Author Archives: Harvard Law School Forum on Corporate Governance and Financial Regulation

Understanding the Failures of Market Discipline

Last week, James Kwak (UConn law professor, co-author of 13 Bankers and White House Burning, and blogger at the Baseline Scenario) provided a nice writeup of some of the key issues I identify in my paper, Understanding the Failures of Market Discipline, recently posted to SSRN. But I wanted to take a few words to […]

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Toward a Constitutional Review of the Poison Pill: A Reply to Wachtell Lipton

We recently placed on SSRN a draft of a new paper, Toward a Constitutional Review of the Poison Pill, which will be published by the Columbia Law Review in the Fall of 2014. Last week, six senior partners of the law firm of Wachtell, Lipton, Rosen & Katz, including founding partner Martin Lipton, published a […]

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Delaware Court Endorses Business Judgment Review in Controlling Stockholder Mergers

The Delaware Supreme Court today affirmed that a going-private transaction may be reviewed under the deferential business judgment rule when it is conditioned on the approval of both a well-functioning special committee and a majority of the minority stockholders. Kahn v. M&F Worldwide Corp., No. 334, 2013 (Del. Mar. 14, 2014). As described in our […]

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SEC v. Contorinis: SEC gets Powerful New Tool—For Now

The Second Circuit Court of Appeals has broadened the Securities and Exchange Commission’s power to seek civil disgorgement of profits from insider trading violations even where an individual did not personally profit from the illegal trades. In its panel opinion in SEC v. Contorinis, decided on February 18, the Second Circuit upheld a trial court […]

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Supreme Court Hears Arguments in Halliburton

On March 5, 2014, the U.S. Supreme Court heard oral argument in Halliburton Co. v. Erica P. John Fund, Inc., No. 13-317, which presents whether to overrule or significantly limit plaintiffs’ ability to rely on the legal presumption that each would-be class member in a securities fraud class action relied on the statements challenged as […]

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Fixing Merger Litigation

In the US, every M&A deal of any significant size generates litigation. The vast majority of these lawsuits settle, and the vast majority of these settlements are for non-pecuniary relief, most commonly supplemental disclosures in the merger proxy. The engine that drives this litigation is the concept of “corporate benefit.” Under judge-made law, litigation that […]

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A Response to Bebchuk and Jackson’s Toward a Constitutional Review of the Poison Pill

In a recent paper, Professors Lucian Bebchuk and Robert Jackson have extended Professor Bebchuk’s extreme and eccentric campaign against director-centric governance into a new realm—that of the Constitution of the United States. They claim that “serious questions” exist about the constitutionality of the poison pill—or, more precisely, “about the validity of the state-law rules that […]

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Remarks on the Halliburton Oral Argument (3): The Consistency of a Fraudulent Distortion Approach with Not Resolving Merit Issues at Class Certification

As we discussed in our first two posts, the Halliburton oral argument (transcript available here), provided encouraging signs that a number of the Justices might choose to avoid making a judgment on the state of efficient market theory and to focus on the presence of fraudulent distortion (sometimes also referred to as price impact). In […]

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Do-It-Yourself Activism

Many corporate executives and board members view activist investors as little more than bullies with calculators: they seem to hunt in packs, force disruptive and risky changes, and use simplistic benchmarks as their call to action. Yet their ranks have grown rapidly, and activist investors now attack even the largest and most successful companies. Worldwide, […]

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Remarks on the Halliburton Oral Argument (2): Implementing a Fraudulent Distortion Approach

In our first post on the Halliburton oral argument (transcript available here), we discussed the encouraging signs that a number of the Justices might choose to avoid making a judgment on the state of efficient market theory and to focus on the presence of fraudulent distortion (sometimes also referred to as price impact). In this […]

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