FIDUCIARY DUTY AND THE EX OFFICIO CONUNDRUM IN CORPORATE GOVERNANCE: THE TROUBLESOME MURKINESS OF THE GUBERNATORIAL TRUSTTEE'S OBLIGATIONS
Salar Ghahramani, 10 Hastings Bus. L.J. 1 (2014)
Should governors serve on the boards of incorporated universities as ex officio members? This article examines the question by considering the expeience of Pennnsylvania State University and analyzes the implications of governors serving on the boards of state- aided corporations by focusing on the fiduciary responsibilities of directors under corporate law. The article concludes that the current statutory framework needs reconsideration and asserts that while there is no question that the state's public interests should trump an institution's "private" interests, it is the state that has chartered the corporation for the promotion of a public good (education) and has appointed the governor to guard the institution's best interests as one of its directors. Accordingly, if the ex officio director is in a position where he may not be able to serve the corporation's interests as a fiduciary, the law must require him to step down from the board,as the current paradigm's constant tensions between public governance political objectives and private corporate governance principles, as defined by centuries of fiduciary law, cannot be sustained.
ONE WORLDWIDE SET OF GLOBAL ACCOUNTING STANDARDS - HMM
Neal F. Newman, 10 Hastings Bus. L.J. 37
This paper examines the contemplated worldwide adoption of IFRS. This paper explores whether a one size fits all accounting regime is viable where economies around the globe, though interconnected, have different histories, different cultural norms, different economic dynamics, different investor and capital bases, and therefore, perhaps different uses for financial information. Do these different cultural norms, economic dynamics, investor and capital bases therefore necessitate different uses for financial information? And if so, how does that affect the stated goal of "[a] single set of high quality global accounting standards?" It is possible that these different cultural norms, economic dynamics, investor bases, etc. are inconsequential to this worldwide adoption effort? Or, upon closer examination, there may be differences so significant that one single set of high-quality global accounting standards is not viable when each province seeks to adopt, interpret, and apply these global standards locally. It is doubtful whether all major and minor countries around the world can adopt, interpret, and enforce the IASB's IFRS version in a uniform manner. This paper's intent is to explore and highlight the difficulties of this proposition.
Part II explains in general terms what the differences are between IRS and the accounting regimes most prevalent prior to the movement towards IFRS. Explaining the differences between IFRS and other accounting regimes helps create a backdrop for the issues involved with switching from a country's local accounting regime to IFRS. Parts III, IV and V study our sample countries-Japan, China, and Russia-and 1) discuss at what stage the particular country is in adopting IFRS; 2) highlight the IFRS issues particular to that country; and 3) analyze how those issues might impact the stated goal of one single set of high quality global accounting standards.' These countries have been selected because they are ranked third, second, and fourth, respectively, in the world in terms of GDP and therefore give valuable insight on the issues related to IFRS adoption on a global scale.
Finally, Part VI explores possible measures to help facilitate successful IFRS implementation. The suggestion in Part VI is both aggressive and aspirational. But, by making the suggestion, the hope is to foster a full appreciation for the challenges that face this monumental global effort as well as the considerable collective effort that will be required to truly achieve the stated goal of "a single set of high quality global accounting standards."
CREATING A CULTURE OF COMPLIANCE: WHY DEPARTMENTALIZATION MAY NOT BE THE ANSWER
Michele DeStefano, 10 Hastings Bus. L.J. 71
Over the past few decades, as corporate criminal liability rules, sentencing guidelines, and settlement incentives have changed, there has been increased emphasis on and resources devoted to the compliance function at large publicly held companies. In this article, Professor DeStefano traces the development of the compliance function at large corporations and questions the recent mandate by certain governmental entities that malfeasant corporations designate a chief compliance officer and separate the compliance gatekeeping function from the legal department so that this chief compliance officer does not report to the general counsel. She categorizes the types of arguments made for and against departmentalization and then analyzes them from the perspective of the public's objectives to increase detection, monitoring, and prevention of corporate misconduct. By examining secondary literature, surveys, and interviews she conducted with 70 general counsels and chief compliance officers, she hypothesizes that preemptive departmentalization may not be in the public's best interest. It may not increase transparency into compliance transgressions at corporations, actual compliance by corporations, or the commitment by corporations to a culture of compliance and ethics. Further, such structural reorganization of the compliance function may generate consequences that offset the potential benefits of departmentalization and create a sense of false complacency that distracts from substantive cultural change that is integrated throughout the organization. Ultimately, she concludes that a focus on culture and informal norms may have more potential to meet the public's objectives than a focus on organizational structure. Therefore, she proposes the government revise its current focus on the external manifestations of compliance to inward, cultural change. Specifically, she suggests that the government reward corporations that take an inward look at how work is actually being done within the company and at the networks and organizational culture that exists beneath the surface of the organization chart, the mission statement, and code of conduct. Such focus, she believes, could enable compliance structures and programs that promote public access to information about compliance transgressions, actual compliance by corporations, and a culture of compliance and ethics within a corporation.
TO BE OR NOT TO BE A FUNDING PORTAL: WHY CROWDFUNDING WILL BECOME BROKER-DEALERS
Shekhar Darke, 10 Hastings Bus. L.J. 183
The recently enacted JOBS Act created crowdfunding exemption to securities registration, allowing entrepreneurs to raise capital for their ventures from everyday investors. The crowdfunding exemption has many stipulations such as a maximum investment and offering amounts within a given period. Also, investors can only invest in crowdfunding opportunities through intermediaries that are registered as broker-dealers or funding portals. The JOBS Act created funding portal registration as an easier alternative to the more burdensome broker-dealer registration. Thus, many people believe that crowdfunding platforms will opt to register as funding portals. However, this note argues that crowdfunding platforms would rather choose broker-dealer registration because broker-dealer registration provides more revenue opportunities, flexibility, versatility, and regulatory clarity.
BOLSTERING COMPETITION IN THE INTERNATIONAL REMITTANCE MARKET: A PROPOSAL FOR REFORMING THE CURRENT REGULATORY LICENSING FRAMEWORK GOVERNING MONEY TRANSMISSION BUSINESS
Leslie Gutierrez, 10 Hastings Bus. L.J. 207
State licensing requirements for money transmission businesses involved in international remittances have allowed key players Western Union and MoneyGram to benefit from the high demand for remittances and the lack of competition by enabling these entities to impose inflated prices on migrant consumers. With the growth of remittance flows and the rise of technological innovations, such as Internet and mobile payments, the current state-by-state licensing requirements for money transmission businesses prove to be overly burdensome and expensive and, ultimately, a barrier to entry for small businesses and start-ups. This note proposes to replace the current money-transmitting state licensing framework with a single, federal licensing requirement in order to increase market competition and provide more reasonable prices to consumers. Federal licensing would alleviate the burden of varying state licensing requirements while still allocating to the states control of money transmission businesses through oversight of compliance with state consumer protection regulations.
A RIGHT WITHOUT A REMEDY IS NO RIGHT AT ALL: A CASE FOR WHY AB 1844 REQUIRES A REMEDIAL SCHEME AND WHAT IT MIGHT BE
Tina Lu, 10 Hastings Bus. L.J. 225
This note seeks to explore whether California intended to create a right or right of action for a plaintiff seeking to sue an employer for an AB 1844 violation, and if so, what remedies are available to the plaintiff. This note discusses several remedies that may be available: options include, but are not limited to, a discussion of the remedial scheme created by the Private Attorney General Act of 2004; a wrongful discharge claim in violation of public policy; or a civil penalty. Next, this note discusses whether or not the trifocal approach of the rights--right of action--remedy equation is the best test a court should use and advocates for an alternative analysis under Professor Zeigler's singular approach. Lastly, this note suggests a solution for the California courts to adopt in deciding a case arising under AB 1844.
CONFIDENTIAL IDEAS AND INDEPENDENT CONTRACTORS: TRADE SECRET OWNERSHIP IN THE AGE OF THE HIRED GUN
Rob P. Saka, 10 Hastings Bus. L.J. 245
Does an independent contractor or a party hiring the contractor own the new, confidential ideas that fall outside of what the contract or is hired to provide, but that arise during the course of that work? The issue of tradesecret ownership is important due to the growing use of contractors, particularly in the tech development industry. This note explores the emerging issue of trade secret ownership in the post- Great Recession era of increased reliance on contractor-inventors. In concluding that-absenta contrary written agreement- contractor- inventors are the rightful owners of their incidentally created trade secrets while assigned to a project, this note reviews the law, offers policy perspectives, and then sets forth contractterms that both sides could use in negotiations.