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Abstract:
This article raises the unthinkable proposition (for academics at least) that Enron may have been an aberration. The Enron debacle may have been the rare case in which nine, ten or more sets of monitors and gatekeepers failed. Alternatively, as with Tyco, WorldCom, Adelphia, Rite Aid or other celebrated corporate "busts," Enron may be the handiwork of one or two well placed wrongdoers, in this case, CFO Andrew Fastow. Enron then may not be the pathway to meaningful reform at all.

The article next proceeds to a critical review of Sarbanes-Oxley's principal provisions. The conclusion reached is that by and large only a few meaningful reforms have resulted, and those with significant costs (such as federalization of key aspects of corporate governance). One suggested pathway to meaningful reform would have been to take an enabling approach rather than the regulatory, even punitive, one that Sarbanes-Oxley encapsulates. The enabling approach would focus on the positive side of corporate governance, which over has improved dramatically in the United States over the last 20 years, principally through the predominance of independent directors. The article suggest several measures that could be taken to enhance the positive in corporate governance, including several lessons from the Enron board's operation that thus far have been ignored. The conclusion reached is that Enron's most meaningful contribution to our political economy is neither Sarbanes-Oxley nor the enabling reforms suggested. Enron's contribution instead is creative destruction of a different kind, namely, creative destruction of what Professor William Bratton terms the "winning culture," or what the author terms the culture of the "good deal exemption," and the countless moral hazards that those cultural viewpoints spawned.

Enron, Corporate Governance, Securities Law, Corporate Law, Sarbanes-Oxley

Abstract:
Elites in the United States legal academy have been uniform in their prediction of "global" convergence on a single model of governance for large publicly held corporations. That model is, of course, the U.S. model. The evidence, though, is only of some trans Atlantic convergence with an outlier here or there. Moreover, the existing scholarship is culturally and economically insensitive. U.S. style corporate governance, with its requirements for truly independent directors who will confront and remove badly performing CEOs, and which has as an element lawsuits brought by activist shareholders, is simply inappropriate for many cultural settings. Post Confucian and feudal value systems in countries such as Indonesia, the People's Republic of China, India, and others represent insurmountable barriers to importation of U.S. style corporate governance. Many other societies reject all or most U.S. or Westernizing influences. Convergence advocates "one size fits all" approach is culturally insensitive in the extreme.

The dominant forms of capitalism in the world are family capitalism and other forms of "embedded capitalism" in which the economy is perceived to be part of and subservient to the society rather than the other way around. Value and governance systems emerging from the laissez faire eras in the United States and England during the 1980s, which appeared only once before in history (in mid Victorian England), simply are not reflective of reality in most other societies in the world, including even many European societies in which family and embedded capitalism predominate and are resistant to change.

Elite U.S. scholars have made these errors because their scholarship is insular and chauvinistic. They also have an incorrect view of what globalization truly is or what it means, substituting homogenization for globalization in the same manner many U.S. multinationals do.

Last of all, the growth in size and number of large multinational corporations in the 90s relegates the issue of 'global' convergence to secondary importance. U.S. style corporate governance is another solution to the Berle and Means separation of ownership from control conundrum U.S. scholars have wrestled with for 60 years. Regulatory arbitrage, environmental degradation, plantation production, economic imperialism, and other socio-economic problems posed by the accelerating growth of multinationals, not the separation of ownership from control, are the problems with which corporate law has to come to grips in the twenty first century.

Abstract:
Scholars today are inquiring as to what, other than formal legal commands or lawsuits based thereon, influences the behavior of human actors in corporations. "Norms versus corporate law" has become a subject of symposia and other fora of inquiry. In that inquiry, arguably two neglected, overlapping aspects have been "soft law" and the role of international organizations such as the OECD, World Bank, IMF and the World Trade Organization (WTO). International and comparative scholars define soft law to include aspirational codes of conduct for corporate actors, corporate governance codes of best practices, treaty provisions, trade agreement provisions, and the like, all of "which may provide a conceptual framework for decisionmaking" in the corporate setting "but do not seriously constrain [corporate] decisionmakers." Codes of best practices also include a substantial comparative aspect as scholars and teachers compare the Vienot Report in France with the Cadbury Report in the UK, the ALI Corporate Governance Project and General Motors' 29 points in the United States, the Bosch Report in Australia and similar codes around the world. Newer codes of best practices include those in Italy, Korea and Japan.

The growth of large multinational corporations and the collective action problem host nation states face in policing multinationals' activities highlight the need for study of soft law, the role of international organizations, and their effects on corporate activities with respect to core worker welfare and safety protections, environmental degradation, and similar subjects. The time may soon be arriving when these subjects have a place in the basic business organizations classes taught in law schools here in the United States as well as elsewhere.

Abstract:
On a doctrinal basis, few areas of corporate law are more confused then the duty of care applicable to corporate officials and its handmaiden, the business judgment rule. The tendency of many scholars and practitioners has been to collapse the duty of care into the business judgment rule, as Professor Stuart Cohn pointed out more than a decade ago. The business judgment rule is a separate legal construct that is related to, but separate from, the duty of care and one which protects only proactive and not somnambulant directors and officers. The business judgment rule stays at center stage for several reasons. One reason is that the number of instances at which the rule is encountered, ranging from pedestrian business decisions to adoption of takeover defenses and dismissal of derivative litigation, continues to grow. Another is the level of foreign interest in this wholly American invention. Australia has codified a version of the American business judgment rule in its corporation law. Working groups in other nations have expressed interest in doing the same. This article gives a doctrinal schematic for understanding what the business judgment rule is, and what it is not.

Abstract:
No one has stepped back to take a comprehensive look at what pundits, academics, software companies, service providers, and commentators have suggested in the name of corporate governance reform. This article does so, detailing the morass that has been overlaid on the Sarbanes-Oxley (SOX) legislation, as well as the costs (but not the details) of SOX itself. This examination of beyond SOX, or SOX and beyond, demonstrates that many regulators, legislators and commentators never learned the lesson that their mothers must have taught them, More Isn't Necessarily Better.

corporate governance, Sarbanes-Oxley

Abstract:
The collapse of Enron and WorldCom has focused considerable attention upon the company director as a 'gatekeeper' for good corporate governance. They are presently subject to ever increasing scrutiny and much of the recent reforms around the world have adopted a regulatory philosophy premised on keeping company directors on the 'straight and narrow' by compelling them to 'Do X', 'Do Y' or 'Do Z'. This approach presumes that legislators and regulators have the inherent ability to subject business decisions to systematic analysis and fails to recognize that such decisions often involve intangible and intuitive insights. This article seeks to balance the scales in favor of directors by offering them safe harbor through the enactment of a statutory business judgment rule for decisions that are made without any conflicts of interest and with full knowledge and appreciation of the material facts. In doing so, it will allow directors to get back to the basics of business within a capitalist framework namely, to promote entrepreneurism through the facilitation of legitimate business decisions and risk taking.

Abstract:
Based upon substantial numbers of women enrolling in MBA and law programs, from the 1970s onward expectations have been high. With 25 and later 36% female MBA matriculates, and 33% and later 49-51% in law, by the 21st Century the expectation was that great numbers of women would populate the CEO suites and boardrooms in the U.S. NO SEAT AT THE TABLE (NYU Press 2007) documents how the numbers lag badly behind the expectations, and how the reality lags further yet behind the numbers. Analyses of Fortune 500 proxy data, as the enclosed chapter demonstrates, produce scant reason to posit a reversal of the leaky pipe phenomenon any time soon. The number of women directors remains static, or grows only slowly, while the number of women trophy directors, those who 4 or more directorships, has increased rapidly. These and other factual findings support the proposition that the glass ceiling remains in place. NO SEAT AT THE TABLE explores explanations for women's failure to advance in the number one would have predicted. Further, NO SEAT AT THE TABLE offers suggestions both for women who wish to advance and for corporations which wish to facilitate entry of more women into the pool from which corporate directors may be chosen.

directors, women directors, corporate studies, women's studies, feminist jurisprudence

Abstract:
The history of corporate governance "reform" begins with Adolf Berle and Gardiner Means's "The Modern Corporation and Private Property," first published in 1932. That book posited the "separation of ownership from control," discussed in the first section of this essay.

The subsequent history of corporate governance reform has been the postulation, by academics and others, of solutions to problems posed by the separation of ownership from control.

One subset of proposed reforms, those of the 1970s, formed the "corporate social responsibility movement." During that era, reformers urged governmental intervention which, as a matter of general corporate law, would expand corporate responsibility from primarily shareholders, to workers, consumers, suppliers, communities in which the corporation had a significant presence, clean air, clean water, and other constituencies.

At times, most particularly during the heyday of the law and economics movement, scholars posited that the separation of ownership from control posed no problem at all. Instead it was an efficient allocation of investor and managerial resources. Thus, law and economics eclipsed the corporate social responsibility movement. Seldom in the annals of jurisprudence has one jurisprudence ascended so quickly, while the one it supplanted simultaneously faded into oblivion.

This essay explores whether, as the new century begins, the beginnings of a* new corporate social responsibility movement are under foot. These beginnings are to be found in the "good governance" movement; the stakeholder versus stockholder debate; renewed calls for corporate social accounting and disclosure; the "green" movement in manufacture and advertisement of products; advocacy of communitarian models of the corporation and of "progressive" corporate law; and a newly strengthened environmental movement.

Mr. Justice Holmes found that a "page of history is worth a volume of logic." Before this essay discusses the new corporate social responsibility movement, history the equivalent of more than volume of logic must be recounted.

corporate governance reform, history, Adolf Berle, Gardiner Means, The Modern Corporation and Private Property, good governance movement, green movement, environmental movement, corporate social responsibility movement, corporate responsibility, social responsibility, corporate social accounting

Abstract:
Many knowledgeable observers ascribe recent share price volatility to short selling, which has increased 4 or more times the historical 4% short interest in most large cap stocks. Much of this short selling has been naked short selling in which, contrary to SEC and stock exchange rules, short sellers sell stock without having first borrowed it and frequently with no intention of ever borrowing it in the future. Through Regulation SHO, which took effect in 2006, and then further efforts in August-October, 2008, the SEC initiated and then ratcheted up its campaign against naked short selling. The crackdown on naked short selling has increased the imperative that a short must borrow stock before selling it. This article asks whether or not stock borrowing from an individual investor is an investment contract, and therefore a security, or should be regulated in some other way. The article also disagrees with 35 years' academic commentary, which asserted that the uptick rule was harmful an should be eliminated as contrary to marklet efficiency. That commentary was wrong because, uniformly, it equates informational efficiency with overall market efficiency when a truly efficient market will exhibit both price continuity, to which an uptick rule would contribute, as well as some level of informational efficiency, which short selling aids.

securities, securities regulation, short selling, uptick rule, stock borrowing, SEC, NYSE, Nasdaq

Abstract:
In the 1970s, legal scholars wrote extensively on the subject, as it was then known, "corporate social responsibility." Proposals surfaced for pubic interest directors, mandatory social accounting and disclosure, increased use of Security Exchange Commission (SEC) shareholder proxy proposals, federal minimum debate was eclipsed completely by the law and economics movement of the 1980s. Now, in the new century, the inquiry into social responsibility of large corporations has begun anew. This article is an attempt to take that inquiry, or debate, and place it in the international context.

I have four stories to tell. First is that much of the globalization ballyhooed by Thomas Friedman and other passionate globalization advocates may be "negative" rather than "beneficial" globalization. Second, I describe another profound occurrence, that is, the growth in number and size of gargantuan multinational corporations. Third, I describe some of the problems perceived to be created by the growth of large multinationals, such as regulatory arbitrage, degradation of the environment, and the plantation production problem. Fourth, I highlight, briefly, a few of the ongoing efforts of international organizations and so-called "soft law" to solve some of the collective action problems which exist among nation states as they attempt to prevent or forestall at least some of the more obvious detrimental effects of large multinational' presence on the globe.

globalization, social responsibility, large multinational corporations, growth, regulation, power, nation state, international organizations, soft law

Abstract:
The sixties and early seventies were turbulent times. Opposition to the Vietnam War, the environmental and civil rights movements, and radicalism generally roiled the corporate world, as much as the world at large. These disparate strands coalesced into the "corporate social responsibility movement," culminating in strident advocacy of federal chartering of large corporations, mandatory public interest directors, and required social accounting and disclosure. Suddenly, though, the law and economics movement eclipsed (vanquished?, obliterated?) the corporate social responsibility movement. In this Essay, professor Branson recounts events and ideas of those bygone days. He then reviews evidence that a more muted, and international, responsibility movement is well underway in this, the new Millennium. A principal feature of that movement is that, unlike in the early1970s, the social responsibility issue is seen as converging with, rather than diverging from, broader trends in corporate governance, most specifically the "good governance" movement, which has been underfoot in many countries around the globe for well over a decade now.

corporate governance, corporate social responsibility movement, corporate responsibility, social responsibility, corporate social accounting, good governance movement, disclosure

Abstract:
This posting is a second iteration of this article, which first appreared in February 2009 but has been revised substantially. In April 2009, the SEC promulgated for comment a 273 page release dealing with ideas and proposals for regulation of short selling of securities. The concepts explored include a modified uptick rule based upon the national best bid price (rather than a last sales price) and various types of circuit breakers which would be triggered by pecipitous price declines, which in turn could be caused by inordinate amounts of short selling. In July, the SEC permanently adopted a formerly temporary rule requiring that market particpants (broker-dealers) must close out all failures to deliver by the open of the fourth day following a sale, including a sjort sale, versus thirteen days under earlier rules. The new rule, unveiled in a 100 page release, is the latest chapter in an SEC jihad against naked short selling, which often is (good) circumstantial evidence of securities price manipulation. The revised article deletes discussion of regulation of stock borrowing programs, which have taken on added importance with the SEC's "get tough" approach to naked short sales and failures to deliver but must be the topic for a second, follow on article.

securities, secruties regulation, short selling, short sales, broker-dealer, broker-dealer regulation

Abstract:
This Article argues that the Court should not have rejected an overarching economic realities approach to the scope of the federal securities laws. By viewing the developing standards under the famous Howey test as a movement toward a global standard for identifying "securities" rather than simply the subpart "investment contracts," the Court could have allowed for a more coherent doctrinal development.

Abstract:
If corporate officers and directors exercised better judgment in choosing their lawyers, we would see fewer convictions and, ultimately, fewer allegations and less criminalization of corporate law. However, corporate defendants are choosing lousy lawyers to defend them, resulting in more convictions and harsher penalties than there should be. The big-shot corporate defendants seem mostly to be going for big firm litigators . . . In my opinion, these guys do not litigate to win cases - they litigate to impress clients.

If ever I had to choose a lawyer in one of these cases, I would choose a person who has some criminal law background and some securities and corporate governance background. In fact, I might choose . . . Frank Razzano, of Washington, D.C. . . . Frank is tough, but he knows when to give ground and when to push it - he just doesn't go and butt heads with federal prosecutors and with the federal government.

lawyer selection, litigators, corporate law, criminal law, corporate governance, securities, experience, expert witness, civil law, Private Securities Litigation Reform Act, Sarbanes-Oxley Act

Abstract:
This Article examines an issue that many corporations, trusts, not-for-profit corporations, and other entities should consider: whether the choice of legal form matters? Is it significant, for example, that a corporation organizes as a corporation as opposed to a trust, or vice versa? Ultimately, the Article concludes that entity choice in fact is not as important as one may previously have thought. In reaching that conclusion, this Article examines converging corporate and trust laws in addition to governing standards, and takes an in depth look at Alaska Native Corporations and Hawaii's Bishop Estate, both of which help illustrate the non-traditional corporate and trust functions performed by such entities. From these examinations, it is clear that governance is governance regardless of the choice of legal form, a valuable lesson for every legal entity today.

legal entity, legal form, choice of entity, ANCSA corporations, Alaska Native Claims Settlement Act, Hawaii's Bishop Estate, corporations, trusts, not-for-profit corporations, corporate governance, operation

Abstract:
The third edition of Understanding Corporate Law has just been published by Lexis-Nexis. The book is designed to offer a clear and comprehensive treatment of key concepts in corporate law. Significant business, economic, and policy issues are highlighted in connection with a thorough analysis of the important cases and statutory provisions used in the study of corporations. It includes the major theoretical approaches used in current corporate law literature.

In each chapter, the authors identify important policies and discuss the relationship of the law as it has developed to those policies. Statutory issues are covered under both the General Corporation Law of the State of Delaware and the Revised Model Business Corporation Act. The Third Edition of Understanding Corporate Law discusses developing case law since the Second Edition including the Delaware courts’ use of good faith in fiduciary duty cases. The book also reflects the corporate governance issues raised by the corporate scandals and the passage of the Sarbanes-Oxley Act of 2002. A section of Chapter 5 deals generally with that Act, but its impact is also covered in relevant sections throughout the book. The book has been popular with students and others studying corporate law.

corporation, corporate law, corporate governance, federal securities law

Abstract:
Business, mutual benefit and charitable entities often choose a sub-optimal legal form. Alternatively, entities choose one form, only to operate as another, often running afoul of the law, at least historically. A trust may operate as if it were a partnership when, in reality, a corporate governance structure would suit it better. At the extreme, corporations under the Alaska Native Claims Settlement Act, for example, have acted as corporations, charities, political subdivisions, trusts, or tribes of Native Americans, as time passes and their needs change. Prompted by a book (SAMUEL KING & RANDALL W. ROTH BROKEN TRUST (2006)) chronicling mismanagement at the United States's largest charitable trust, the Bishop Estate, whose trustees acted as though they were partners of a small firm, this article inquires into this common but overlooked matter. One conclusion is that differences in the law applicable to differing legal forms have narrowed. Another is that corporate governance best practices may in reality be governance best practices, as suitable for a large trust, charity, or mutual benefit corporation as for a business entity.

corporate governance, corporation, nonprofit, charity, not-for-profit, partnership

Abstract:
The book is designed to assist students and faculty by offering a clear and comprehensive treatment of key concepts in corporate law. Significant business, economic and policy issues are highlighted in connection with a thorough analysis of the important cases and statutory provisions used in the study of corporations. It includes the major theoretical approaches used in current corporate law literature. In each chapter, the authors identify important policies and discuss the relationship of the law's development to those policies. Statutory issues are covered under both the General Corporation Law of the State of Delaware and the Model Business Corporation Act. The second edition also reflects the current corporate governance issues raised by the recent corporate scandals and the passage of the Sarbanes-Oxley Act of 2002. A section of Chapter 5 deals generally with that Act, but its impact is also covered in relevant sections throughout the book. This book is designed to be used with all of the major corporate law casebooks.

corporate law

Abstract:
The Private Securities Litigation Reform Act (PSLRA)(1995) creates a gauntlet that plaintiff investors must run in order to prosecute a securities law class action. The Securities Litgation Uniform Standards Act of 1998 makes securities class actions filed in state courts removable to federal court where the restrictive provisions of the PSLRA will apply. My article explores what is left in state court, with particular emphasis on three legal theories: (1) common law and constructive fraud (2) aiding and abetting breaches of fiduciary duty; and (3) the fiduciary duty of disclosure (candor). The article is the third in a series. The earlier pieces are Douglas M. Branson, Running the Gauntlet: A description of the Arduous, and Now Often fatal, Journey for Plaintiffs in Federal Securities Law Actions, 65 U. Cinn. L. Rev. 3 (1996), and Douglas M. Branson, Chasing the Rogue Profession After the Private Securities Litigation Reform Act of 1995, 50 SMU L. Rev. 91 (1996).