Preemption and Federalism in Corporate Governance: Protecting Shareholder Rights to Vote, Sell, and Sue

Thompson examines the changed roles of the state and federal governments since the enactment of the Securities Litigation Uniform Standards Act of 1998. He notes that these changes have created a greater dependence on federal law, a greater emphasis on the voting function of shareholders, and the likelihood of additional argument over traditional corporate issues

The Case for Iterative Statutory Reform: Appraisal and the Model Business Corporation Act

Appraisal may be the Model Business Corporation Act\u27s (MBCA) most distinctive and creative corporate law product in its sixty year history. Through a series of changes, beginning in the late 1970s and early 1980s, and continuing through revisions in 1999 and 2006, the MBCA has shown the value that can come from an ongoing revision process of corporate law. Thompson examines the challenges that have long plagued appraisal statutes, and then evaluating the product that has resulted from the MBCA approach

Anti-Primacy: Sharing Power in American Corporations

Prominent theories of corporate governance frequently adopt primacy as an organizing theme. Shareholder primacy is the oldest and most used of this genre. Director primacy has grown dramatically, presenting in at least two distinct versions. A variety of alternatives have followed—primacy for CEOs, employees, creditors. All of these theories can’t be right. This article asserts that none of them are. The alternative developed here is one of shared power among the three actors named in corporations statutes with judges tasked to keep all players in the game. The debunking part of the article demonstrates how the suggested parties lack legal or economic characteristics necessary for primacy. The prescriptive part of the article suggests that we can better understand the multiple uses of primacy if we recognize that law is not prescribing first principles for governance of firms, but rather providing a structure that works given the economic and business environment in place for modern corporations where there is separation of function and efficiencies of managers as a starting point. Thus the familiar statutory language putting all power in the board must be read against the reality of the discontinuous nature of the board (and shareholder) involvement in governance. Corporate governance documents of the largest American corporations, as discussed in the article, are consistent with this reality, assigning management to officers and using verbs like oversee, review and counsel as the director functions. The last part examines dispute resolution and the role of judges in such a world, with a particular focus on the shareholder/director boundary. At this boundary there are two distinct judicial roles, the traditional role focusing on use of fiduciary duty to check conflict and other director incapacity and the less-recognized role of protecting shareholder self-help. In this more modern context shareholders, because of market and economic developments, are able to effectively participate in governance in a way that wasn’t practical three decades ago, when the key Delaware legal doctrines were taking root. What is particularly interesting here is how courts, commentators and institutional investors act in a way that is consistent with a shared approach to power, as opposed to the primacy of any of the theories initially suggested

“Publicness” in Contemporary Securities Regulation after the JOBS Act

The JOBS Act of 2012 reflects the largest deregulatory change to the Securities Exchange Act of 1934 over its more than 75 year history. It contracts the coverage of those companies subject to the obligations of ‘publicness” and it introduces an “on ramp” that will permit most newly-public companies to meet a lesser set of disclosure, internal control and governance obligations for up to five years. We set these changes against a larger discussion of when a private enterprise should be forced to take on public status in securities regulation, a topic that has been entirely under theorized. We conclude that the change from 500 to 2000 shareholders of record made by the JOBS Act, while entirely clear in its deregulatory thrust, misses a key point: “record” ownership is an antiquated metric for any measuring of publicness and Congress needs to find a better one, such as public trading. More broadly, we observe that Congress increasingly has defined public obligations in securities regulation less by the traditional touchstone of investor protection and more by ways that our largest companies affect constituencies beyond their investor base. Our boundary-setting thus should include two tiers of public companies with the smaller tier limited to core disclosure and governance obligations. Finally, our review of these boundary questions reveals a larger pattern that ought to inform how we understand securities regulation. Entrepreneurs and their advisors regularly occupy new unregulated space created in the wake of technological change or by gaps in regulation revealed as markets evolve. Government response, seemingly inevitably, is piecemeal and reactive. The result is a regulatory process that is more informal than administrative law theory usually suggests and more opaque than we might want in contemplating regulatory change

IPOs and the Slow Death of Section 5

Since its enactment, Section 5 of the Securities Act of 1933 has restricted sales-based communications with investors, but that effort is nearly dead even with respect to the most sensitive of offerings, the IPO. Our paper traces that devolution, which began almost as soon as the ’33 Act came into existence, though the SEC’s 2005 deregulatory reforms and Congress’ intervention in the JOBS Act of 2012. We show how much of this related to an embrace of “book-building” as the industry’s preferred method of price discovery, which requires private two-way communications between underwriters and potential sophisticated investors. But book-building (and the predictable IPO underpricing that results) has a retail dimension as well, and we point to ways in which the otherwise sensible deregulation may enable an over-stimulation of retail investor demand. We then explore two main justifications that have been given for the aggressive deregulation. The first is that any loss in prophylactic protection can be made up for by the threat of liability, particularly with an enhanced Section 12(a)(2). We find this unpersuasive for a variety of reasons. The other—amply visible in the long history of Section 5—is a faith in the “filtration” process, that retail investors gain protection because of the availability of the preliminary prospectus during the waiting period, to those involved in the selling process if not the investors themselves. Putting aside the biased incentives that affect filtration, much of what is most important—and conveyed privately to the institutions in the course of book-building—is forward-looking information that probably need not appear in the formal disclosure, whether preliminary or final. None of this is an argument for returning to the old prophylactics of Section 5. But it is cause for the SEC and FINRA to pay close attention to the retail investor effects of the IPO selling practices, especially in the post-JOBS Act era

Global Seismic Oscillations in Soft Gamma Repeaters

There is evidence that soft gamma repeaters (SGRs) are neutron stars which experience frequent starquakes, possibly driven by an evolving, ultra-strong magnetic field. The empirical power-law distribution of SGR burst energies, analogous to the Gutenberg-Richter law for earthquakes, exhibits a turn-over at high energies consistent with a global limit on the crust fracture size. With such large starquakes occurring, the significant excitation of global seismic oscillations (GSOs) seems likely. Moreover, GSOs may be self-exciting in a stellar crust that is strained by many, randomly-oriented stresses. We explain why low-order toroidal modes, which preserve the shape of the star and have observable frequencies as low as ~ 30 Hz, may be especially susceptible to excitation. We estimate the eigenfrequencies as a function of stellar mass and radius, and their magnetic and rotational shiftings/splittings. We also describes ways in which these modes might be detected and damped. There is marginal evidence for 23 ms oscillations in the hard initial pulse of the 1979 March 5th event. This could be due to the $_3t_0$ mode in a neutron star with B ~ 10^{14} G or less; or it could be the fundamental toroidal mode if the field in the deep crust of SGR 0526-66 is ~ 4 X 10^{15} G, in agreement with other evidence. If confirmed, GSOs would give corroborating evidence for crust-fracturing magnetic fields in SGRs: B >~ 10^{14} G.Comment: 12 pages, AASTeX, no figures. Accepted for Astrophysical Journal Letter

The dilemma of odious debts

Public international law requires that states and governments inherit ("succeed to") the debts incurred by their predecessors, however ill-advised those borrowings may have been. There are situations in which applying this rule of law strictly can lead to a morally reprehensible result. Example: forcing future generations of citizens to repay money borrowed in the state's name by, and then stolen by, a former dictator. Among the purported exceptions to the general rule of state succession are what have been labeled "odious debts", defined in the early twentieth century as debts incurred by a despotic regime that do not benefit the people bound to repay the loans. The absconding dictator is the classic example. The removal of Iraq's Saddam Hussein in 2003 sparked a resurgence of interest in this subject. By enshrining a doctrine of odious debts as a recognized exception to the rule of state succession, some modern commentators have argued, a successor government would be able legally to repudiate the loans incurred by a malodorous prior regime. This, they contend, would have two benefits: it would avoid the morally repugnant consequence of forcing an innocent population to repay debts incurred in their name but not for their benefit, and it would simultaneously force prospective lenders to an odious regime to rethink the wisdom of advancing funds on so fragile a legal foundation. The authors argue that in this recent debate the adjective "odious" has quietly migrated away from its traditional place as modifying the word "debts" (as in "odious debts"), so that it now modifies the word "regime" (as in "debts of an odious regime"). This is a major shift. If this new version of the odious debt doctrine is to be workable, someone must assume the task of painting a scarlet letter "O" on a great many regimes around the world. Who will make this assessment of odiousness and on what criteria? The stakes are high. An unworkable or vague doctrine could significantly reduce cross-border capital flows to sovereign borrowers generally. The authors are skeptical that this definitional challenge can be met. Rather than jettison the whole initiative as quixotic, however, the authors investigate how far principles of private (domestic) law could be used to shield a successor government from the legal enforcement of a debt incurred by a prior regime under irregular circumstances. A wholesale repudiation of all contracts signed by an infamous predecessor may be more emotionally and politically satisfying for a successor government, but establishing defenses to the legal enforcement of certain of those claims based on well-recognized principles of domestic law may be the more prudent path. The authors believe that such defenses exist under U.S. law (and presumably elsewhere) and could be used to address many, although admittedly not all, cases of allegedly odious debts

Ingestion of amniotic fluid enhances the facilitative effect of VTA morphine on the onset of maternal behavior in virgin rats

Previous research has shown that injection of morphine into the ventral tegmental area(VTA) facilitates the onset of maternal behavior in virgin female rats, and injection of the opioid antagonist naltrexone into the VTA disrupts the onset of maternal behavior in parturient rats. Placentophagia – ingestion of placenta and amniotic fluid, usually at parturition – modifies central opioid processes. Ingestion of the active substance in placenta and amniotic fluid, Placental Opioid-Enhancing Factor (POEF), enhances the hypoalgesic effect of centrally administered morphine, and more specifically, enhances δ- and κ-opioid-receptor-\ud mediated hypoalgesia and attenuates μ-opioid-receptor-mediated hypoalgesia. POEF (in placenta or amniotic fluid) ingestion does not, by itself, produce hypoalgesia. In the\ud present study, we tested the hypothesis that ingestion of amniotic fluid enhances the facilitative effect of opioid activity (unilateral morphine injection) in the VTA on the rate of onset of maternal behavior. Virgin female Long-Evans rats were given one intra-VTA injection of morphine sulfate (0.0, 0.01, or 0.03 μg, in saline) and an orogastric infusion of 0.25 ml amniotic fluid or saline once each day of the first three days of the 10-day testing\ud period. Subjects were continuously exposed to foster pups that were replaced every 12 h; replacement of pups was followed by a 15-min observation period. Maternal behavior\ud latency was determined by the first of two consecutive tests wherein the subject displayed pup retrieval, pup licking in the nest, and crouching over all foster pups, during the 15-min observation. We confirmed the previous finding that the VTA injection, alone, of 0.03 μg morphine shortened the latency to show maternal behavior and that 0.0 μg and 0.01 μg morphine did not. Ingestion of amniotic fluid (and therefore POEF) facilitated the onset of\ud maternal behavior in rats receiving an intra-VTA microinjection of an otherwise subthreshold dose of morphine (0.01 μg)

Geodesic Warps by Conformal Mappings

In recent years there has been considerable interest in methods for diffeomorphic warping of images, with applications e.g.\ in medical imaging and evolutionary biology. The original work generally cited is that of the evolutionary biologist D'Arcy Wentworth Thompson, who demonstrated warps to deform images of one species into another. However, unlike the deformations in modern methods, which are drawn from the full set of diffeomorphism, he deliberately chose lower-dimensional sets of transformations, such as planar conformal mappings. In this paper we study warps of such conformal mappings. The approach is to equip the infinite dimensional manifold of conformal embeddings with a Riemannian metric, and then use the corresponding geodesic equation in order to obtain diffeomorphic warps. After deriving the geodesic equation, a numerical discretisation method is developed. Several examples of geodesic warps are then given. We also show that the equation admits totally geodesic solutions corresponding to scaling and translation, but not to affine transformations