How a Uniform Disclosure Regime Would Empower Benefit Corporations

Benefit corporations[1] are free to pursue profit and purpose.[2]  That is to say, each benefit corporation is free to focus on good acts, defined as those acts that have “a material positive impact on society and the environment.”[3]  One high profile benefit corporation is Patagonia.  While Patagonia pursues profit for its owners, it is also committed to using a substantial amount of its revenue to help the environment.[4]  Patagonia spends large sums of money on renewable raw materials (when non-renewable raw materials would be cheaper) and even donates cash outright to environmental nonprofits.

The Problem with

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Force Fannie Mae to Disclose Information About Its MBS

The following post comes to us from Brent J. Horton, Associate Professor at Fordham University’s Gabelli School of Business. It is based on his recent paper entitled For the Protection of Investors and the Public: Why Fannie Mae’s Mortgage-Backed Securities Should be Subject to the Disclosure Requirements of the Securities Act of 1933,” which is forthcoming in the Tulane Law Review and is available here

Increased risk-taking at Fannie Mae in the years preceding the financial crisis led to massive losses for the company, and unfortunately, a $116 billion taxpayer bailout in 2008.  The back story: from 2002-2007, … Read more

How Pressure on the Issuers of Private-Label Mortgage-Backed Securities Can Improve the Accuracy of Credit Ratings

The following post comes to us from Brent J. Horton, assistant professor at Fordham University Gabelli School of Business.

In my recent Article, Toward a More Perfect Substitute: How Pressure on the Issuers of Private-Label Mortgage-Backed Securities Can Improve the Accuracy of Ratings,[1] which is scheduled to be published in Volume 93 of the Boston University Law Review this winter,[2] I propose a burden shifting procedure that will force issuers of private-label MBS to take ownership of the ratings incorporated into their registration statement (e.g., Aaa, Baa3)—specifically, the accuracy of those ratings. The issuers will … Read more

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The Going-Private Freeze-Out: A Unique Danger for Investors in Publicly Traded Delaware LPs and LLCs

The following post comes to us from Brent J. Horton, assistant professor at Fordham University Gabelli School of Business.

In my recent article, The Going-Private Freeze-Out: A Unique Danger for Investors in Delaware Non-Corporate Business Associations,[1] I examine the agreements of 86 publicly traded, non-corporate business associations (i.e., limited partnerships (“LPs”) and limited liability companies (LLCs)) for provisions that modify the fiduciary duties of management in the context of going-private freeze-outs.

One danger of investing in a public company—whether in the corporate or non-corporate context—is the going-private freeze-out.  In such a transaction, public ownership is eliminated—“cashed-out”—and … Read more

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