Sky Blog
Public companies face a wide range of legal claims, yet the Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC) have questioned whether public companies provide sufficient disclosure to warn investors of potential losses from these claims. …
When a company signs a contract containing a forum selection clause, it is clearly bound by that provision. But what about its parent company? Its subsidiaries? Its affiliates? Are these non-parties likewise bound by the forum selection clause?
The answer …
The explosive growth in Special Purpose Acquisition Companies (“SPACs”)[1] is starting to generate significant amounts of litigation. Scores of civil lawsuits have been filed against SPAC sponsors and/or their directors and officers since the start of 2020, with more …
Many corporate law scholars watched in amazement as merger litigation exploded over the past 15 years. In 2005, only 37 percent of mergers involving U.S. public companies and with a transaction size of at least $100 million were challenged in …
Can silence solve problems that words cannot? The Securities and Exchange Commission (SEC) hopes so, because this premise underlies the confidential filing provision of the Jumpstart Our Businesses (JOBS) Act. But how firms benefit from confidential filings remains unclear, complicating …
Does regulation deter insider trading? This has been a controversial question, with mixed empirical findings. One set of studies finds that insider trading regulations have been effective in reducing the frequency and profitability of opportunistic trades (e.g., Agrawal and Jaffe …
Securities class actions may deter financial misreporting and flawed disclosure, but how effective are they at deterring managers from taking actions that sacrifice long-term value for higher profits? In a recent paper, we uncover a novel mechanism that extends the …
The most significant securities decision to be handed down in the first half of 2019 came from the Supreme Court in Lorenzo v. SEC, which clarified the scope of “scheme liability” under Rule 10b-5(a) and (c). Another significant ruling …
Although states stand to earn significant revenue from developing a system of corporate law and encouraging companies to incorporate under it, most tend not to make the necessary investments. That may be perfectly rational. After all, a state may not …
Lord Denning, a highly quotable British judge, once remarked:
“As a moth is drawn to the light, so is a litigant drawn to the United States.”[1]
Some reasons for this strong attraction are obvious: (1) the U.S. (and only …
Shareholder litigation is an important way for shareholders to affect corporate governance. Legal protection of shareholders can mitigate agency problems that arise from the separation of ownership and control. In particular, litigation enables shareholders to deter and find remedies for …
In a recent series of landmark decisions, the Delaware Supreme Court has constructed an orderly doctrinal framework designed to reduce wasteful post-closing merger litigation. These cases recognize that the market’s judgment is usually sound and that the costs of intensive …
While external whistleblowing—reporting misconduct to regulators or members of the media— has captured much attention, the impact of reporting misconduct anonymously to management, known as internal whistleblowing, is relatively unknown. Our new study, Evidence on the Use and Efficacy of …
Protecting against data breaches, hacks and cyber threats is an unwelcome but necessary reality for businesses today. In addition to vigilantly guarding against attacks, companies must consider the possibilities of litigation and investigations that can stem as a result of …
In a forthcoming article, I contend that Professor James Spindler has it wrong in his recent critique[1] of scholarly opposition to securities fraud class actions (SFCAs). Spindler argues that the opposition is based on two mistaken ideas: (1) that …
Close to 40 percent of all companies listed on major U.S. stock exchanges have been targeted by a securities class action lawsuit at least once between 1996 and 2017, according to the Stanford Securities Class Action Clearinghouse. These lawsuits are …
Securities class actions soared in 2017, jumping from 271 filings in 2016 to a near record 412 filings in 2017 — well above the average of 193 per year for the years 1997 to 2016.[1] Only 2001 was comparable, …
Global M&A accelerated in the fourth quarter of 2017, driven in part by tech expansion and strong economies in several key markets, and there are many signals pointing to a continued strong pace of transactions, including in the U.S. Overall …
An August 21 blog post, “Shareholders Deserve Right to Choose Mandatory Arbitration,” by Professor Hal S. Scott, argues that the introduction of mandatory arbitration clauses into corporate charters would be good for stockholders. Nothing could be further from the truth.…
On July 17, SEC Commissioner Michael Piwowar extended an important invitation to U.S. public companies. “For shareholder lawsuits,” Piwowar offered, “companies can come to [the SEC] to ask for relief to put… mandatory arbitration into their charters.” To some, this …