Journal of Corporation Law

Articles cover corporate legal topics and development important to businesses, scholars and practicing lawyers.

Articles from Vol. 32, No. 4, Summer

Bulletproof: Mandatory Rules for Deal Protection
I. INTRODUCTION II. COMMON DEAL PROTECTION AND BULLETPROOFING A. Voting Protections B. Exclusivity Measures C. Compensatory Devices D. Bulletproofing E. Restrictions on Use of Deal Protection III. COMMENTATORS' ARGUMENTS IN FAVOR OF BULLETPROOFING:...
Corporate Governance and the New Hedge Fund Activism: An Empirical Analysis
Hedge funds are not "normal" institutional investors. They launch proxy fights for corporate control. Their recent successes and "wolf pack" tactics have garnered headlines, but leave us with a question: what does hedge fund activism mean for corporate...
Disney, Good Faith, and Structural Bias
This Article assesses the recent Disney decision and argues that on the facts presented, the decision was probably correct. However, the court squandered an opportunity to develop and articulate an appropriate doctrinal approach for the issues the...
III. Empirical Study and Review: Hedge Fund Activism
All these legal changes have combined to open the door for a new, more aggressive kind of shareholder activism, and hedge funds have marched unhesitatingly through. The following pages examine what they actually do and how they do it. (92) A. Study...
II. Industry Hallmarks: Conflicted Management and Redeemable Securities
Typically, companies are "internally managed" in that the managers are full-time employees working for the benefit of the company's owners, not independent contractors owing their primary allegiance to an outside entity. The typical American business...
III. the Nature and Genesis of 12b-1 Fees
Though 12b-1 fees are not essential to a mutual fund's operation, (59) they are nonetheless very common. More than 60% of the American mutual funds feature 12b-1 shareholder charges. (60) As noted above, in 2006, 12b-1 payments amounted to an amazing...
I. Introduction
After an absence of over a decade, shareholder activism is once again a hot topic, (1) but this time with a difference. Back in the early 1990s, the focus was on institutional investors and whether they could step in and help keep corporate managements...
I. Introduction
Holding more than $10 trillion in assets, (1) the mutual fund industry is a powerful financial force in this country. Ninety-one million individual shareholders own mutual funds, representing about one in every two American households. (2) The vast...
II. the Legal Foundations of Hedge Fund Activism Today
To begin with, there is no legal or even generally accepted definition of a "hedge fund." According to the Securities and Exchange Commission (SEC), a hedge fund is any privately offered "entity that holds a pool of securities" or other assets and...
IV. Conflicts of Interest and Full Disclosure
The central question running throughout any examination of hedge fund activists is this: Can we trust them? (135) According to critics, they are short-term traders whose interests frequently diverge from those of a company's other shareholders. (136)...
IV. Rule 12b-1's Requirements
Rule 12b-1 classifies as a "distributor" of securities a mutual fund that pays distribution expenses for selling its shares out of its own assets; it then regulates when and how such payments can be made by the fund. A fund functions as distributor...
IX. Fund Boards as Reform Leaders-Missing in Action
The SEC's blueprint for 12b-1's operation counted heavily on board diligence and oversight and that plan has failed. Under the SEC-established 12b-1 plan-adoption regime, full disclosure would precede careful judgments by decision makers. Fund boards...
Merck V. Integra: (Section) 271(e)(1) and the Common Law Research Exemption
I. INTRODUCTION II. BACKGROUND A. Common Law Research Exemption B. The Statutory Research Exemption C. Patent System Goals and Research Exemptions D. Merck v. Integra: Facts and History III. ANALYSIS OF THE ARGUMENTS PRESENTED TO THE COURT ...
The Corporate Governance Industry
This Article considers the role of the corporate governance industry as a voluntary regulator. The corporate governance industry influences (and in some cases effectively controls) the votes of trillions of dollars of equity, and affects the governance...
United States V. Dentsply: The Third Circuit Bites Down on the 'Alternative Distribution Channels' Defense
I. INTRODUCTION II. BACKGROUND A. Applicable Law B. The History of Dentsply International C. Dealer Criterion 1. Facts 2. Alternative Distribution Channels 3. The District Court's Decision E. The District Court's Decision Overturned...
V. Balance of Power Politics and Corporate Governance
Plainly, hedge-fund activists have a role to play in corporate governance. This Article has shown that, when they choose to get involved, hedge funds can be a real force with which to be reckoned. The question then becomes how they fit into current...
VI. Conclusion
At the end, we are inevitably left with a fundamental question: what is the meaning of hedge fund activism? This Article has conducted a legal, empirical, and theoretical study in an effort to develop an answer. This Article has shown that the SEC...
VII. Half-Hearted SEC Regulation Has Hurt Investors
A respected money manager recently condemned the SEC's approval of 12b-1 fees in strong, unequivocal terms steeped in frustration and disappointment: In 1980, the Securities and Exchange Commission caused considerable damage to mutual-fund shareholder...
VIII. Wanted from the SEC: Investor-Oriented Leadership
Congress expressly invited searching scrutiny of fund industry sponsors and managers when it made this policy finding, which was included in this language in the 1940 Act: [T]he national public interest and the interest of investors are adversely...
VI. the Acid Test: Does Rule 12b-1 Benefit Mutual Fund Shareholders?
That the SEC's staff filibustered for years against Rule 12b-1 attests to a deeply ingrained skepticism among a highly knowledgeable group of fund industry experts about the basic precept that fund sales financially benefit existing shareholders. The...
V. Rule 12b-1 in Practice
A. The Early Days Immediately following Rule 12b-1's promulgation, the rule was used infrequently. (102) 12b-1 fees were low, typically 0.25% or less, and payments were commonly used to pay such distribution expenses as advertising costs or sales...
Why the Time Has Arrived to Broaden Protection of Foreign Trademarks in the United States and Why It Won't Happen
I. INTRODUCTION II. BACKGROUND A. The Doctrine of Territoriality 1. The Lanham Act 2. The Early International Agreements a. The Paris Convention b The Madrid Agreement 3. The Madrid Protocol B. The Use and Intent to...
XI. Conclusion
Rule 12b-1 stands as a monument to the law of unintended consequences. The benefits that 12b-1 fees supposedly would confer remain unrealized, yet the revenues generated under the rule have grown impressively over the years. Any objective analysis...
X. Legal Recourse as a Tool for Chance
A. Introduction If load fund boardrooms seem like an inhospitable place to look for 12b-1 reform, the same is true of the nation's courtrooms, at least to date. No lawsuit attacking 12b-1 plans has succeeded, and, as discussed above, suits contesting...
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