Corporate & Securities Law

Costs of Drug Prohibition

Posted on April 01, 2011
I have been thinking about a story that appeared in the Times a few days ago.  States are considering requiring medical prescriptions for over-the-counter cold medicines that contain pseudoephedrine, an ingredient for making methamphetamine.  Mississippi and Oregon already have such laws, and other states are considering them, although they have been voted down in other [...

Microsoft comes full circle

Posted on March 31, 2011
I am disappointed but not surprised to see that my former employer filed an official antitrust complaint against Google in the EU.  The blog post by Microsoft’s GC, Brad Smith, summarizing its complaint is here. Most obviously, there is a tragic irony to the most antitrust-beleaguered company ever filing an antitrust complaint against its successful competitor...

When markets let corporations be good

Posted on March 31, 2011
In my article, Accountability and Responsibility in Corporate Governance, I explored the complex relationship between social responsibility and markets. I noted among other things that social responsibility is a way to sell products, so it’s hard to untangle whether success let’s firms be “good,” or whether “goodness” causes firms to be successful...

IPOs going elswhere

Posted on March 31, 2011
A couple of months ago I asked “what happened to IPOs.”   I noted then that the decline in US IPOs had something to do with US regulation, including SOX and Dodd-Frank.  A new paper by Doidge, Karolyi &  Stulz, The U.S. Left Behind: The Rise of IPO Activity Around the World suggests it has something [...

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Sokol’s trades

Posted on March 31, 2011
Per the WSJ, Buffett associate David Sokol bought shares of a potential Berkshire target, Lubrizol, the day after expressed interest in the company on behalf of Berkshire. He sold those shares a week later, but soon bought more around the time the Lubrizol board met to discuss Berkshire’s interest...

Antitrust in Tech Industries

Posted on March 31, 2011
Two stories about Google indicate the dangers of antitrust in fast moving tech industries.  Microsoft is urging the EU antitrust authorities to sue Google.   (Microsoft was itself the victim of a massive antitrust action. I guess it is true that abusers are likely to have been themselves abused...

Google, Antitrust, and First Principles

Posted on March 31, 2011
I’ve read with interest over the last few days the commentary on Microsoft’s filing of a formal complaint with the EU, Microsoft’s defense of its actions, and the various stories around the web.  Geoff and Paul appropriately focus on the error-cost concerns associated with intervention in high-tech markets; Paul also emphasizes the ironies associated with [...

Tomorrow at Illinois: Law practice in the US and China

Posted on March 31, 2011
I’m participating in a mini-conference comparing the two countries featuring David Mao of the Library of Congress and Sida Liu, a sociologist from Wisconsin.  Should be interesting. Filed under: lawyers, legal profession

Posner on corporate fiduciary duties

Posted on March 30, 2011
Francis Pileggi brings news of an interesting Posner opinion in CDX Liquidating Trust v. Venrock Associates, (7th Cir. March 29, 2011), a case decided under Delaware law.  As Mr. Pileggi notes, the case held, among other things, that disclosure of a conflict of a director’s interest may “insulate the agreement from attack, but does not, per [...

Insider trading at the FDA

Posted on March 30, 2011
The SEC has civilly charged an FDA employee under 17(a) and 10(b) with violating his duty of trust and confidence to the FDA and misappropriating drug approval information by using it to make $3.6 million in trading securities. The WSJ story summarizes: The SEC and the Justice Department said the men traded shares dating back [...

The death of campaign finance regulation

Posted on March 29, 2011
In Arizona Free Enterprise Club, et al., v. Bennett, et al. and McComish, et al., v. Bennett, et al.  the Court is deciding what seems to be a couple of relatively narrow issues: (1) Whether the First Amendment forbids states from providing additional government subsidies to publicly financed candidates that are triggered by independent expenditure [...

Fretting over privacy

Posted on March 28, 2011
Gordon Crovitz, writing in today’s WSJ, notes that news that more than half of Americans over 12 have Facebook accounts powerfully suggests that people don’t care that much about “trading personal information for other benefits.”  He asks, “why is Washington so focused on new privacy laws?”  He’s referring, e...

Fiscal discipline in Illinois

Posted on March 28, 2011
Last January I commented on the Illinois tax increase of personal income tax rates from 3% to 5% and corporate taxes from 4.8% to 7%: Detroit would seem to be a good example to keep in mind when thinking about Peoria without Caterpillar.  Remember that any company considering moving to or staying in Illinois not [...

Bonuses for prosecutors

Posted on March 28, 2011
Walter Olson has been posting on a Colorado plan to give bonuses to prosecutors based on conviction rates.  His latest post on why this is a bad idea says “[v]ery similar logic helps explain the historically prevailing ban on contingency fees for lawyers in most Western legal systems...

The Industrial Organization of Food Carts

Posted on March 28, 2011
As Harold Demsetz notes, “the problem of defining ownership is precisely that of creating properly scaled legal barriers to entry.”   Taxi medallions, meet food cart permits.  From the WSJ: The city’s competitive street food culture has created a thriving black market for mobile food vending permits issued by the Department of Health and Mental Hygiene...

New York Malpractice Reform

Posted on March 25, 2011
The state of New York is considering a cap on noneconomic damages (“pain and suffering”) for malpractice in order to save money.  The New York Times story asks “… who benefits from caps ? doctors or insurers ? and whether the measures inflict unintended negative consequences upon victims of medical errors, including plaintiffs? inability to [...

Google Book Project

Posted on March 24, 2011
Google’s efforts to make out of print books available online has run into a major stumbling block. Judge Chin ordered that books can only be digitized by Google if the author opts in; the agreement which he through out called for opt out.  This is an shame and a highly inefficient result...

Markets are incremental; Obamacare is not

Posted on March 24, 2011
Watching Obamacare dissolve in a morass of legal challenges and waivers points out another benefit of markets.   Markets proceed incrementally.  The Internet has made a huge difference in all of our lives.  But the process was gradual.  It began with just a few academic users and then expanded as entrepreneurs figured out next steps...

Search Bias and Antitrust

Posted on March 24, 2011
There is an antitrust debate brewing concerning Google and “search bias,” a term used to describe search engine results that preference the content of the search provider.  For example, Google might list Google Maps prominently if one searches “maps” or Microsoft’s Bing might prominently place Microsoft affiliated content or products...

The Antitrust (and Business) Risk of a Concerted Response to the Insane U.S. News Rankings

Posted on March 24, 2011
I?ve been in a blue funk since last Tuesday, when my home institution, the University of Missouri Law School, fell into the third tier in the U.S. News & World Report annual ranking of law schools. Since the rankings began, Missouri has pretty consistently ranked in the 50s and 60s...

What happened to IPOs redux

Posted on March 22, 2011
A couple of months ago I asked, “what happened to IPOs.”  Today’s WSJ asks almost the exact same question and gets the same answer: The elephant in the room is the 2002 Sarbanes-Oxley law, which triggered billions of dollars in new compliance costs for public companies...

The counterproductive effects of SOX and Dodd-Frank

Posted on March 22, 2011
Much significant regulation has been inflicted on the financial markets over the last decade with little regard for evidence of whether the regulation is likely to accomplish its intended purpose.  A couple of recent studies on SOX and Dodd-Frank suggest that at least some of this regulation has made things worse...

The present and future of legal education

Posted on March 22, 2011
At the Glom the Masters are discussing “proposed changes to accreditation standards” and possibly also “the reported decline in law school applications and talk of the law school bubble’s bursting.”  This discussion focuses on the present of legal education...

Some Links

Posted on March 22, 2011
Google Book Settlement is rejected Brian Leiter interviews Ron Allen on the Van Zandt era at Northwestern; Bainbridge comments Which lawyers are working the AT&T/ T-Mobile deal?  Also, economist David Evans on how the deal will be reviewed (Video) Interesting paper: Do Financial Counseling Mandates Improve Mortgage Choice and Performance? Evidence from a Legislative Experiment [...

No Facts, No Problem?

Posted on March 22, 2011
There has been, as is to be expected, plenty of casual analysis of the AT&T / T-Mobile merger to go around.  As I mentioned, I think there are a number of interesting issues to be resolved in an investigation with access to the facts necessary to conduct the appropriate analysis...

The AT&T and T-Mobile Merger

Posted on March 21, 2011
The big merger news is that AT&T is planning to acquire T-Mobile.  From the AT&T press release: AT&T Inc. (NYSE: T) and Deutsche Telekom AG (FWB: DTE) today announced that they have entered into a definitive agreement under which AT&T will acquire T-Mobile USA from Deutsche Telekom in a cash-and-stock transaction currently valued at approximately [...

This Wednesday: talking movies at Yale

Posted on March 21, 2011
I’ll be discussing Inside Job with Steve Davidoff and Roberta Romano, at the invitation of the Yale Law & Business Society. I managed to get through the movie last night without throwing any sharp objects at the screen.  I’m hoping to repeat that performance on Wednesday...

The Dodd-Frank debacle, takeover edition

Posted on March 21, 2011
The so-called “Dodd-Frank Wall Street Reform and Consumer Protection Act” was supposed to fix the problems that led to the financial bust.  Of course, that would require some understanding of what, exactly, those problems were, which Congress lacked...

More on Gupta-gate

Posted on March 19, 2011
I first addressed what I call “Gupta gate” a week ago in a post on “the SEC’s shrinking credibility.” There I noted: Guptagate is the SEC?s decision on March 1, the eve of its big Rajaratnam case, to file an administrative order against Rajat K...

Securities prices and current events

Posted on March 19, 2011
When teaching efficient markets I like to have fun speculating about the limits of the theory.  The third edition of my casebook (Ribstein & Letsou, Business Associations), had a New Yorker cartoon which showed executives looking out their high-rise window at attacking flying saucers and remarking: “Drat! I suppose the market has already discounted this, [...

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