As remote interactions become more prevalent and technological advancements increase, corporations must reform their policies to be more accessible and connect to their shareholders, specifically during shareholder voting. The ability to participate in corporate governance remotely should motivate shareholders to be more active in director elections and the promulgation of management proposals. Both the Securities and Exchange Commission and Delaware’s corporate law[1] have acknowledged this technological necessity by encouraging virtual board meetings[2] and e-voting, which some corporations have implemented with the help of blockchain technology, effectively increasing shareholder participation.[3] Using blockchain technology as a corporate governance mechanism will allow for…
Author: Jacqueline Hennelly
Arbitration agreements have been standard features of commercial contracts since the 1920s, but their use and entrenchment as key features of those contracts have vastly expanded in the past one hundred years.[1] Arbitration is a method of dispute resolution, meant to “eliminate the expense of litigation, to save delays in legal proceedings…and to substitute the decisions of practical business men for those of inexperienced juries.”[2] Parties would turn to arbitration to solve their disputes, but courts would often impede their efforts by refusing to enforce the arbitration agreements.[3] Without outside enforcement, parties have no assurance that they will not have…
Testimony to Congress from “Big Tech” CEOs like Jack Dorsey of Twitter represent the height of the debate around Section 230,[1] the part of the U.S. code regulating speech and liability on the internet. Even the Federal Communications Commission is investigating whether to “clarify” Section 230.[2] In a rare case of bipartisanship, there seems to be consensus between the political parties on repealing and/or reforming Section 230.[3] Given all this noise in the media, it is worthwhile to take a step back and explore the origins and purposes of Section 230, the reform proposals put forth, and whether, actually,…
Introduction The word “hacker” has developed a negative connotation. People hear the word “hacker” and instantly imagine a scrawny and disheveled man in a hoodie sitting in a dark basement lit up only by his screen. He types lines of code furiously before exclaiming, “I’m in,” and launching a denial of service attack on a website, bringing the whole site down.[1] The current media landscape has done little to alter this negative perception. Just Googling the term “hack” yields thousands of news results, very few of which are positive.[2] Every new piece of technology is attached to some form of…
The definition of “accredited investor” is at the heart of Rule 506 exemption, one of the most utilized exemptions in the Securities Act of 1933.[1] The rationale for Rule 506 exemption, explained in SEC v. Ralston Purina, is that financially sophisticated investors do not need the protections of disclosure under the Securities Act of 1933.[2] To provide bright-line standards, the U.S. Securities and Exchange Commission (“SEC”) relied exclusively on income and net worth to identify natural persons as accredited investors.[3] This rigid test inevitably excludes investors who are financially sophisticated but failed to meet the income and assets requirements set…
Directors and officers should plan to add one more stressor to their likely full plates in 2021; their director and officer (“D&O”) insurance renewal. The outbreak of the COVID-19 pandemic has exacerbated the already hard D&O insurance market, with insurers increasing their pricing and reducing capacity offered.[1] In light of this, D&O coverage may become even more important for commercial buyers in 2021, as companies and their officers grapple with a tumultuous litigation environment. D&O insurance is a type of liability insurance that insulates directors and officers from claims made against them while serving on a company’s board and also…
Over the years, skeptics of actively managed investment portfolios argue that over time a portfolio chosen by “a blindfolded monkey throwing darts at a newspaper’s financial pages” will do just as well or outperform a financial advisor’s pick.[1] Indeed, studies throughout the years, including a 2020 study done by the S&P Dow Jones Index, found that actively managed funds consistently underperform their benchmark index by wide margins.[2] Along with underperformance, actively managed funds can bake in outrageous fees that may cost hundreds of thousands of dollars to a retail investor over time.[3] In 2017, we outlined recent market updates on…
Although remote communication technologies are among the hottest new trends in the pandemic age, the move to Zoom meetings is not the only identifiable transformation in corporate boardrooms. COVID-19 has given rise to profound corporate governance issues in overseeing the short-term and long-term health of a corporation.[1] This new environment presents boards with new and increasingly complex challenges, such as responding to the demands of various stakeholders and elevated social engagement expectations.[2] Among the important issues affecting corporations is the transition from the traditional shareholder-centric model of corporate governance, which places shareholder interests at its center, to a model of…
On August 10, 2020, the California Superior Court in People v. Uber Tech., Inc., held that both Uber and Lyft have misclassified their ride-hailing drivers as independent contractors rather than employees in violation of California’s Assembly Bill 5.[1] This ruling has only exacerbated the long-standing debate centered around whether ride-hailing companies, Uber and Lyft, correctly classify their drivers as independent contractors or employees.[2] This lawsuit was filed by California Attorney General Xavier Becerra and the city attorneys of Los Angeles, San Diego, and San Francisco under a new California law, Assembly Bill 5, that indicates that companies “can only classify…
By: Adarsh Vijayakumaran[1] The year 2008 is synonymous with catastrophe in the economic history.[2] The bankruptcy of Lehman Brothers and the collapse of Merrill Lynch reduced the world economy to watching itself plummeting to rock-bottom.[3] After credit default swaps and pre-packaged subprime loans in the United States led to an International stock market crash, market-watchers noticed a discreet $800+ billion financial system emerging into the narrow void of technology and finance.[4] This was the advent of cryptocurrencies and Bitcoin (“BTC”), the world’s first decentralized digital currency.[5] The extraordinary returns that these “alegal” creatures of blockchain technology generated have led to…