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Author: Dave Hoffman

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Dunbar and Heller on the Future of Securities Class Actions

For those who want background on why Judge Alito’s strong recent re-affirmation the efficient capital markets hypothesis matters, there is a new article on SSRN for you.

Frederick Dunbar and Dana Heller (both of National Economic Research Associates) have posted “Fraud on the Market Meets Behavioral Finance,” forthcoming in the Delaware Journal of Corporate Law. From the abstract:

The efficient market hypothesis, in its current form, dates academically from 1970 and it was first accepted by a Federal Court in a shareholder class action in 1975, providing plaintiffs with a rebuttable presumption of reliance based on the fraud-on-the-market theory. By 1988, the fraud-on-the-market theory was the law in most Circuits and was affirmed by the Supreme Court in Basic v. Levinson. Since then, the efficient market hypothesis has not been rebutted in any case involving actively traded securities, and its impact on securities litigation and regulation extends well beyond class certification to materiality, causation and damages. Somewhat ironically, over the same time period, financial economics was, first, finding anomalies in securities markets that were not consistent with the Supreme Court’s version of the efficient market hypothesis and, second, using concepts borrowed from behavioral economics to develop theories of securities price formation to explain, among other things, the stock price bubble of the late 1990s. In fact, even proponents of the efficient market hypothesis have claimed that securities were mispriced during this episode. If courts were to adopt behavioral finance explanations of securities market behavior, then prior precedent would not be appropriate in a number of areas of securities fraud including reliance, materiality, causation and damages. We explore the implications of how analysis of these issues would be changed by application of behavioral finance.

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Stove Top Stuffing Obit

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Ruth M. Siems, lead inventor of stove top stuffing, died last week. Her obit in the Times was, sadly, patronizing and somewhat nasty. Margalit Fox writes that Siems’ invention will make its appearance in homes tomorrow, “welcome or otherwise”, that it is “[c]omforting or campy,” and it is an “enduring emblem of postwar convenience culture.”

Look. I’m not a huge fan of this stuff, but – like other parts of the “postwar convenience culture” – it has made it possible for Americans to spend less time at the stove, and at pursuits that they apparently find more rewarding. Like working. Or spending time with children. And, it seems that snarking at the product misses an interesting life story. The obit gives us a few facts:

Ruth Miriam Siems was born in Evansville, Ind., on Feb. 20, 1931. She earned an undergraduate degree in home economics from Purdue University in 1953, and after graduation took a job at the General Foods plant in Evansville, where she worked on flours and cake mixes. She moved to the company’s technical center in Tarrytown, N.Y., not long afterward. Ms. Siems retired in 1985.

Besides Ms. Porter, of Copley, Ohio, Ms. Siems is survived by another sister, Rosemary Snyder, of Chicago; and a brother, David, of Milford, Mich.

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On Blawg Comments

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Now that this blawg is a little over two months old, we’re starting to get spammed with some frequency in the comments. I take this to be sort of like a toddler learning to crawl. It is chaotic, messy, and time-consuming in the short-term, but signals long-term progress.

However, it got me to thinking about a comment policy. Although we, unlike some, allow comments, we don’t exactly have an easy to find comment (removal) policy. Nor do we have a “diary” system which would permit our visitors to create their own content. With respect to the former non-policy, we’re like ACSBlog, Althouse, Opinio Juris, among others. No blawgs to my knowledge have a diary system.

Before discussing why, it is worth canvassing the field.

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Faculty Recruitment Practices

Brian Leiter has this interesting recent post on some high-pressure AALS faculty recruitment practices. Coincidentally, I just received an email from the “AALS Special Committee on Faculty Recruitment Practices,” which states, in relevant part:

The special committee’s specific charge was to determine whether, in light of [certain] complaints, something like a statement of good practices in faculty recruitment was appropriate. Of course, a prerequisite first step in fulfilling that charge is determining what practices are occurring and whether or not they are sufficiently problematic in frequency and type that a statement of good practices is necessary or appropriate. To that end, a survey of current practices seemed appropriate. Hence, this email message, which is being sent to faculty members who participated in the faculty recruitment conference within the past two years and are now full-time faculty members at an ABA approved law school/AALS member law school. We know that you are very busy individuals.

Busy, yes. But not too busy to blog.

My guess, based on anecdotes from the law clerk hiring process and discussions about international norms with colleagues, is to doubt that AALS will succeed at stamping out abuse in the absence of a real enforcement hammer. But you’ve got to give them credit for trying, because the current market is set-up to produce some unhappy marriages between candidates and schools.

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Wex

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Cornell Law School’s Legal Information Institute recently launched WEX, “a collaboratively built, freely available legal dictionary and encyclopedia.” Sounds peachy. What is it?

According to an email which has been circulating from the Tom Bruce, Director of the LII [who kindly gave me permission to quote]:

At the risk of sounding a little more diffident than perhaps I should, I’ll say that we’ve just put something sorta new and very interesting on the LII site. It’s called WEX, and we are hoping that it will grow into a very ambitious and interesting project indeed — interesting and ambitious enough that we should be trumpeting it from the housetops, I suppose, but for the moment we’re confining ourselves to low-key conversations with our friends and supporters. Hence this note.

WEX . . . will be the first collaboratively edited legal encyclopedia and dictionary on the web, aimed specifically at law novices.

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David Giacalone on the FTC’s Price Gouging Statement

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David Giacalone has a nice new post up about the FTC’s recent position statement against a federal price gouging law. I had missed this development last week.

According the FTC’s chairperson, “[e]nforcement of the antitrust laws is the better way to protect consumers.”

As a first take, I think I agree that there is no pressing need for yet more federal regulation of economic activity, especially where states are both capable, and in this case motivated, to take care of the “problem” themselves. This is particularly true in this context, where the harms attributed to price gouging are localized and fleeting.

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Unauthorized Practice on Craigslist?

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I was recently browsing Craigslist’s Legal Forum. On that forum, folks post legal problems and others answer them. Some of the answering posters identify as lawyers, but do not provide their names.

The forum describes itself as follows:

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DISCLAIMER – craigslist is not responsible for, and you may not rely upon, the accuracy of any information or advice posted here – this forum is provided for educational and entertainment purposes only – you should consult with an attorney prior to acting on any information found here.

Will such boilerplate really protect CL if, say, the PA Bar were to seek an injunction again the discussion group for hosting the unauthorized practice under 42 PA C.S.A. 2524? Or if the Bar were ask the attorney general of Pennsylvania to seek criminal penalties under that section’s misdemeanor provisions? I’m imagine that CL would try to avoid liability by pointing to the “Terms of Use” provisions on the page, but do such disclaimers survive a Grokster-like analysis? Maybe Dan’s analysis of suing wikipedia would throw some light on this problem. I haven’t been able to find much in the legal ethics literature on this problem – and some might argue that state bars have enough on their hands without investigating internet practice.

Obviously, what constitutes the practice of law is a matter for debate, and you should feel free to visit the site yourself and make your own mind up.

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Saddam’s Host of Lawyers

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Via Drudge, I hear that 1,100 lawyers are leaving Saddam Hussein’s defense team because of security fears. But Saddam’s trial will go on.

I lack expertise in the Iraqi security situation and legal system, and so I’m left with a (perhaps naive) question: why does Saddam need over a thousand lawyers? [And how did the team apparently grow by 1,089 lawyers over a few weeks?] Only three explanations come to mind.

1. Saddam plans to mount a meticulous defense to the charges on the merits, and needs hundreds of attorneys to comb through the evidence against him, interview witnesses, and develop a coherent legal strategy.

2. Saddam plans to win at trial by hook-or-crook, and has employed a host of lawyers as a first step in rebuilding his empire of patronage and client relationships.

3. Saddam is not in control of his legal team. The person who is plans to use the opportunity as first step in building an empire of patronage and client relationships.

Possibility #1 is a joke; #2 is delusional; #3 is just sad.