Coffee

The Marketplace of Ideas: Professor Coffee and Brandon Gold on the Wachtell Bylaw

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The CLS Blue Sky Blog presents its first installment of our new series, entitled “The Marketplace of Ideas.”  The intent is to present different perspectives on the same subject by two or more authors.

Today, Professor John C. Coffee, Jr. …

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Editor's Tweet: Introducing "The Marketplace of Ideas" Professor Coffee and Brandon Gold offer different views on the Wachtell Bylaw

The Challenge of the Semi-Public Company

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Something new and significant is taking shape. For a variety of reasons—the impact of the JOBS Act, the growing popularity of equity private placements, the appearance of new trading markets for venture capital and other non-reporting companies—a new tier of companies is growing rapidly that is composed of issuers that are not "reporting" companies, but that do have a significant number of shareholders. In terms of the size of their shareholder class, these companies overlap with public companies, but they trade in the dark—and actively. More importantly, as their number grows, it is predictable that existing and new trading venues will begin to compete to attract and capture the trading interest in these stocks. This column will call these firms "semi-public companies" to reflect their intermediate status, midway between truly private firms (such as early stage venture capital startups and family-held firms) and public companies.
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Editor's Tweet: Professor John C. Coffee, Jr. of Columbia Law School discusses the Challenge of the Semi-Public Company.

M&A Litigation: More and More Dysfunctional

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Empirical scholars of corporate law are uncovering a rapidly changing and depressing pattern in M&A litigation. This new research dates from a series of articles in 2012 by Professors John Armour, Bernard Black and Brian Cheffins, which announced that Delaware …

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Editor's Tweet: Professor John Coffee of Columbia Law School discusses M&A Litigation and its increasing dysfunctional

Insider Trading Rules Need Rationalization

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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

Gone With the Wind: Small IPOs, the JOBS Act, and Reality

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A dramatic reversal occurred in the capital markets, beginning around 2000, and its causes and implications appear to have been widely misunderstood. From 1980 to 2000, an average of 310 operating companies did initial public offerings (IPOs) each year, but …

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Editor's Tweet: Professor Coffee discusses small IPOs, the JOBS Act, and reality. He suggests some alternative explanations for the decline of the IPO.

Should the SEC hire bounty-hunters?

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The majority of pundits and market observers have only tuned into the effectiveness of the SEC as financial market regulator since 2008, when the financial system nearly collapsed. So far, criticism has been relatively shallow. But when one of the …

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Editor's Tweet: Is Professor John Coffee suggesting bounty-hunters to improve SEC enforcement? Cate Long of Reuters comments on the ongoing debate.

SEC enforcement: What has gone wrong?

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A disturbingly persistent pattern has emerged in U.S. Securities and Exchange Commission enforcement cases that involves three key elements: (1) The commission rarely sues individual defendants at large financial institutions, settling instead with the entity only; (2) when it does …

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Editor's Tweet: Professor John C. Coffee Jr. of Columbia Law School opines on the problem of SEC enforcement. Could the private bar be a solution?

Bipartisan Policy Center Urges Consistency in Implementation of the Volcker Rule

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Today, the Bipartisan Policy Center’s Financial Regulatory Reform Initiative working group on Capital Markets and the Volcker Rule sent a letter to the Treasury Department and the five federal financial regulators tasked with adopting Volcker Rule regulations. The letter responds …

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Editor's Tweet: Bipartisan Policy Center Urges Consistency in Implementation of the Volcker Rule

The Political Economy of Dodd-Frank

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For a number of years, commentators have noted that securities “reform” legislation seems to be passed only in the wake of major stock market crashes, with this pattern dating back to the South Sea Bubble. Some have argued that this …

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Editor's Tweet: Professor John C. Coffee, Jr. of Columbia Law School discusses why financial reform tends to be frustrated and systemic risk perpetuated