December 16, 2012. The New York Times. Instagram Testimony raises some questions on antitrust and perjury risks. Referring to the FTC: “These antitrust questions would not have been raised if Instagram was selling to Twitter or Google,” Eric Talley says.
A new study by Justin McCrary highlights the relationship between the local and regional economic cost of crime and the size of police forces. Read more>
December 14, 2012. Law.com. In discussing the due diligence HP conducted during the acquisition of Autonomy: “When you are teaching courses on corporate governance, it’s hard not to use HP as a cautionary tale,” Eric Talley says.
On December 3-4, 2012, The Jindal School of Government and Public Policy held a conference on “Comparative Perspectives on Democratic Governance: Transparency and Accountability.” The event, held in collaboration with The UC Berkeley Goldman School of Public Policy, included as speakers Ken Taymor, Henry Brady, and Sudha Shetty.
The 2011 America Invents Act (AIA) revamped some key rules in the US patent system. In Priority and Novelty Under the AIA, Robert Merges describes the seismic shift from “first-to-invent” to “first-to-file” and helps patent applicants navigate the new legal landscape.
On November 15, 2012, Robert Bartlett spoke at the SEC’s Government-Business Forum on Small Business Capital Formation. The forum was divided into two panels: the first focused on the JOBS Act implementation and the second focused on small business capital formation issues not addressed by the JOBS Act. Read more>
On November 14, 2012, Nancy Wallace accepted a position with the US Department of the Treasury. She will serve on the Financial Research Advisory Committee of the Office of Financial Research (OFR) where she joins 29 distinguished professionals in economics, finance, financial services, data management, risk management, and information technology. Wallace’s focus will be the mortgage market and asset backed securitization. Press release is here>
On November 1, 2012, Robert Bartlett will present at The Ohio State University “Do Institutional Investors Value the 10b-5 Private Right of Action? Evidence from Investor Trading Behavior Following Morrison v. National Australia Bank Ltd. (2010).” Using an abrupt change in U.S. securities law, this paper examines the value institutional investors place on the private right of action under Rule 10b-5 of the Securities Exchange Act of 1934. In June 2010, a combination of the U.S. Supreme Court’s decision in Morrison v. National Australia Bank Ltd. and Congress’ prompt response to it ensured that U.S. institutional investors would henceforth no longer be permitted to pursue private 10b-5 actions against many of the non-U.S. issuers in their international equity portfolios. Rather, the U.S. antifraud regime that had increasingly been used by institutional investors to police foreign issuers would thereafter be limited to the domain of the SEC. With this new regime of 10b-5 enforcement, however, came one critical exception for U.S. investors seeking to maintain their power to bring private 10b-5 actions: Investors purchasing securities traded on a U.S. stock exchange could continue to bring 10b-5 actions against the issuing company regardless of its domicile. In effect, the combination of this new bright-line rule and the fact that so many non-U.S. firms trade on both foreign and U.S. exchanges provided investors with something that had historically been difficult to achieve—the power to choose whether a security comes with the right to sue under Rule 10b-5.
By analyzing a proprietary data set of equity trades made by 356 institutional investors during the thirty month period surrounding Morrison, this paper examines whether investors reallocated their international buy-orders in cross-listed issuers from foreign markets to U.S. exchanges to exercise this newfound power. Notwithstanding the oft-voiced concerns among institutional investors that Morrison would encourage such a reallocation, the results of this study reveal a remarkable persistence in the allocation of investors’ purchase orders following the decision. Indeed, the overall trend in the fifteen months following Morrison was a modest decrease in U.S.-exchanged based purchases even after controlling for ADR trading costs. Overall, the absence of any significant change in trading behavior among this large sample of investors suggests that whatever concerns animate institutional investors’ public policy positions when it comes to Rule 10b-5 are not necessarily shared by their trading desks.
With “Law, Economics, and the Burden(s) of Proof,” Eric Talley provides an overview of the theoretical Law and Economics literature on the burden of proof in litigation. It clarifies core legal definitions and provides a conceptual roadmap for analyzing the major contributions to theoretical law and economics. The essay concludes by offering a number of recommendations about where applied law and economics scholars could direct their research efforts.
Robert Bartlett, joined by other law professors, filed an amicus brief in support of respondents in the pending Supreme Court case, Amgen, Inc. v. Conn. Retirement Plans and Trust Funds. Before the Court is whether plaintiffs using a “fraud-on-the-market” theory of reliance in a securities fraud (10b-5) class action must prove the “materiality” of alleged misstatements at the class certification stage. The brief argues that the histories of FRCP Rule 23 and the fraud-on-the-market presumption show that plaintiffs do not. Read more>
Prasad Krishnamurthy provided written and oral testimony in support of the bill on wage garnishment, AB 1775, to the CA Senate Judiciary Committee and the Governor’s office on behalf of the bill’s sponsors. The bill — not without flaws — was recently signed into law by Gov. Brown, and gives workers much-needed relief in a State that leads household debt. Read more>
October 30, 2012. The Wall Street Journal. In “ObamaCare’s Cost to the Working Class,” David Gamage says that “Regardless of who wins the presidential election, bipartisan compromise will be necessary to reform health care in a constructive way.”
October 9, 2012. Yahoo Finance. The recent Energy Efficiency Forum co-hosted by BCLBE, Manatt Phelps & Phillips, and the Fisher Center of Real Estate & Urban Economics, brought into focus the need to finance energy-efficiency improvements to existing commercial and multifamily buildings throughout California. “Building connections between the government, real estate, technology and finance industries is the first step in eliminating costly waste and employing efficient, long-lasting energy solutions,” Ken Taymor says. Read more>
On October 2, 2012, Eric Talley presented at the Association for Corporate Counsel 2012 Annual Meeting in Orlando, Florida. His presentation was part of the panel Corporate Securities (section 405) “Redefining the Corporate Form for the 21st Century.” Read more>
September 25, 2012. WSJ. China expert Stanley Lubman observes in his WSJ blog that harsh conditions for China’s factory workers will continue as iPhone sales rise. Read more>
September 13, 2012. Thomson Reuters. Stavros Gadinis’ study of SEC enforcement actions against broker-dealers is getting national attention. Results from the first such systematic examination in 30 years reveals that larger firms fare better than smaller ones, which face tougher SEC sanctions.
Aaron Edlin recently posted “Freedom to Trade and the Competitive Process” to his SelectedWorks, a paper co-authored with Joseph Farrell that discusses how, although antitrust courts sometimes stress the competitive process, they have not deeply explored what that process is. Inspired by the theory of the core, the paper explores the idea that the competitive process is the process of sellers and buyers forming improving coalitions. Read more>
August 21, 2012. Wired. A federal regulatory meeting on Wednesday, August 22, 2012 is expected to shed light on how aggressively startups can solicit investments and thus reach beyond venture capitalists and other established investors. SEC Chairman Mary Schapiro is expected to reveal how the SEC proposes to repeal longstanding and new rules. “It’s expected to have enormous repercussions in Silicon Valley — it rewrites the venture capital rules,” Robert Bartlett says.
July 24, 2012. GlobeSt.com. Nancy Wallace and Ken Taymor‘s observations on devising a model that will allow large-scale energy retrofits to be financed. According to Taymor, creating underwriting tools that can actually evaluate the energy profile of a building can help owners determine the proper course to take when considering retrofitting. Read more>
PRESS RELEASE: San Francisco, July 18, 2012. “CalCEF Reveals Residential Energy Efficiency Roadmap to Strengthen Housing Market,” presents actionable solutions to improve home values, stabilize loan portfolios and meet California’s energy goals. This press coverage highlights Lori Bamberger‘s report “Pulling the Trigger: Increasing Home Energy Savings,” in which she recommends a set of government and utility initiatives for integrating energy efficiency (EE) retrofits. Ms. Bamberger is a Senior Fellow, Energy Efficiency Finance Researcher for BCLBE.
July 20, 2012. Congratulations to the LL.M. Business Law Certificate Recipients of Summer 2012! Click hereto learn more about the program.
July 11, 2012. Eric Talley presented “A Model of Optimal Corporate Bailouts” at the University of Colorado, Boulder. In this paper, Talley analyzes incentive-efficient government bailouts within a canonical model of intra-firm moral hazard. Read more>
The Affordable Care Act (ACA) has been heralded as the signature achievement of the Obama Administration. While recognizing the importance of the reform, David Gamage‘s essay focuses on how the ACA’s tax provisions may also create perverse incentives harming low and moderate income workers. Read more>
The UC Berkeley School of Law Centennial video celebrates the school’s 100-year legacy as told by faculty, students, and alumni. It includes an interview with Eric Talley on the importance of business law and its ramifications for the global economy. “Business law has gotten sophisticated, large, and global,” he notes.
May 24, 2012. San Francisco Chronicle. Eric Talley and Robert Bartlett comment on Facebook’s debut on Nasdaq, which has now led to investor fury and accusations of securities law violations as the stock has failed to live up to expectations. Talley explains how one outcome of the Facebook legal drama could hinge on interpretation of SEC regulations. Bartlett says Morgan Stanley and Facebook may have violated the spirit, but not the letter of SEC rules. Read more>
The current issue of the Berkeley Law Transcript features “Finding the Right Fit for Retrofits.” Ken Taymor comments on the importance of financial incentives to promote energy efficiency in commercial and residential real estate based on research done by BCLBE and the Fisher Center for Real Estate and Urban Economics at UC Berkeley, Haas School of Business. Read more>
May 23. 2012. Market News International. In “Investors, Analysts Don’t All See Benefits In Single Agency MBS,” Dwight Jaffee says that “As long as the GSE securities have a full government guarantee, a single MBS platform is irrelevant.” Read more>
May 13, 2012. The New York Times. In “Disruptions: Facebook’s Real-Life ‘Spidey Sense’,” Eric Talley says that Facebook is not engaging in market manipulation, but is simply doing a better job of monitoring data than its competitors.” Read more>
April 13, 2012. Nature.com. In “Critics of California stem-cell agency address Institute of Medicine panel,” Ken Taymor testified to a US Institute of Medicine (IOM) committee on possible improvements to governance of California’s stem cell research funding program. He called on the IOM to recommend that the program’s oversight board members have a broader range of expertise rather than solely being advocates for research about specific diseases. Read more>
Dwight Jaffee contributed to “House of Cards: Reforming America’s Housing Finance System.” This research compendium presents a variety of articles that discuss the problems with housing finance in the US and presentsalternative reforms to the current GSE model. Read more>
March 7, 2012. The Huffington Post. In “Why Stanford’s Pyramid Scheme Is a Problem for You Too,” anempirical study published by Stavros Gadinis of Boalt Hall at University of California, Berkeley found “several significant and systematic biases in the SEC’s enforcement patterns” and found indrect evidence to support the thesis that “post-agency employment at higher salaries may operate as a quid pro quo in return for favorable regulatory treatment.”
March 1, 2012. WSJ. In “China’s State Capitalism: the Real World Implications,” Stanley Lubman states that Chinese leader-in-waiting Xi Jinping’s visit to the U.S. last month and the recent release of a World Bank report on the future of China’s economy have helped to once again revive debate around the state-led “China model” as an alternative blueprint for economic development. As these debates unfold, it has become clear that China’s version of “state capitalism” (as opposed to “market capitalism”), still is not adequately understood abroad. Read more>
February 2012. Robert Bartlett presented at the University of Indiana-Bloomington “Do Institutional Investors Really Care About 10b-5? Evidence from Institutional Investor Trading Behavior Following Morrison v. National Australia Bank Ltd. (2010)” Using an abrupt change in US securities law, this paper examines the value institutional investors place on the private right of action under Rule 10b-5 of the Securities Exchange Act of 1934.
In June 2010, a combination of a US Supreme Court case and Congressional legislation ensured that US institutional investors would henceforth no longer be permitted to pursue private 10b-5 actions against many of the non-US issuers in their international equity portfolios. Rather, the US anti fraud regime that had increasingly been used by institutional investors to police foreign issuers would thereafter be limited to the domain of the Securities and Exchange Commission. With this new regime of 10b-5 enforcement, however, came one critical exception for US investors seeking to maintain their power to bring private 10b-5 actions: Investors purchasing securities traded on a US stock exchange could continue to bring 10b-5 actions against the issuing company regardless of its domicile. In effect, the combination of this new bright-line rule and the fact that so many non-US firms trade on both foreign and US exchanges provided investors with something that had historically been difficult to achieve—the power to choose whether a security comes with the right to sue under Rule 10b-5.
By analyzing a proprietary data set of equity trades made by 282 institutional investors during 2010, this paper examines whether investors exercised this new found power by reallocating their international buy-orders from foreign markets to US exchanges. Controlling for investor- and security-fixed effects, the results reveal only the slightest increase in US -exchange based purchases from July through December 2010. Moreover, even this modest increase was localized almost entirely among money managers rather than pension fund sponsors, notwithstanding sponsors’ strong public opposition to the new 10b-5 regime. Overall, the absence of any significant change in trading behavior among this significant group of investors suggests that whatever concerns animate institutional investors’ public policy positions when it comes to Rule 10b-5 are not necessarily shared by their trading desks.
February 27, 2012. International Business Times. In “Wikileaks Release Suggests Stratfor Inside Info Plan with Goldman Sachs Exec,” Eric Talley remarks that when global intelligence firm Stratfor set up an investment arm, StratCap, as a separate legal entity, it served primarily as a buffer against liability should StratCap go bankrupt. While StratCap’s ability to benefit from privileged access to Stratfor’s intelligence opens up a legal gray area conducive to insider trading, it does not indicate that Stratfor/StratCap was directly engaged in the practice.
February 21, 2012. Bloomberg. Social network Facebook is in the so-called quiet period, mandated by federal rules dating to 1933 that aim to prevent companies from hyping and selling stocks that aren’t worth as much as the sellers claim. In “Why Facebook Must Stay Quiet” Eric Talley was quoted saying: “Since the 2005 reforms are fairly recent, and the IPO market has been cool during much of that time, lawyers are still quite conservative about how they interpret the relaxed rules.”
February 13, 2012. BCLBE submitted comments to four federal agencies regarding their proposed rules to implement the “Volcker Rule” part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. BCLBE advocates for flexibility in allowing bank investment in venture capital firms because VC firms do not rely on leveraged capital structures and bank investments in them may even directly contribute to financial stability.
February 12, 2012. San Francisco Chronicle. In “Housing crisis losses – who pays?,” Dwight Jaffee comments on who bears the losses from the collapse in housing prices, and comments the difficulty of developing policies to lessen their impact.
February 2, 2012. Law.com. Facebook’s IPO has been eagerly anticipated as a defining moment for the latest web investing boom. In “Regulators Prepare to Examine the Facebook IPO,” Eric Talley observes that an IPO can be a company’s most arduous securities filing, and may even form the basis of future lawsuits if investors were to charge they were misled. A core question, Talley indicates, is how does Facebook value its assets? Given the Internet tech sector’s reliance on intangible assets, such as intellectual property rights, “this is sometimes quite difficult for a lot of tech companies… How do I value the network effect of the fact that Facebook is, by an order of magnitude, the largest social networking site in the world?” Talley asks. Read more>
January 24, 2012. WSJ. In “Unpacking the Law Around the Chinese Reverse Takeover Mess,” Stanley Lubman observes that a new dispute over access to accounting information on US-listed Chinese companies should give American investors pause. The dispute stems from the fact that American auditing companies cannot open their own auditing offices in China and must operate through Chinese affiliates. The Chinese government has long rejected American requests to investigate Chinese auditing companies on the grounds of protecting Chinese sovereignty. Read more>
January 2, 2012. The New York Times (by subscription only). In “New Laws Now Evaluated by Job Creation,”David Card is quoted for remarks on legislative analysis: The recent focus on job creation is “just a selling point.”Read more>