Bite-Sized Business Law

Is litigation funding driving the next big wave of mass tort cases and if so, what incentives does that create? Samir Parikh and Emily Siegel join the podcast today to help us explore the $15 billion litigation finance industry. Samir, a professor of corporate and bankruptcy law at Wake Forest Law, discusses the opaque nature of some financiers and their influence on mass tort litigation, often prioritizing profit over justice. Emily shares her perspective as a senior reporter at Bloomberg Law, highlighting the growing role of key players driving opaque capital – like sanctioned Russian actors operating as hedge funds – and the potential risks involved, including national security concerns. As financiers increasingly view mass tort disputes through the prism of an asset sale, they inevitably reshape the legal landscape, trigger ethical dilemmas for attorneys, and risk flooding the system with non-meritorious claims. Despite the controversies, litigation finance can level the playing field, offering a lifeline to claimants with legitimate cases. But as more money flows into mass tort disputes, less focus is placed on justice for victims. Tune in to explore the complexities and implications of litigation funding in mass torts and find out why transparency and regulation are more crucial than ever.

Key Points From This Episode:

• How litigation funding is driving mass tort cases.
• Introducing today’s guests, Samir Parikh and Emily Siegel.
• Key players driving opaque capital, including highly aggressive private equity firms.
• Samir's explanation of opaque capital financiers' profit motives.
• Why many modern tort cases more closely resemble asset sales than litigation.
• The risks that various parties face in mass tort litigation when it is funded by opaque capital.
• Emily’s findings on how Russian billionaires are avoiding sanctions by funding lawsuits.
• Why a lack of reporting requirements for funding litigation could pose a national security risk.
• Key questions raised by the Johnson & Johnson mass tort case and the potential of a future litigation regarding “forever chemicals.”
• The Daubert Standard in mass tort claims and the impact it has on funder decisions.
• Why mass torts are particularly attractive to litigation financiers.
• Ethical obligations in mass tort cases and how the attorney-client relationship is at risk.
• The impact of litigation funding on corporate defendants.
• A reminder that many legitimate financiers do a lot of good and the value that they add.
• How legitimate litigation financiers help meritorious claimants gain access to justice.
• The biggest risks posed by the new Arizona state law regarding mass tort cases.
• An overview of non-meritorious claims threatening system integrity.
• Why robust regulations and disclosures are necessary.

Links Mentioned in Today’s Episode:

Samir Parikh

Samir Parikh on LinkedIn

Emily Siegel on LinkedIn
Bite-Sized Business Law Episode 30: The Opaque Capital Fueling Mass Tort Litigation

‘Opaque Capital and Mass Tort Financing’
'Putin’s Billionaires Dodge Sanctions by Financing Lawsuits (1)

Fordham University School of Law Corporate Law Center

Go inside this most infamous financial crime with guest Stephen Fishbein, who has argued some of the most influential insider trading cases in modern history. Almost everyone, no matter your knowledge base, has an opinion about insider trading. And most peoples’ opinions are that it’s evil. But do you know exactly what insider trading is (not even Congress has defined it) and how you are affected by it? To help us dissect insider trading law and explain why we need to recalibrate our thinking around how we prosecute this white-collar crime, distinguished trial lawyer and partner at A&O Shearman, Stephen Fishbein, joins us. Stephen begins by explaining how his early career as a federal prosecutor serves him in the work that he does today in private law. Stephen describes the law’s ever-changing definition of insider trading, why Congress has yet to provide its own definition of insider trading, Dirks v. SEC’s establishment of the baseline, how United States v. Newman changed the law, and how the Blaszczak cases revealed a different side of insider trading. We also learn about shadow insider trading and the misappropriation theory, how political ambitions inside prosecutors’ offices have shaped insider trading law in America, what the law looks like in the rest of the world, and the dangers of not doing enough research on insider trading for you and your business. To end, we take a philosophical detour to debate whether insider trading is inherently good or bad and our guest shares his thoughts on what policymakers need to be doing more of to change the way insider trading is policed.

Key Points From This Episode:

• Stephen Fishbein's professional background and how he ended up at A&O Shearman.
• How his experience as a prosecutor influences the work that he does today.
• Understanding the main features of insider trading under Rule 10b-5.
• The basics of insider trading law as established in Dirks v. SEC.
• How (and why) United States v. Newman changed the law.
• Why Congress has thus far been reluctant to provide its own definition of insider trading.
• The Blaszczak cases: a different type of insider trading.
• The correlation between shadow insider trading and the misappropriation theory.
• How political ambitions inside the U.S. Attorney's Office have shaped insider trading law.
•  Insider trading law in other countries.
• Whether insider trading is right or wrong on a philosophical level.
• What American lawmakers need to be thinking more about with regard to insider trading.

Links Mentioned in Today’s Episode:
Stephen Fishbein

Stephen Fishbein on LinkedIn

A&O Shearman 

‘Misappropriation Theory’

‘Title 15’

‘Dirk v. SEC’

‘United States v. Martoma’

United States v. Blaszczak I

United States v. Blaszczak II

Den of Thieves

Fordham University School of Law Corporate Law Center

Corporate boards use their expertise to advance the best interests of the corporation and its shareholders. But they’re only human. What if we could create a board made up of entirely unbiased, indefatigable members who never falter and never tire? Today we explore the idea of inviting artificial intelligence into the boardroom with Sergio Alberto Gramitto Ricci, an associate professor of law at the University of Missouri, Kansas City. Sergio’s well-known paper, “Artificial Agents in Corporate Boardrooms,” has taken on new significance with the rapid progression of AI technology. Tuning in, you’ll hear about both the risks and rewards of introducing AI into the boardroom. We delve into what Delaware law has to say about legal personhood before Sergio discusses his concerns about having AI make decisions for companies and why the lack of AI accountability is problematic. We debate the risks around AI becoming sentient, and discuss whether new laws will be introduced to allow AI inside corporate boardrooms. Tune into this fascinating and informative episode today!

Key Points From This Episode:

• Welcoming today’s guest, Sergio Alberto Gramitto Ricci. 
• How Sergio got interested in the idea of AI in the boardroom.
• How ancient Roman practices of using highly intelligent slaves translates to the use of AI in boardrooms. 
• AI Governance Nirvana and how it could address the problem of agency costs. 
• Why there will always be a place for humans in the boardroom. 
• What Delaware law has to say about legal personhood when it comes to boards of directors. 
• Sergio discusses the idea of accountability and why AI cannot be held accountable. 
• Why Sergio is so concerned about AI becoming sentient. 
• The effects of using AI to make decisions for companies. 
• The likelihood of introducing new laws to make use of AI in boardrooms. 
• Whether transparency about the use of AI in the boardroom would solve the legal roadblocks to using AI in the boardroom. 

Links Mentioned in Today’s Episode:

Sergio Alberto Gramitto Ricci

Sergio Alberto Gramitto Ricci on LinkedIn

Sergio Alberto Gramitto Ricci on X

‘Artificial Agents in Corporate Boardrooms’

Fordham University School of Law Corporate Law Center

American financier, Michael Milken, has been called many things, from the junk bond king to a criminal and a fraud. But he has also been credited as the most important person to alter the financial markets since JP Morgan, with some even estimating that he has created more wealth for shareholders than any financier in modern history. Milken is perhaps best known for his role in the development of the market for high-yield bonds, also referred to as junk bonds, and his conviction and sentence following a guilty plea on felony charges for violating US securities laws in 1990. Joining us today to discuss this important figure is Richard Sandler, Executive Director of the Milken Family Foundation, Director of the Milken Institute, and a personal lawyer to Michael Milken during his criminal investigation. We talk with Richard about his book, Witness to a Prosecution: The Myth of Michael Milken, and why he argues that Milken is one of the most misunderstood public figures of all time. Richard shares his insights on key events during this era, Michael’s true character, and the convoluted and unjust processes that led to his conviction. Tune in to hear the full story of Michael Milken from his personal friend and lawyer, Richard Sandler!

Key Points From This Episode:

• Some background on Richard Sandler and his legal career.
• How he came to work with Michael Milken at Drexel Burnham Lambert.
• Richard’s long relationship with Milken, beginning in childhood.
• His response to those who question his objectivity regarding Milken.
• A breakdown of high-yield bonds, also known as junk bonds, and how they work.
• Milken’s early interest in high-yield bonds and why he believed in their potential value.
• Why Drexel allocated capital to him to invest in new securities.
• Unpacking the disruption that Milken caused and how this upset Wall Street.
• An overview of Ivan Boesky, his role on Wall Street, and his conviction for insider trading.
• What it was like when Milken was formally charged.
• The unusual amount of publicity that this case received and the implications of this.
• A breakdown of the charges against Milken, the proceedings, and why Milken pled guilty.
• Why the criminal process is not a level playing field, no matter what your resources are.
• The deeply disruptive impact the case had on Milken and his young family.
• Key flaws in the prosecutorial system and assumptions of guilt.
• Richard’s respect for Milken’s lawyers and his take on punishment for non-violent crimes.
• What compelled him to write Witness to a Prosecution: The Myth of Michael Milken.
• Reflecting on Milken’s true character as a good and caring individual.
• What Milken is doing today and his many philanthropic endeavors.

Links Mentioned in Today’s Episode:

Richard Sandler

Witness to a Prosecution: The Myth of Michael Milken

Michael Milken

Three Felonies A Day: How the Feds Target the Innocent

The Milken Family Foundation

Fordham University School of Law Corporate Law Center

Do shareholder proposals compel corporations to speak in ways that violate the First Amendment? Although shareholder proposals have been studied from numerous angles, the concept of compelled speech is fairly novel. And this question raises several other inquiries, including the nature of corporate purpose and the rationale behind negative speech rights in the first place. Joining us to discuss this fascinating proposition is Professor Sean J. Griffith, the T.J. Maloney Chair in Business Law at Fordham Law School, a former Director of the Fordham Corporate Law Center, and an expert in corporate and securities law. Tuning in, you’ll gain insight into Sean’s paper, ‘Shareholder Proposals and the Negative Speech Rights of Corporations’, how the shareholder proposal rule predominantly relates to sociopolitical issues rather than financial or company performance issues, and how it compels corporations to speak on controversial issues. We also touch on a corporation’s right to religious freedom, what companies can do to oppose shareholder proposals and much more, so be sure to listen in today!

Key Points From This Episode:

• What inspired Sean to write articles on shareholder proposals and corporate speech.
• Corporations that the shareholder proposal rule applies to and what it entails.
• How the shareholder rule (Rule 14a-8) has evolved since its inception.
• Ways that shareholder proposals compel corporations to speak on controversial issues.
• Supreme court cases that illustrate violations of companies’ First Amendment rights.
• Insight into how a company might seek exclusion from the SEC.
• The relationship between corporate negative speech rights and corporate purpose.
• Intrinsic interests, corporate souls, and the rationale behind negative speech rights.
• Whether or not every social “hot button” issue affects a company’s financial performance.
• How companies can seek to exclude shareholder proposals.
• Why existing policy arguments for and against shareholder proposals haven’t necessarily included First Amendment rights.

Links Mentioned in Today’s Episode:

Sean J. Griffith

Sean J. Griffith on LinkedIn

‘Shareholder Proposals and the Negative Speech Rights of Corporations’

'What’s “Controversial” About ESG? A Theory of Compelled Commercial Speech under the First Amendment’

Fordham University School of Law Corporate Law Center

The perception of defaulted sovereign debt investing has swayed between a masterful strategy and a divisive one that preys on poorer nations. To help us make sense of this, we are joined by one of the godfathers of sovereign debt investing, Jay Newman. Jay has had a remarkable career in international finance, he’s a trailblazer in sovereign debt investing, and now, with his first novel, Undermoney, he has also cemented himself as a captivating author. After learning about Jay’s roots and history in finance, he gives us his definition of sovereign debt investing and how he and his company helped to develop the strategy. Then, we dive into the 15-year saga that concluded with one of the biggest hedge fund trades in history: Argentine bonds. Jay gives us his first-hand experience of the drama including how Argentina acted throughout, how he dealt with pitfalls and challenges, Argentina’s fatal mistake, his asset seizure strategy, and the lessons that can be learned from the seizure of The Libertad. We also discover how the Yegiazaryan v. Smagin ruling of 2023 affects sovereign debt investing, what Jay has to say about the negative perceptions of sovereign debt investing, and the ins and outs of his enthralling debut novel, Undermoney. 

Key Points From This Episode:

• Getting to know the international finance expert-turned-novelist, Jay Newman. 
• What drew him away from law and into finance, and a look at his professional history.
• The idea behind sovereign debt investing. 
• How Jay and his company helped to develop the sovereign debt strategy, and the role of the bond market.
• The 15-year saga that concluded with one of the biggest hedge fund trades in history.
• A critical assessment of how Argentina operated during the saga, and how Jay dealt with it. 
• Argentina’s fatal misstep. 
• When Jay knew that it was time to pursue Argentina’s assets, and the strategies he used. 
• The story behind the seizure of the Argentine naval ship, The Libertad. 
• Understanding what broke the stalemate between Argentina and its creditors. 
• Jay’s advice for how to handle winning judgments that may not be immediately lucrative. 
• How the Yegiazaryan v. Smagin ruling of 2023 impacts sovereign debt investing.
• Our guest’s retort against sovereign debt investing being a predatory, suppressive strategy.  
• What inspired him to write Undermoney; the scary truth behind the fiction. 

Links Mentioned in Today’s Episode:

Jay Newman 

Jay Newman on LinkedIn

Jay Newman on X

Undermoney 

Elliott Management 

Default: The Landmark Court Battle over Argentina's $100 Billion Debt Restructuring 

Beaufort 

‘22-381 Yegiazaryan v. Smagin (06/22/2023)’ 

‘Peter Clement Returns: The Death of Wagner Leader Yevgeny Prigozhin’

Fordham University School of Law Corporate Law Center

It seems that the very purpose of a corporation, to make money over the long run, has been dashed by incentives to perform quarter after quarter. As the American attention span diminishes while our hunger for instant gratification and constant growth intensifies, how should the law evolve? How should corporations adapt? What is the SEC’s role in reigning it all in? During this episode, we are joined by UCLA Law Professor James Park, a leading expert in securities regulation, public companies, and securities fraud. Join us as we discuss his book, The Valuation Treadmill which delves into familiar case studies, including Xerox, Penn Central, and Apple, to consider how the constant pressure to meet projections causes public companies to commit securities fraud. Touching on the PSLRA, Sarbanes-Oxley, Dodd-Frank, and the concept of real earnings management, we discuss the pressure public companies face to meet earnings projections and the lengths to which they’ll go to keep pace with such projections. Is valuation pressure inevitable in our economy or are there ways around it? Hear James’s ideas, learn more about what drives certain companies to commit securities fraud, and decide whether there’s a way off of this treadmill.

Key Points From This Episode:

•The shift that has occurred in keeping with the reduced American attention span.

•Introducing guest James Park, professor, author, and expert.

•His definition of the Valuation Treadmill.

•The utility of forecasting and the related dark side.

•Xerox as a case study.

•Penn Central and the surrounding scandal that caused us to lose faith in managers.

•How the story of Apple’s early products demonstrates the necessity of understanding the risk of investing in tech.

•The PSLRA passed in 1995 and how it offers protection for projections.

•Considering criticisms of the PSLRA and to what extent it was successful. 

•Where Sarbanes-Oxley and Dodd-Frank fit into this conversation.

•The method of real earnings management.

•Why there are bigger losses at stake when misrepresenting the numbers.

•Finding better ways to embrace disclosure.

•The impact executive compensation packages have on securities fraud.

•James’s suggestion that proving a motive is sufficient and why it is controversial.

•Why the duty disclose is only going to get stronger.

Links Mentioned in Today’s Episode:

James Park at UCLA

James Park on LinkedIn

The Valuation Treadmill

Diana Henriques on Taming the Street

Fordham University School of Law Corporate Law Center

Insurance is central to our economy and lives, from global catastrophes to athletes’ pitching arms. Unsexy at first blush but completely fascinating upon deeper examination, insurance is an undeniably essential area of the law. Today’s guest has more than three decades of experience in litigating re-insurance and insurance coverage disputes: Michael Goldstein, Senior Counsel at Mound Cotton Wollan & Greengrass. Tune in as we unpack the areas of human life that insurance law touches, climate and digital risks faced by the industry, and the myriad of career paths in insurance law. Touching on the complex world of war exclusions and policies, we also discuss existing legal precedents and the challenges posed by today’s geopolitical instability at home and abroad. Don’t miss this engrossing conversation exploring celebrity insurance, natural disasters, and much more!

Key Points From This Episode: 

•The essential role that insurance occupies in our economy and our lives.

•An overview of Michael’s experience in re-insurance and insurance law.

•His introduction to insurance and how he came to understand its pivotal position in our world.

•What re-insurance is and the remarkable size of the industry.

•Differentiating between horizontal and vertical coverage.

•Natural disasters and the impact of climate change on insurance risk.

•Risks posed by AI information (and misinformation).

•Whether or not insurance firms should be taking risks in the current landscape.

•Michael weighs in on the dire climate situation in Florida.

•Insurance for war and geopolitical policies and the war exclusions included in war policies.

•How the courts rule on war exclusions and unrest.

•COVID-19 and the surrounding rulings for this Act of God.

•  The role of insurance giants in the 2008 financial crisis.

•  AIG’s bailout and it’s repayment in full of $182.3 billion in December 2012, leaving taxpayers with a $23 billion profit.

•Insight into insuring athletes and celebrities. 

•Event cancellation insurance and hole-in-one insurance.

•The effect of the number of occurrences on insurance.

•How the insurance industry remains agnostic about political issues.

Links Mentioned in Today’s Episode:

Michael Goldstein on LinkedIn

Michael Goldstein at Mound Cotton Wollan & Greengrass

Mound Cotton Wollan & Greengrass

2024 Global Risks Report

Fordham University School of Law Corporate Law Center

Bitcoin is a controversial subject, but it is no secret that it is becoming an incredible opportunity for investment. Today’s guest, Anthony Scaramucci, was one of the earliest supporters of Bitcoin and has had an incredible career in business as an investment fund manager and in politics as former White House communications director. He joins us today to talk about Bitcoin’s big ETF victory. Tuning in, you’ll hear about Anthony’s impressive background, what led him to start buying Bitcoin, how his company, Sky Bridge, is invested in Bitcoin, the huge Bitcoin ETF controversy, and more! We delve into why Bitcoin skeptics might simply need more education before discussing why a “boom/bust” cycle is inevitable in society and the importance of patience in investing. Finally, Anthony tells us what to expect for other coins getting ETF approval and what’s happening with Bitcoin abroad. To hear all this and get motivated to do some Bitcoin research, press play now!

Key Points From This Episode:

•Welcoming today’s guest, Anthony Scaramucci.

•Anthony tells us a bit about his background and what led him to work in the White House.

•What made Anthony decide to start buying Bitcoin and his company’s investment in Blackrocks’ Bitcoin ETF.

•The controversy around Bitcoin ETFs in the USA and why the outcome is a victory.

•The DC Circuit Court’s opinion invalidating the SEC’s position on the Bitcoin ETF.

•Anthony encourages listeners to do a deep dive into Bitcoin’s potential.

•Why Bitcoin skeptics simply misunderstand it.

•The inevitability of “boom/bust” cycles in society.

•The importance of patience in investing.

•How Bitcoin has done since the ETF approval.

•Anthony’s prediction about other coins getting ETF approval.

•What’s happening with Bitcoin ETFs all over the world.

Links Mentioned in Today’s Episode:

Anthony Scaramucci on LinkedIn

Anthony Scaramucci on X

Anthony Scaramucci on Instagram

Sky Bridge

SALT.org

Fordham University School of Law Corporate Law Center

Today on Bite-Sized Business Law, we discuss the very bad day that Elon Musk had recently as a result of the Delaware Court of Chancery opinion that started with a simple question: “Was the richest person in the world overpaid?” This is the first time that a court of law has overturned a board’s decision on compensation. Here to walk us through exactly what happened (and why) is the esteemed Richard Squire, Professor Of Law at Fordham Law School. Join us as we unpack some of the important considerations raised for boards and independent directors when deciding upon significant compensation awards, why Tesla’s directors maintained a somewhat cavalier attitude concerning the formalities the courts require in these circumstances, and how the sheer size of the grant ultimately influenced the outcome of the decision. We also touch on the precedent that this ruling sets and how it could lead to similar suits against other outrageous CEO pay packages. Be sure to tune in for a fresh take on this “intergalactic corporate conflict!”

Key Points From This Episode:

•   The story behind the Tesla compensation package that would have paid Musk $55+ billion.

•   Whether or not Musk achieved the benchmarks necessary for payout.

•   Reasons shareholders sued him over the payout.

•   How Tesla’s stock price has responded to the ruling.

•   An overview of the plaintiff’s main argument in this case.

•   Why the stockholder vote approving Musk’s grant was deemed “not fully informed.”

•   What the Delaware safe harbor provisions are and how they might have been achieved here.

•   Important considerations for boards and independent directors when deciding on significant compensation awards like this.

•   When it becomes necessary for the courts to step in.

•   Grounds for appeal and how this decision will impact corporate negotiation strategies.

•   How the eye-watering size of the grant factored into the Delaware court’s decision.

•   Ways that this case lays the blueprint for companies to safeguard executive pay.

•   Why Musk is mad at Delaware and how he could influence business investment there.

•   Insight into the appeal of the Delaware Chancery Court ruling.

•   Some of the questions we’d like to see addressed if the case is appealed.

Links Mentioned in Today’s Episode: 

Tornetta v. Musk: Post-Trial Opinion

Richard Squire

Richard Squire on LinkedIn

Fordham University School of Law Corporate Law Center