compensation funds have veered from "the shadow of torts,' probably because of a finite pool of money and political considerations.  Funds may be less generous, by considering effects of private insurance and pensions (a proposal for the 9/11 Fund, which did not last long) or by excluding victims with merely emotional harm, though severe.  Funds may also be more generous, by establishing minimum payouts, even for those with lesser physical injuries or for deaths of those with no income (such as the Virginia Tech students or child victims).  Funds must balance traditional legal theories of bad actor-funded compensation with political realities of back-stop fund compensation.

One Fund Boston introduces two new wrinkles to fund compensation.  First, many of the injured were residents of Massachussetts and covered by "Romneycare."  If the fund chooses a "backstop" approach, then much of at least the initial care would be covered by insurance.  Fourteen victims lost limbs, so we will see how much of these extraordinary costs will be covered by insurance.  Second, many of those with grievous injuries have already set up there own funds and are raising large amounts of money.  The NYT article on OFB today mentions one site up by alumni of Lawrence Academy for the White family (three injured), which has raised over $58,000.  The Corcoran family, who saw the mom lose both legs and a daughter who was injured in the leg, has a site that has raised ten times that amount ($589,000) on their site.  As an improvement to fund compensation, these victims have instant access to these funds, though the donors would not seem to have a charitable deduction available.  However, I wonder about whether victims who are more telegenic, web-articulate, or networked have an advantage in attracting donations from strangers that might have gone into a general fund.  Corporate donations seem to be headed toward OFB, but individuals like to bypass bureaucracy and give directly to those they feel a connection to, so the success of these funds is understandable.  However, I wonder whether under a backstop theory of compensation, these funds should be deducted from payouts from a general fund.

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The SEC just announced that it would split the post of enforcement chief between two lawyers, both alumni of the US Attorney's Office at the SDNY.  I've never heard of such an arrangement outside of the Roman Empire; why do it?

Conflict of interest.  One of the enforcement directors worked closely with Mary Jo White at her New York firm; the other one can handle Debevoise cases until they age out of the problem.  Which means that this does not need to be a permanent arrangment, and perhaps fittingly, the conflict enforcement chief plans on leaving reasonably soon.

But it is also a statement about how such problems come up more the closer you get to the top of an agency.  Mary Jo White is hardly the first appointee to bring her favorite person at her law firm along for the ride.  But special assistants and assistant deputies are easy to wall off; it used to be that there was only one enforcement director.

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A little Friday reading:

Via CLS Blue Sky Blog, Lawrence Cunningham on the wily Oracle of O vs. Modern Finance Theory:

Threatened by Buffett’s performance, stubborn devotees of modern finance theory resorted to strange explanations for his success. Maybe he is just lucky—the monkey who typed out Hamlet— or maybe he has inside access to information that other investors do not. In dismissing Buffett, modern finance enthusiasts still insist that an investor’s best strategy is to diversify based on betas or dart throwing, and constantly reconfigure one’s portfolio of investments.

Buffett responds with a quip and some advice: the quip is that devotees of his investment philosophy should probably endow chaired professorships at colleges and universities to ensure the perpetual teaching of efficient market dogma; the advice is to ignore modern finance theory and other quasi-sophisticated views of the market and stick to investment knitting. That can best be done for many people through long-term investment in an index fund. Or it can be done by conducting hard-headed analyses of businesses within an investor’s competence to evaluate. In that kind of thinking, the risk that matters is not beta or volatility, but the possibility of loss or injury from an investment.

And NYT's Deal Professor, Steven Davidoff, tells a gripping tale of hedge fund vs family hegemony playing out in Maryland's courts.  CommonWealth REIT is controlled by the Portnoy family, which has made a pretty penny in the process, and 2 hedge funds are trying to get it to change its ways.  

First, the story has implications for the future of shareholder arbitration provisions.  I knew the SEC objects to these puppies at IPO, but didn't think that a board might turn around post-IPO and and adopt amend the bylaws to require arbitration to resolve disputes with shareholders.  Shady.  But apparently that's what happened at CommonWealth REIT.  

And there's more to the story.  

On March 1, CommonWealth’s board passed a bylaw amendment that purports to require that any shareholder wishing to undertake a consent solicitation must, among other things, own 3 percent of the company’s shares for three years. This is an extremely aggressive position that if upheld would stop Corvex and Related in their tracks.

Not satisfied with this attempted knockout blow, CommonWealth appears to have lobbied the Maryland Legislature to amend the Maryland Unsolicited Takeover Act. This law allows companies to have a mandatory staggered board.

CommonWealth already has such a board, but the company has also reportedly lobbied the legislature to make a change that companies opting into this statute would now be unable to have their directors removed by written consent. Again, this would kill Corvex and Related’s campaign. When the two funds got wind of this, they fought back, and the Maryland legislature adjourned without adopting CommonWealth’s proposal.

CommonWealth still announced this week that it had opted into the act. The REIT is claiming that even though the Maryland Legislature did not adopt any amendment, the law still implicitly has this requirement. The funds will now have to sue CommonWealth to force them to change their interpretation.

Go read the whole thing.  Some wacky shenanigans from my home state.  If it does come down to arbitration I'd love to see CommonWealth's arbitrator, allegedly a friend of its controlling family, go toe to toe with the hedge funds' choice-- former Delaware Chancellor Bill Chandler.  

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Thanks to Usha for asking me to guest blog about the proposed Public Benefit Corporation amendments to Delaware’s General Corporation Law.  This summer one of my planned projects is writing an article tentatively entitled Governing Public Benefit Corporations, and I will be floating some of my early ideas here.  Comments will be appreciated.

On March 20, I mentioned the proposed Delaware Public Benefit Corporation (“PBC”) amendments on the Social Enterprise Law Blog (“SocEntLaw”)* shortly after I received word from Professor Brian Quinn and some of my friends in Delaware.  Last week, both Usha and Stephen Bainbridge added thoughtful posts about the PBC.

For this guest blogging stint, I plan on authoring three additional posts, starting next week.  Each post will compare and contrast the proposed PBC amendments with the model benefit corporation legislation.  The twelve states that currently have benefit corporation statutes follow the structure and main provisions of the model legislation without too much variation.  (The variations can be seen in my chart that Usha mentioned).  Delaware, however, cuts its own path.  In the three posts, I will focus on private ordering, director guidance, and brand strength.

* I will cross-post my guest posts on the Conglomerate at my permanent blogging home over at SocEntLaw.  Last year, Cass Brewer (Georgia State), Deborah Burand (Michigan), Alicia Plerhoples (Georgetown), Dana Brakman Reiser (Brooklyn), a handful of practicing attorneys, and I (Regent) joined social enterprise lawyer Kyle Westaway (who is a Regent Law alum and a Lecturer on Law at Harvard Law School) at his blog.  We welcome any and all readers. 

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We have received an enthusiastic response to the Call for Papers for the National Business Law Scholars Conference, scheduled for June 12-13, at The Ohio State University School of Law.  We will have additional openings for anyone who would like to make a presentation but has not yet responded.  Thus, we have extended the deadline to MAY 31st.  See the Call for Papers, reposted below with the extended deadline date, for details on how to submit:

National Business Law Scholars Conference: Call-for-Papers

The National Business Law Scholars Conference (NBLSC)  will be held on Wednesday, June 12th and Thursday, June 13th at The Ohio State University Michael E. Moritz College of Law in Columbus, Ohio.  This is the fourth annual meeting of the NBLSC, a conference which annually draws together dozens of legal scholars from across the United States and around the world.  We welcome all on-topic submissions and will attempt to provide the opportunity for everyone to actively participate.  Junior scholars and those considering entering the legal academy are especially encouraged to participate.

To submit a presentation, email Professor Eric C. Chaffee at echaffee1@udayton.edu with an abstract or paper by MAY 31, 2013.  Please title the email “NBLSC Submission – {Name}”.  If you would like to attend, but not present, email Professor Chaffee with an email entitled “NBLSC Attendance”.  Please specify in your email whether you are willing to serve as a commentator or moderator.  A conference schedule will be circulated in late May.

Conference Organizers:

Barbara Black (University of Cincinnati)
Eric C. Chaffee (University of Dayton)
Steven M. Davidoff (The Ohio State University)

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Promontory, the consultancy firm for banks in distress, is the place you go if you are a senior regulator and you want to cash out.  Eugene Ludwig, its founder and the former OCC head, makes $30 million per annum, way more than CEOs of banks with actual branches and loans and so on.  His subordinates include a raft of Obama first termers confirmed by the Senate.

Felix Salmon thinks that this means that Promontory needs to be regulated.  But I think that the firm's services are bought for two reasons. One - the bad old Washington lobbyist one - is to try to get the regulators to lay off.  But the other - the government alumni promotes law observance one - is to concede that the regulators might lay off if you implement some reforms, and hire some people who can tell you what those reforms need to be, and how to sell them to the government.

That means that the strange thing about Promontory - and it is strange - is that it is so, so profitable.  Washington lobbyists look at seven figure salaries with awe.  Eight figures?  Hard to even parse.  The gap between SEC deputy director and Promontory executive is stunning when the competition amounts to law firms and Ernst & Young.  In the next set of Promontory stories, I'd like to see more about how all of the money is made.

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• If you haven't seen Steven Davidoff's discussion of the amusingly active trading in dead people walking stocks Fannie Mae and Freddie Mac, you'll want to give it a look.
• Continuing the international law theme around here, Kent Greenfield, along with Judge Nancy Gertner, have filed a brief in the shareholder suit against Hershey accusing it of tolerating child labor, and seeking inspection.  They argue that 
  • The reality of chocolate production in western Africa, linked with the dominant role of defendant Hershey corporation in the world chocolate market, gives rise to a more-than-reasonable presumption that Hershey is toward the top end of the continuum of accountability for illegal acts, providing a more than “credible basis” for the shareholder plaintiff’s claim for inspection. 
• Here's a nice wrap of the DC Circuit's resolution of the dispute between the CFTC and FERC over whether FERC could impose fines for manipulation of the energy futures market.  The answer is, despite FERC's increasing efforts as a financial regulator, no.

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