Insider Trading Rules Need Rationalization

The current scope of the insider trading prohibition is arbitrary and unrationalized. Both sides in the debate should be able to agree on this, as the current scope is at the same time both underinclusive and overinclusive. On the one hand, if a thief breaks into your office, opens your files, learns material, nonpublic information, and trades on that information, he has neither breached a fiduciary duty nor “feigned fidelity” to the source and is presumably immune from insider trading liability under current law. On the other hand, if an employee of an acquiring firm seeks to test out information about a potential target with a friend at a major investor in the target and that investor later acquires more stock in the target based on that conversation, it is possible under SEC v. Obus that the employee will be deemed to have violated Rule 10b-5 on theory that he made a gift of the information, even though no payment or economic benefit is paid to the alleged tipper. This is considerably grayer behavior than that of the thief. Thus, drawing lines so that the thief escapes liability, while the inquiring employee does not, seems morally incoherent. Nor are such lines doctrinally necessary.
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Editor's Tweet: Professor John C. Coffee, Jr. discusses the current scope of the insider trading prohibition and how it can be rationalized

Why the Out-Of-Delaware Trend in Merger Litigation May Not Be So Bad

The recent discovery that corporate law litigation very often takes place in courts outside of Delaware has rattled the academic consensus that Delaware won the corporate law “race” by providing a well-managed forum staffed with expert judges willing to decide …

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Editor's Tweet: Professor Sean J. Griffith of Fordham Law discusses why the out-of-Delaware trend in merger litigation may not be so bad

Skadden on Swap Regulation: The CFTC and SEC Chart the Road Ahead

The Dodd-Frank Act authorized the CFTC and the SEC to develop comprehensive regulations for swap transactions and security-based swaps, respectively. Considering swaps generally were unregulated before Dodd-Frank, the CFTC and the SEC have been writing for two years on a …

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Editor's Tweet: Skadden discusses the road ahead for swap regulation

Wachtell Lipton Discusses Recent Decisions Stressing Potential Disclosure-Based Litigation Claims

With the 2013 proxy season now well underway, two recent decisions emphasize the potential litigation risks public companies face under federal and state disclosure law. These decisions highlight the need for companies to focus on disclosure requirements as they prepare …

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Editor's Tweet: Wachtell Lipton Discusses Recent Greenlight and Symantec decisions

Market Structure Reform: A Suggested Agenda for Mary Jo White

A series of rule changes begun under former SEC Chairman Arthur Levitt are largely responsible for turning deep, centralized, and diverse pools of liquidity for trading stocks into our current fragmented market structure.

Today’s market now includes thirteen stock exchanges …

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Editor's Tweet: Joe Saluzzi and Sal Arnuk, authors of the recent book, Broken Markets, suggest an SEC agenda for market structure reform.

Mutual Fund Sales Notice Fees: Are a Handful of States Unconstitutionally Exacting $200 Million Each Year?

My recent article, Mutual Fund Sales Notice Fees: Are a Handful of States Unconstitutionally Exacting $200 Million Each Year? appearing in the current issue of the Hastings Constitutional Law Quarterly, examines the constitutional validity of the notice filing fees paid …

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Editor's Tweet: Dechert's David M. Geffen discusses his recent article on the constitutionality of mutual fund sales notice fees.

Shareholders Need Robust Disclosure to Exercise Their Voting Rights as Investors and Owners

In the next few months, thousands of public companies will hold their annual shareholder meetings. I would like to take this opportunity to emphasize the importance of robust proxy disclosure to shareholders and to highlight areas in which the disclosure …

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Editor's Tweet: SEC Commissioner Aguilar discusses why shareholders need robust disclosure to exercise their voting rights

Regulatory Competition and Anticorruption Law

My paper, Regulatory Competition and Anticorruption Law, which was recently published in the Virginia Journal of International Law, responds to arguments that the recent increase in European enforcement of anti-bribery laws has created a risk of overenforcement. Critics of …

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Editor's Tweet: Professor Paul Stephan of UVA law discusses international bribery rules and the dynamics of regulatory competition.

No-Shops & Fiduciary Outs: A Survey of 2012 Public Merger Agreements

One of the fundamental tenets of corporate law is that boards of directors owe fiduciary duties to the corporation and its stockholders. In the context of a sale of the corporation, these duties may require a board of directors to …

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Editor's Tweet: Gibson Dunn releases a survey of 2012 Public Merger Agreements, including an examination of many provisions at the center of negotiations.

Why Buckley v. Valeo May Solve the CFPB’s Most Pressing Dilemma

On January 25, the D.C. Circuit issued a controversial decision in the Noel Canning case.[1]  The Court invalidated three of President Obama’s recess appointments to the National Labor Relations Board after finding that the President overreached in making the …

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Editor's Tweet: Jason W. Parsont of Columbia Law explains why Buckley v. Valeo may solve the CFPB’s most pressing dilemma

The Value of Lawyer-Directors in Public Corporations

The accepted wis­dom is that a lawyer who repre­sents herself—by acting as both a lawyer and a director—has a fool for a client.  In our working paper, Lawyers and Fools: Lawyer-Directors in Public Corporations, my co-authors, Lubomir Litov and …

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Editor's Tweet: Professor Charles K. Whitehead of Cornell Law discusses the value of lawyer-directors in public corporations

Facebook IPO derivative ruling: a cure for multiforum madness?

Every company considering an IPO owes a hearty thanks to U.S. District Judge Robert Sweet of Manhattan for his decision Wednesday to dismiss four shareholder derivative suits against Facebook board members. Sweet’s painstaking 70-page opinion includes holdings that are great …

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Editor's Tweet: Alison Frankel discusses the SDNY's Feb. 13th opinion regarding Facebook's IPO.

Wachtell Lipton Discusses Rulemaking Petition for Modernization of Section 13 Beneficial Ownership Reporting Rules

NYSE Euronext, the Society of Corporate Secretaries and Governance Professionals and the National Investor Relations Institute have jointly filed a rulemaking petition with the SEC, seeking prompt updating to the reporting rules under Section 13(f) of the Securities Exchange Act …

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Editor's Tweet: Wachtell Discusses a Rulemaking Petition Calling for Modernization of Section 13 Beneficial Ownership Reporting Rules

Seinfeld and Director Compensation: A Decision That Wasn’t About Nothing

As companies prepare for the upcoming proxy season, the recent Delaware decision in the Seinfeld case offers a cautionary note for boards as they consider director equity and incentive awards and the terms of the plans under which they are …

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Editor's Tweet: David Fox and Daniel Wolf of Kirkland & Ellis discuss the implications of the recent Delaware decision, Seinfeld.

Market Discipline: The Next Generation

My forthcoming article, Interbank Discipline, draws attention to the important role that banks play monitoring and disciplining other banks.  To understand the significance of interbank discipline, the Article proposes a new way of thinking about market discipline more generally.  …

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Editor's Tweet: Professor Kathryn Judge of Columbia Law School discusses the next generation of market discipline.

Charitable Insolvency and Corporate Governance in Bankruptcy Reorganization

Poor corporate governance is a pervasive problem in the charitable nonprofit sector. Prominent examples of mismanagement and abuse include instances of intentional misconduct, such as embezzlement and unauthorized self-dealing, and negligent conduct, such as failure to diversify the organization’s investment …

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Editor's Tweet: Professor Reid Weisbord of Rutgers Law (Newark) discusses his forthcoming article on Charitable Insolvency and Corporate Governance.