Annual Report 2009–2010

institute for law & economics .....

A Joint Research Center of the Law School, the Wharton School, and the Department of Economics in the School of Arts and Sciences at the University of Pennsylvania Message from the Co-Chairs 1 Insights from Practice 20 Board of Advisors 2 Delaware Chancery Program 20 Message from the Dean 4 Lectures 22 Message from the Co-Directors 5 Law and Entrepreneurship 24 Roundtable Programs 6 Distinguished Jurist 28 Corporate Roundtable, Spring 2010 8 Past Lectures 30 Corporate Roundtable, Fall 2009 10 Academic Events 32 Off the Record, Spring 2009 12 Penn/NYU Conference, Spring 2010 34 Corporate Roundtable, Spring 2009 12 NYU/Penn Conference, Spring 2009 34 Corporate Roundtable, Fall 2008 14 ILE/Wharton Finance Seminars 36 Corporate Roundtable, Spring 2008 14 Publications and Papers 38 Panel Programs 16 Associate Faculty 40 Chancery Court Programs, Spring 2010 18 Institute Investors 49

Founded in 1980, the Institute for Law and Economics at the University of Pennsylvania has an ambitious agenda that is timelier than ever. The study of law and economics remains the most rapidly growing movement in legal scholarship and jurisprudence. Under the sponsorship of the Law School, the Wharton School, and the Department of Economics in Penn’s School of Arts and Sciences, the Institute has played a leading role in this expanding field. Cross-disciplinary research, the cornerstone of ILE, seeks to influence the national policy debate by analyzing the impact of law on the global economy, spotlighting the significant role that economics plays in fashioning legal policy. Our innovative roundtables and conferences, launched in 1985, complement these goals by provoking in-depth and frequently groundbreaking examinations of critical issues. These and other programs highlighted in this Annual Report have helped the Institute stay on the leading edge of this cross-discipline. The Institute for Law and Economics has unique advantages. We draw on the research and teaching strengths of the Law School, the Wharton School, and the Department of Economics. Our geographic location is optimal, allowing us to bring together participants from Washington and New York for full-day meetings and still get everyone home in time for dinner. We have been able to call on the expertise of Penn Law School alumni who occupy key positions in law, business, and government. And, critically, we have an extraordinarily distinguished cadre of board members and sponsors who are willing to give of their time and expertise to make our programming a success. In each area, from our public lectures and panels through our closed-door roundtables to our more academically- oriented faculty workshops, we are driven by the same mission: to use the tools of economics to understand the law. In a world in which complex legal rules govern economic relationships, the tools of economics provide a way of asking whether the law creates appropriate incentives to encourage actors to maximize social welfare. Funding for ILE comes from a diverse group of corporations, law firms, foundations, and individuals who endorse our work each year. Over the past decade, the Institute has more than tripled its donor base to provide ongoing support for the programs discussed in this Annual Report. A list of Institute Investors for 2009–2010 appears on page 49.

Cover Captions Top: Joseph D. Gatto, Barclays Capital Americas. Left: Hon. Leo E. Strine, Jr., Delaware Court of Chancery. Right: Roy J. Katzovicz, Pershing Square Capital Management, L.P. Message from the Co-Chairs for almost three decades, penn’s institute for law and economics has contributed to scholarship, policy, and practice on relevant issues of law and economics that affect our country’s businesses and financial institutions.

The Institute’s programs have become increasingly relevant and important in this challenging economic climate, focusing on the issues that the academic, legal, and business communities care about. Today the Institute enjoys an outstanding international reputation for the excellence of its programs, where leaders in business, financial management, legal practice, and academic scholarship candidly discuss the intersec- tion of theory and practice on a host of significant issues. Your participation in these programs is a vital component of their success. On behalf of the Institute’s Board of Advisors, we want to express our gratitude to everyone who has helped the Institute during this past year, whether through financial contributions or by participation in ILE programs. One of the foremost goals of the Institute is to broaden and diversify our foundation, and once again we have realized that goal. We are delighted to report some superb additions to our Board of Advisors during the past year. We are pleased to welcome the following new members: Louis J. Bevilacqua (Cadwalader, Wickersham & Taft LLP); Stephen Fraidin (Kirkland & Ellis LLP); Dennis J. Friedman (Gibson, Dunn & Crutcher LLP); Mark I. Greene (Cravath, Swaine & Moore LLP); Brendan R. Kalb (AQR Capital Management, LLC); Jeffrey D. Marell (Paul, Weiss, Rifkind, Wharton & Garrison LLP); Allan N. Rauch (Bed Bath & Beyond); and one returning member, Joel E. Friedlander (Bouchard Margules & Friedlander). These accomplished individuals will greatly enhance the work of the Institute and broaden the composition of our Board. All of the members of our Board give graciously to the Institute, not just financially but also of their time and expertise, and we are very grateful for their contributions. Very special thanks must be given to ILE Benefactors Bob Friedman, Paul G. Haaga, Jr., and Skadden, Arps, Slate, Meagher & Flom LLP (through Eric Friedman). Their extraordinary level of financial support enables the Institute to continue to lead the field, and we want to express our sincere appreciation to each of them. Jill Fisch, Ed Rock, and Michael Wachter have continued to be truly outstanding as co-directors of the Institute. We look forward to welcoming Bill Bratton as a co-director in the upcoming year, as Ed Rock will be stepping down. The co-directors’ dedication to all aspects of the Institute’s work and their ability to come up with timely programs and attract the ideal participants to make every program an unqualified success are why ILE is world-renowned as the forum for interesting dialogue on topical issues for corporations and their financial and legal advisors.

Charles “Casey” Cogut Simpson Thacher & Bartlett LLP

Joseph B. Frumkin Sullivan & Cromwell LLP

September 2010

institute for law and economics 1 message from the co-chairs Board of advisorsAdvisors

JamesBarry M. H. AbelsonAgger RobertJoel E. L.Friedlander Friedman PaulRoy G. J.Haaga, Katzovicz Jr. SimonNew M. York, Lorne NY PeterWayne, G. SamuelsPA Chair,Pepper 1994–2001 Hamilton LLP Chair,Bouchard 2001–2007 Margules & ViceGeneral Chairman Counsel Vice Chairman and Chief Proskauer Rose LLP RetiredPhiladelphia, Senior PA Vice SeniorFriedlander Managing Director andCapital Pershing Research Square and Capital LegalJames Officer A. Ounsworth NewDavid York, M. Silk NY President, General ChiefWilmington, Legal Officer DE ManagementManagement, Company L.P. MillenniumManaging Director Wachtell, Lipton, CounselJames H. and Agger Secretary The Blackstone Group L.P. LosNew Angeles, York, CANY ManagementThe Musser ConsultingLLC Group VictoriaRosen & E. Katz Silbey AirChair, Products 1994–2001 and NewDennis York, J. NYFriedman NewWayne, York, PANY SeniorNew York,Vice President—NY Chemicals,Retired Senior Inc. Vice Gibson, Dunn & JohnBruce G. Harkins, N. Kuhlik Jr. Legal and General Counsel Allentown,President, General PA Counsel JosephCrutcher B. FrumkinLLP Chair,Executive 1980–1990 Vice President andJeffrey Morton D. MarellA. Pierce SunGardBruce L. DataSilverstein Systems Inc. and Secretary Co-Chair,New York, 2008– NY HarkinsGeneral Cunningham Counsel LLP Paul,Dewey Weiss, & LeBoeuf Rifkind, LLP Wayne,Young Conaway PA Stargatt RichardAir Products B. Aldridge and Sullivan & Cromwell LLP Philadelphia,Merck & Co., PA Inc. WhartonNew York, & Garrison NY LLP & Taylor, LLP MorganChemicals, Lewis Inc. & Bockius LLP NewEric J.York, Friedman NY Whitehouse Station, NJ New York, NY DavidWilmington, M. Silk DE Philadelphia,Allentown, PA PA Executive Partner Leon C. Holt, Jr. Martha L. Rees Wachtell, Lipton, JosephSkadden, D. GattoArps, Slate, RetiredMark Vice Lebovitch Chairman and AlanVice Miller President and Assistant RosenA. Gilchrist & Katz Sparks III WilliamRichard B.D. AldridgeAnderson, Jr. ViceMeagher Chairman & Flom LLP ChiefBernstein Administrative Litowitz OfficerBerger &Co-Chairman General Counsel NewMorris, York, Nichols, NY Arsht ManagingMorgan Lewis Director & Bockius LLP LehmanNew York, Brothers NY Inc. Air GrossmannProducts and LLP InnisfreeE. I. du M&A Pont deIncorporated Nemours & Tunnell LLP Goldman,Philadelphia, Sachs PA & Co. New York, NY Chemicals,New York, Inc. NY New& Company,York, NY Inc. BruceWilmington, L. Silverstein DE New York, NY Robert L. Friedman Allentown, PA Wilmington, DE Young Conaway Stargatt William D. Anderson, Jr. JosephChair, 2001–2007Glatt Paul S. Levy G. Daniel O’Donnell &Hon. Taylor, Leo LLP E. Strine, Jr. MarshallManaging B.Director Babson PrincipalSenior Managing Counsel Director WilliamFounder B. Johnson DechertMyron LLP J. Resnick Wilmington,Vice Chancellor DE HughesGoldman, Hubbard Sachs & Co. Apolloand Chief Capital Legal Officer ChairmanJLL Partners Emeritus Philadelphia,Retired Senior PA Vice President Delaware Court of &New Reed York, LLP NY Management,The Blackstone L.P. WhitmanNew York, Corporation NY and Chief Investment Officer A.Chancery Gilchrist Sparks III New York, NY NewGroup York, L.P. NY Chicago, IL JamesAllstate E. Odell Insurance Company Morris,Wilmington, Nichols, DE Arsht Marshall B. Babson New York, NY Robert A. Lonergan ManagingNorthbrook, Director IL and & Tunnell LLP LouisHughes J. HubbardBevilacqua & Reed LLP Perry Golkin BrendanExecutive R. Kalb Vice President, Head of Legal Wilmington,Nancy Straus DE Sundheim Cadwalader,New York, NY MemberJoseph B. Frumkin Co-GeneralGeneral Counsel Counsel and UBSRobert Investment H. Rock Bank Senior Vice President, Heidi Stam Wickersham & Taft LLP KohlbergCo-Chair, Kravis 2008– Roberts & Co.AQRCorporate Capital Secretary NewChairman York, NY and Publisher General Counsel and NewFred BlumeYork, NY NewSullivan York, & NY Cromwell LLP Management,Rohm and Haas LLC Company Directors & Boards ManagingSecretary Director James A. Ounsworth Chairman Emeritus New York, NY Greenwich,Philadelphia, CT PA Philadelphia, PA andUnisys General Corporation Counsel FredBlank Blume Rome LLP John G. Harkins, Jr. Managing Partner VanguardBlue Bell, PA ChairmanPhiladelphia, Emeritus PA Chair,Joseph 1980–1990 D. Gatto CynthiaSimon B. M. Kane Lorne TheGerald SL Consulting Rosenfeld Group Wayne, PA Blank Rome LLP HarkinsChairman Cunningham of Investment LLP SpecialVice AssistantChairman toand the Chief Philadelphia,Deputy Chairman PA Jere R. Thomson Philadelphia,Charles I. Cogut PA Philadelphia,Banking PA SecretaryLegal Officer of State Rothschild North America Hon.Jones Leo Day E. Strine, Jr. Co-Chair, 2008– Barclays Capital DelawareMillennium Department Management, MortonNew York,A. Pierce NY ViceNew Chancellor York, NY Daniel H. Burch Simpson Thacher & LeonAmericas C. Holt, Jr. of StateLLC Dewey & LeBoeuf LLP Delaware Court of Chancery Chairman & CEO Bartlett LLP RetiredNew York, Vice ChairmanNY and Wilmington,New York, DENY NewPeter York, G. NYSamuels Wilmington,Hon. E. Norman DE Veasey MacKenzieNew York, NY Partners, Inc. Chief Administrative Officer Proskauer Rose LLP Chief Justice, Supreme Allan N. Rauch Hon. E. Norman Veasey New York, NY AirJoseph Products D. Glatt and Chemicals, Inc.RoyMichael J. Katzovicz E. Lubowitz New York, NY Court of Delaware, Vice President— Chief Justice, Supreme Court Isaac D. Corré Allentown,General Counsel PA ChiefWeil, Legal Gotshal Officer & Manges LLP 1992–2004 Charles I. Cogut of Delaware, 1992–2004 Senior Managing Director Apollo Capital PershingNew York, Square NY Capital LegalJohn and F. GeneralSchmutz Counsel Weil, Gotshal & Co-Chair, 2008– Weil, Gotshal & Manges LLP Eton Park Capital WilliamManagement, B. Johnson L.P. Management, L.P. BedChair, Bath 1990–1994 & Beyond Manges LLP Simpson Thacher New York, NY, and Management ChairmanNew York, Emeritus NY NewJ. AnthonyYork, NY Messina Union,Retired NJ Senior Vice President New York, NY, and &New Bartlett York, LLPNY Whitman Corporation Buchanan Ingersoll & and General Counsel Wilmington,Wilmington, DE Martha L. Rees New York, NY Chicago,Perry Golkin IL RogerRooney Kimmel PC E. I. du Pont de Nemours Vice President and Marc Weingarten Pamela Craven Kohlberg Kravis VicePhiladelphia, Chairman PA & Company, Inc. Marc Weingarten Isaac D. Corré Schulte Roth & Zabel LLP Chief Administrative Officer StephenRoberts J.& Jones Co. Rothschild Inc. AssistantWilmington, General DE Counsel Schulte Roth & Zabel Senior Managing Director New York, NY Avaya Communications ViceNew President, York, NY General NewAlan York, Miller NY E. I. du Pont de Nemours New York, NY Eton Park Capital & Company, Inc. Basking Ridge, NJ Counsel and Secretary Co-Chairman Howard L. Shecter Gregory P. Williams Management Stuart M. Grant Bruce N. Kuhlik Wilmington, DE Air Products and Chemicals, Inc. Innisfree M&A Incorporated Orrick, Herrington & Richards,Gregory P.Layton Williams & NewRichard York, D’Avino NY Allentown,Grant & Eisenhofer PA P.A. ExecutiveNew York, Vice NY President Sutcliffe LLP Richards, Layton & Myron J. Resnick Finger, P.A. V.P. Taxes-GE Capital and Wilmington, DE and General Counsel New York, NY Finger, P.A. Richard B. Ford Retired Senior Vice President Wilmington, DE NBC Universal Cynthia B. Kane MerckG. Daniel & Co., O’Donnell Inc. Wilmington, DE CT, a Wolters Kluwer General Electric Company SpecialMark I.Assistant Greene to the WhitehouseDechert LLP Station, NJ andRobert Chief Investment C. Sheehan Officer Business Cravath, Swaine Allstate Insurance Company Donald J. Wolfe, Jr. Stamford, CT Secretary of State Philadelphia, PA Executive Partner PotterDonald Anderson J. Wolfe & New York, NY & Moore LLP Mark Lebovitch Northbrook, IL Delaware Department of State Skadden, Arps, Slate, CorroonPotter Anderson LLP & New York, NY BernsteinJames E.Litowitz Odell Berger Meagher & Flom LLP Corroon LLP StephenJoel E. Friedlander Fraidin Wilmington, DE Wilmington, DE Bouchard, Margules & & GrossmannGeneral Counsel, LLP The New York, NY Wilmington, DE Kirkland & Ellis LLP Friedlander NewAmericas York, NY New York, NY Wilmington, DE UBS Investment Bank Victoria E. Silbey Senior Vice President–Legal and General Counsel SunGard Data Systems Inc.

institute for law and economics 2 board of advisors 1 2 3 4

1 Lee Holt and Jim Agger 2 Richard Aldridge 3 Bill Anderson 4 Marshall Babson 5 Isaac Corré 6 Joel Friedlander 7 Bob Friedman 8 Eric Friedman 9 Joe Gatto 10 Perry Golkin 5 6 7 8 11 John Harkins 12 Cynthia Kane 13 Roy Katzovicz 14 Sy Lorne 15 Alan Miller 16 Jim Odell 17 Mort Pierce

9 10 11 12

13 14 15 16 17

18 Martha Rees 19 Victoria Silbey 20 David Silk 21 Bruce Silverstein 22 Gil Sparks 23 Heidi Stam 24 Marc Weingarten 25 Greg Williams 26 Don Wolfe 18 19 20 21

22 23 24 25 26

institute for law and economics 3 board of advisors Message from the Dean for over twenty years, the institute for law and economics has successfully demonstrated the benefits of a cross- disciplinary perspective.

Its programs provide a model for how to build bridges between disciplines by creating ties between schools, between faculty members, between students, and between experts in the field from around the world. ILE combines Penn’s greatest strengths in the Law School, the Wharton School, and the Department of Economics to focus on complex questions that concern all of these fields. The Institute proves that when you bring the right people—judges, deal-makers, regulators, business leaders, lawyers, bankers, policymakers, academics, and more—to convene outside of their own niches, remarkably original insights are generated. As our world grows more complex every day, the topics the Institute addresses are both exciting and relevant. It is no longer enough to approach complicated questions such as the reform agenda, the role of shareholder activism, and the governance of mutual funds from solely a legal, economic, or business perspective. Indeed, no significant business issue can be addressed without paying attention to the underlying economic trends and legal regulations. All of ILE’s participants contribute to and benefit from the profound understanding such analysis affords. In addition to its unique focus, another of the Institute’s strengths is the variety of programs it offers. The roundtables—ILE’s signature events—bring together distinguished members of the bar, judiciary, government, business world, and academia for open discussion and intellec- tual exploration. ILE’s public lectures by leading jurists, executives, and entrepreneurs attract participants from all sectors of the University and from the wider community. During the past year the outstanding talks, panels, and conferences organized by the Institute covered a wide range of topics and programs, from corporate finance and corporate governance to private equity, hedge funds, and mutual funds, as well as large-scale entrepreneurship and management. Since my cross-disciplinary vision for the Law School and the purposes of the Institute for Law and Economics are so similar, it is personally gratifying to me that the Institute is generously supported by contributors who understand the importance of what we do and the unique position the Institute holds. Many of these contributors also serve as members of the Institute’s Board of Advisors, helping to plan the direction and focus of the programs and lending their expertise as panelists and commentators for Institute events. ILE’s extraordinary co-chairs, Casey Cogut and Joe Frumkin, have my particular thanks for their many exceptional contributions. Like all who serve as advisors for ILE, Casey and Joe contribute their very valuable time and expertise, in addition to their numerous contacts in the legal and business communities. ILE has benefited substantially from their leadership. I must also thank the three eminent professors who lead the Institute for Law and Economics—Michael Wachter, Ed Rock, and Jill Fisch. It is because of their commitment and enthusiasm that ILE ranks among the premier institutions of its kind. I extend the deepest appreciation to all ILE supporters and participants for their commitment and investment during the past year. With the proper support and sponsorship, the Institute for Law and Economics has limitless potential for growth and expansion in the future. We welcome others to join in backing and participating in this extremely worthwhile endeavor.

Michael A. Fitts, Dean and Bernard G. Segal Professor of Law, University of Pennsylvania Law School

September 2010

institute for law and economics 4 message from the dean Message from the Co-Directors our programs this year explored some of the most critical issues of the day.

Our Fall Corporate Roundtable explored reasons for and against shareholder empowerment. We also examined the various reform agendas for the financial system and how they would affect this area of corporate governance. In the spring, we looked at the regulation of mutual funds as well as funds’ internal corporate governance. At the fall Insights from Practice program, we showcased dealmakers and asked how their practice had been affected by the financial crisis. And in our spring Chancery Court programs, we looked back on two key decisions of the Delaware courts, Paramount Communications v. Time and NCS v. Omnicare, to revisit the arguments and to appraise their impact. Over the course of the year, we presented two fascinating Law and Entrepreneurship lectures. In the fall, J.P. Suarez, Senior Vice President and General Counsel of Wal-Mart Stores International Division, spoke to an overflowing audience about maintaining an entrepreneurial spirit in one of the largest corporations in the world. In the spring, Joseph D. Gatto, Chairman of Investment Banking for the Americas for Barclays Capital, spoke about managing through the recent financial crisis. For our Distinguished Jurist lecture, Hon. Lewis A. Kaplan of the Southern District of New York spoke on “Private Securities Litigation—Time for a Fresh Start?” Our joint programs with Wharton’s Finance Department flourished. The Law and Finance series, a regular part of the Finance workshop schedule, continued with presentations by Howell Jackson (James S. Reid, Jr. Professor of Law, Harvard Law School) and Anil Kashyap (Edward Eagle Brown Professor of Economics and Finance, The University of Chicago Booth School of Business). In February, we hosted the sixth annual Penn/NYU Law and Finance Conference, a joint venture of the Institute for Law and Economics, the Wharton Financial Institutions Center, and the Pollack Center for Law and Business at New York University. The Institute’s greatest strength lies in the quality of our supporters and their active, enthusiastic participation in our programs. Our board members and sponsors make our programs possible, both as key participants and with their financial support. We would particularly like to acknowledge our board chairs, Casey Cogut of Simpson Thacher & Bartlett LLP and Joe Frumkin of Sullivan & Cromwell LLP, for their dedicated and enthusiastic work over the past year. We are delighted to have added seven new members to the board, and we welcome them: Louis J. Bevilacqua (Cadwalader, Wickersham & Taft LLP); Stephen Fraidin (Kirkland & Ellis LLP); Dennis J. Friedman (Gibson, Dunn & Crutcher LLP); Mark I. Greene (Cravath, Swaine & Moore LLP); Brendan R. Kalb (AQR Capital Management, LLC); Jeffrey D. Marell (Paul, Weiss, Rifkind, Wharton & Garrison LLP); and Allan N. Rauch (Bed Bath & Beyond). We also welcome back one returning member, Joel E. Friedlander (Bouchard Margules & Friedlander). There are changes in the ILE leadership team as well. After twelve years as co-director, Ed Rock is stepping down, although he will remain an active participant. The Institute welcomes William W. Bratton as co-director beginning in the fall of 2010. Bill comes to us from Georgetown University Law Center, where he was the Peter P. Weidenbruch, Jr. Professor of Business Law. He has been an active participant in ILE programs over the years, and we are privileged to have him as a partner moving forward. We extend our heartfelt thanks to all of our supporters for bringing your perspective, your ideas, your experience, and your expertise to all that we do. Your participation is necessary to realize the Institute’s purpose and objectives, and it makes our job as Institute directors immensely satisfying and worthwhile.

Jill E. Fisch, Co-Director, Institute for Law and Economics Perry Golkin Professor of Law

Edward B. Rock, Co-Director, Institute for Law and Economics Saul A. Fox Distinguished Professor of Business Law

Michael L. Wachter, Co-Director, Institute for Law and Economics William B. Johnson Professor of Law and Economics

September 2010

institute for law and economics 5 message from the co-directors

Roundtable Programs at the heart of the institute’s work is the roundtable series, which brings together members of the institute’s associate faculty and other academics with corporate executives, practicing attorneys, judges, public policy- makers, and students. each roundtable provides a forum for lively discussion of current issues that emerge from the research and teaching of the institute.

Over the years, the Institute has sponsored roundtables on a broad range of topics—including labor law and bankruptcy, as well as corporate law, governance, and finance—engaging the interest and participation not only of scholars but also of leaders in the business and public sectors. The high caliber of the participants guarantees that each affair is intense and informative. ILE’s longstanding off-the-record policy for the round- tables is often the impetus for an energetic and wide-ranging exchange of ideas among some of the nation’s most accomplished scholars, attorneys, and business people.

institute for law and economics 7 roundtable programs Corporate Roundtable 9 April 2010

Rethinking the Regulation of Securities Intermediaries Welcome Jill E. Fisch, Perry Golkin Professor of Law, Michael A. Fitts, Dean and Bernard G. Segal Professor of Law, University of Pennsylvania Law School University of Pennsylvania Law School The author argues that existing regulation of mutual funds has serious shortcomings. In particular, the Morning Session Investment Company Act, which is based primarily on principles of corporate governance and fiduciary Rethinking the Regulation of Securities Intermediaries duties, fails to support and, in some cases impedes, Jill E. Fisch, Perry Golkin Professor of Law, University of Pennsylvania Law School market forces. Existing evidence suggests that retail investing behavior and the dominance of sales agents Commentators with competing financial incentives further weakens market discipline. Tamar Frankel, Michaels Faculty Research Scholar and Professor of Law, As a solution, the author proposes that funds should Boston University School of Law be treated primarily as financial products rather than Eric D. Roiter, Former General Counsel, Fidelity Management & Research corporations and, correspondingly, investors should be treated primarily as consumers rather than corporate shareholders. To implement this approach, the author Mutual Fund Performance Advertising: Inherently and Materially Misleading? proposes the creation of a new federal agency that Alan R. Palmiter, Professor of Law, Wake Forest University School of Law would develop standardized financial products coupled with corresponding disclosure principles. Sellers of Ahmed Taha, Professor of Law, Wake Forest University School of Law retail products would be required either to conform their products to these standards or to explain material Commentators differences. The goal is to enhance market discipline Donald G. Bennyhoff, Senior Investment Analyst, Vanguard while making retail funds less complicated and more understandable for individual investors. Eric Zitzewitz, Associate Professor of Economics, Dartmouth College

Mutual Fund Performance Advertising: Afternoon Session Inherently and Materially Misleading? Alan R. Palmiter, Professor of Law, Panel on the Governance of Mutual Funds Wake Forest University School of Law Ahmed Taha, Professor of Law, Moderators Wake Forest University School of Law Jill E. Fisch, Perry Golkin Professor of Law, University of Pennsylvania Law School Mutual funds are a mainstay of our national savings and Michael L. Wachter, William B. Johnson Professor of Law and Economics, retirement systems. Their effectiveness as investment University of Pennsylvania Law School vehicles is critical to our national financial well-being. With individual investors largely responsible for deciding how to allocate their money among different Panelists mutual funds, the question of how this allocation occurs John E. Baumgardner, Jr., Sullivan & Cromwell LLP is central to the functioning of the mutual fund market. Edwin J. Elton, Nomura Professor of Finance, NYU Stern School of Business The most important factor used by investors (and their advisers) in choosing among mutual funds is the Scott Goebel, Senior Vice President and General Counsel, past performance of the funds. Fund investors chase Fidelity Management & Research Company returns. Yet the consistent findings of academic Susan B. Kerley, Strategic Management Advisors, LLC studies—with the evidence growing stronger over Ryan Leggio, Mutual Fund Analyst, Morningstar, Inc. time—is that return chasing is a fool’s game. Strong past returns, except those arising from lower fund Jeffrey S. Puretz, Dechert LLP costs, do not persist over time. Nonetheless, mutual fund companies advertise past performance—in fact, most fund advertising refers to past returns (nominal and risk-adjusted). No fund companies advertise low performance. Performance advertisements are especially effective in attracting fund flow. Advertised funds (with high past performance) garner significantly more new investment dollars than nonadvertised funds, even though advertised funds tend to later under-perform their benchmarks. The authors assert that the current regulation of mutual fund performance advertising is inadequate. Current performance advertisements, as currently regulated, are inherently and materially misleading. By implying that past performance will continue—the clear assumption of reasonable investors—mutual fund companies are engaged in securities deception. Advertising of past performance is misleading since it implies that past returns will persist, despite strong evidence to the contrary. Past performance data is highly material to investors (and their advisers)—that is, there is a substantial likelihood that fund investors view the information as important in their investment decision. And the current SEC-mandated warnings do not effectively “bespeak caution.”

institute for law and economics 8 roundtable programs 2

1

1 Sarah E. Cogan, SimpsonThacher & Bartlett LLP.

2 Front row: Scott Goebel, Fidelity Management & Research Company; David M. Silk, Wachtell, Lipton, Rosen & Katz; Hon. Myron T. Steele, Supreme Court of Delaware. Back row: Martin S. Lessner, Young Conaway Stargatt & Taylor, LLP; Tamar Frankel, Boston University School of Law; Alan R. Palmiter, Wake Forest School of Law; Eric D. Roiter, Boston University School of Law.

3 Susan B. Kerley, Strategic Management Advisors, LLC. 3

4 Front row: John E. Baumgard- ner, Jr., Sullivan & Cromwell LLP; Scott Goebel, Fidelity Management & Research Company; David M. Silk, Wachtell, Lipton, Rosen & Katz. Back row: Martin S. Lessner, Young Conaway Stargatt & Taylor, LLP; Tamar Frankel, Boston University School of Law; Alan R. Palmiter, Wake Forest School of Law; Eric D. Roiter, Boston University School of Law.

5 Edwin J. Elton, Stern School of Business, New York University.

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6 Front row: Perry Golkin, Kohlberg Kravis Roberts & Co.; Jeffrey S. Puretz, Dechert LLP; Edwin J. Elton, Stern School of Business, New York University. Middle row: Gérard Hertig, Swiss Institute of Technology; Eric Zitzewitz, Dartmouth College; Matthew R. Clark, Morris, Nichols, Arsht & Tunnell LLP; Jill E. Fisch, University of Pennsylvania Law School; Donald G. Bennyhoff, Vanguard; Randall S. Thomas, Vanderbilt University Law School; Sarah E. Cogan, Simpson Thacher & Bartlett LLP; Glenn Booraem, Vanguard; William W. Bratton, Georgetown University Law Center. Back row: Mary K. Stokes, Blank Rome LLP; William A. Birdthistle, Chicago-Kent College of Law, Illinois Institute of Technology; Talyana T. Bromberg, Grant & Eisenhofer P.A.

5 6 institute for law and economics 8 roundtable programs institute for law and economics 9 roundtable programs Corporate Roundtable 11 December 2009

Embattled CEOs Welcome Marcel Kahan, George T. Lowy Professor of Law, Michael A. Fitts, Dean and Bernard G. Segal Professor of Law, New York University School of Law Edward Rock, Saul A. Fox Distinguished Professor of University of Pennsylvania Law School Business Law, University of Pennsylvania Law School Morning Session The authors argue that chief executive officers of publicly-held corporations in the United States are Embattled CEOs losing power to their boards of directors and to their Marcel Kahan, George T. Lowy Professor of Law, New York University School of Law shareholders. This loss of power is recent (say, since Edward B. Rock, Saul A. Fox Distinguished Professor of Business Law, 2000) and gradual, but nevertheless represents a University of Pennsylvania Law School significant move away from the imperial CEO who was surrounded by a handpicked board and lethargic shareholders. After discussing the concept of power Commentators and its dimensions, we document the causes and Roy J. Katzovicz, Chief Legal Officer, Pershing Square Capital Management symptoms of the decline in CEO power in several areas: share ownership composition and shareholder Reinier H. Kraakman, Ezra Ripley Thayer Professor of Law, Harvard Law School activism; governance rules and the board response to shareholder activism; regulatory changes related to The Case Against Shareholder Empowerment shareholder voting; changes in the board of directors; and executive compensation. The authors argue that William W. Bratton, Peter P. Weidenbruch, Jr. Professor of Business Law, this decline in CEO power represents a long-term Georgetown University Law Center trend, rather than a temporary response to economic Michael L. Wachter, William B. Johnson Professor of Law and Economics, and political conditions. The decline in CEO power has University of Pennsylvania Law School several important implications, including implications with respect to the possibility of a regulatory backlash against certain newly empowered shareholder groups, Commentators future development in Delaware’s corporate law, the William D. Anderson, Jr., Managing Director, Goldman, Sachs & Co. type of persons who will serve on corporate boards in the future, the type of shareholder initiatives that will Roberta Romano, Oscar M. Ruebhausen Professor of Law, Yale Law School be introduced and the corporate response to them, the convergence of corporate laws across countries, Afternoon Session the source of resistance to acquisitions and the legal Panel on the Reform Agenda regulation of target defenses, the desirability of legal reforms expanding shareholder voting rights, and the relationship between CEOs and private equity firms. Moderators Jill E. Fisch, Perry Golkin Professor of Law, University of Pennsylvania Law School The Case Against Shareholder Empowerment William W. Bratton, Peter P. Weidenbruch, Jr. Professor Edward B. Rock, Saul A. Fox Distinguished Professor of Business Law, of Business Law, Georgetown University Law Center University of Pennsylvania Law School Michael L. Wachter, William B. Johnson Professor of Law and Economics, University of Pennsylvania Law School Panelists Hon. Jeffrey W. Bullock, Secretary of State, Delaware Department of State Many look toward enactment of the law reform Lucian A. Bebchuk, William J. Friedman and Alicia Townsend Friedman Professor of Law, agenda held out by proponents of shareholder Economics, and Finance, Harvard Law School empowerment as a part of the regulatory response to the financial crisis. The authors argue that the Glenn Booraem, Principal and Assistant Fund Controller, Vanguard financial crisis exposes major weaknesses in the Marcy Engel, Chief Operating Officer and General Counsel, Eton Park Capital Management shareholder case. Their claim is that shareholder Scott Goebel, Senior Vice President and General Counsel, empowerment delivers management a simple and emphatic marching order: manage to maximize the Fidelity Management & Research Company market price of the stock. And that is exactly what the Robert McCormick, Chief Policy Officer, Glass, Lewis & Co., LLC managers of a critical set of financial firms did in recent years. They managed to a market that focused on increasing observable earnings and, as it turned out, failed to factor in concomitant increases in risk that went largely unobserved. The fact that management bears primary responsibility for the disastrous results does not suffice to effect a policy connection between increased shareholder power and sound regulatory reform. A policy connection instead turns on a counterfactual question: Whether increased shareholder power would have imported more effective risk management in advance of the crisis. We conclude that no plausible grounds exist for making such a case.

institute for law and economics 10 roundtable programs 1 2

1 Front row: Jeffrey W. Bullock, Delaware Department of State; Marcy Engel, Eton Park Capital Management. Middle row: John C. Wilcox, Sodali Ltd.; Jennifer Shotwell, Innisfree M&A Incorporated.

2 Robert E. Spatt, Simpson, Thacher & Bartlett; Hon. Jack B. Jacobs, Supreme Court of Delaware.

3 Hon. Travis Laster, Delaware Court of Chancery; Charles I. Cogut, Simpson Thacher & Bartlett LLP.

4 Front row: Scott Goebel, Fidelity Management & Research Company; Robert McCormick, Glass Lewis & Co, LLC; Glenn Booraem, Vanguard. Middle row: Merritt B. Fox, Columbia Law School.

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5

5 Marcy Engel, Eton Park Capital Management.

6 Robert E. Spatt, Simpson, Thacher & Bartlett; Eric J. Friedman, Skadden, Arps, Slate, Meagher & Flom LLP; Heidi Stam, Vanguard; Peter G. Samuels, 4 Proskauer Rose LLP.

6 institute for law and economics 10 roundtable programs institute for law and economics 11 roundtable programs Off the Record: A Board Discussion of the Financial Crisis 26 May 2009

The Off the Record program was created as a forum Eton Park Capital Management, New York City for the ILE Board of Advisors and a select group of invitees to discuss candidly the current financial crisis in an informal setting. The presentation by Richard Moderators Herring provided the context explaining how the crisis Isaac D. Corré, Senior Managing Director, Eton Park Capital Management came about. Edward Rock’s presentation detailed Jill E. Fisch, Perry Golkin Professor of Law, University of Pennsylvania Law School several different plans for recovery and suggestions for reform moving forward. The program was hosted Michael L. Wachter, William B. Johnson Professor of Law and Economics, at the offices of Eton Park Capital Management in University of Pennsylvania Law School New York City. Presentations by Richard J. Herring, Jacob Safra Professor of International Banking; Professor of Finance, The Wharton School Edward B. Rock, Saul A. Fox Distinguished Professor of Business Law, University of Pennsylvania Law School

Corporate roundtable 8 May 2009

Welcome Afternoon Session Michael A. Fitts, Dean and Bernard G. Segal Professor of Law, Panel on the Government as Shareholder University of Pennsylvania Law School Moderators Morning Session Edward B. Rock, Saul A. Fox Distinguished Professor of Business Law Shareholder Primacy in a Corporatist Political Economy Michael L. Wachter, William B. Johnson Professor of Law and William W. Bratton, Peter P. Weidenbruch, Jr. Professor of Economics, University of Pennsylvania Law School Business Law, Georgetown University Law Center Michael L. Wachter, William B. Johnson Professor of Law and Panelists Economics, University of Pennsylvania Law School Alan Beller, Cleary Gottlieb Steen & Hamilton LLP Robert F. Hoyt, Department of the Treasury Commentators Roberta Romano, Oscar M. Ruebhausen Professor of Law, Joseph B. Frumkin, Sullivan & Cromwell LLP Yale Law School Mark J. Roe, David Berg Professor of Law, Harvard Law School Hon. Leo E. Strine, Jr., Vice Chancellor, Delaware Court of Chancery

Big Deal: The Government’s Response to the Financial Crisis Steven M. Davidoff, Associate Professor of Law, University of Connecticut School of Law David Zaring, Assistant Professor of Legal Studies, The Wharton School

Commentators Isaac D. Corré, Senior Managing Director, Eton Park Capital Management Andrew Metrick, Professor of Finance, Yale School of Management

institute for law and economics 12 roundtable programs 1 Front row: Heidi Stam, Vanguard; Hon. Donald F. Parsons, Jr., Delaware Court of Chancery; Gerald Rosenfeld, Rothschild North America. Middle Row: Eric D. Roiter, Boston University School of Law.

2 Robert L. Friedman, The Blackstone Group L.P.; Alan L. Beller, Cleary Gottlieb Steen & Hamilton LLP; Hon. Leo E. Strine, Jr., Delaware Court of Chancery. 1

3 Perry Golkin, Kohlberg Kravis Roberts & Co.; Lee A. Meyerson, Simpson Thacher & Bartlett LLP; Hon. E. Norman Veasey, Weil, Gotshal & Manges LLP

2 3

4 Perry Golkin, Kohlberg Kravis Roberts & Co.; Gerald Rosenfeld, Rothschild North America; Charles I. Cogut, Simpson Thacher & Bartlett LLP; Jill E. Fisch, University of Pennsylvania Law School; Isaac D. Corré, Eton Park Capital Management; Michael L. Wachter, University of Pennsylvania Law School; Joseph D. Gatto, Barclays Capital Americas; Joseph B. Frumkin, Sullivan & Cromwell LLP; G. Daniel O’Donnell, Dechert LLP; Marcy Engel, Eton Park Capital Management; Robert H. Mundheim, Shearman & Sterling LLP. 4 5 Marcy Engel, Eton Park Capital Management; Robert H. Mundheim, Shearman & Sterling LLP.

6 William W. Bratton, Georgetown University Law Center; Martha L. Rees, DuPont. Middle row: Stephen L. Brown, TIAA-CREF; Martin S. Lessner, Young Conaway Stargatt & Taylor, LLP; Andrew R. Brownstein, 5 Wachtell, Lipton, Rosen & Katz.

6 institute for law and economics 12 roundtable programs institute for law and economics 13 roundtable programs Corporate Roundtable 12 December 2008

Welcome Afternoon Session Michael A. Fitts, Dean and Bernard G. Segal Professor of Law, Panel on How Do Institutional Investors Decide to Vote University of Pennsylvania Law School Their Shares? How Should They Decide?

Morning Session Moderators Are U.S. CEOs Overpaid? Edward B. Rock, Saul A. Fox Distinguished Professor of Business Law Steven N. Kaplan, Neubauer Family Professor of Entrepreneurship and Michael L. Wachter, William B. Johnson Professor of Law Finance, The University of Chicago Graduate School of Business and Economics, University of Pennsylvania Law School

Commentators Panelists John E. Core, Ira A. Lipman Professor and Professor of Accounting, Stephen L. Brown, Director of Corporate Governance, TIAA-CREF The Wharton School Jill E. Fisch, Perry Golkin Professor of Law, University of Pennsylvania Damon Silvers, Associate General Counsel, AFL-CIO Law School Paul G. Haaga, Jr., Executive Vice President, Capital Research and Rating the Ratings: How Good Are Commercial Management Company Governance Ratings? Michael McCauley, Senior Corporate Governance Officer, Robert M. Daines, Pritzker Professor of Law and Business, Florida State Board of Administration Stanford Law School Robert McCormick, Chief Policy Officer, Glass Lewis & Co, LLC Ian D. Gow, Stanford University Graduate School of Business Eric D. Roiter, Lecturer, Boston University School of Law [former David F. Larcker, James Irvin Miller Professor in Finance, General Counsel, Fidelity Management & Research Company] Stanford University Graduate School of Business Hon. Myron T. Steele, Chief Justice, Supreme Court of Delaware

Commentators Martha Carter, Managing Director, Corporate Governance, RiskMetrics Group Andrew Metrick, Professor of Finance, Yale School of Management

Corporate roundtable 6 June 2008

Saïd Business School, University of Oxford Commentators Horst Eidenmüller, Professor, University of Munich Opening Address Carolyn Conner, Allen & Overy LLP Colin Mayer and Timothy Endicott, Deans of Saïd Business School and Faculty of Law, University of Oxford Afternoon Session Panel Discussion on Doing Deals When the Sky Is Falling Morning Session Hedge Fund Activism in Europe Moderators Marco Becht, Director, European Corporate Governance Institute; John H. Armour, Lovells Professorship in Law and Finance, Professor of Finance and Economics, Université Libre de Bruxelles Oriel College, University of Oxford Julian Franks, Professor of Finance, London Business School Edward B. Rock, Saul A. Fox Distinguished Professor of Business Law, Jeremy Grant, Executive Director of the Centre for Corporate University of Pennsylvania Law School Governance, London Business School Panelists Commentators David S. Blitzer, Senior Managing Director, Private Equity Group, John H. Armour, Lovells Professorship in Law and Finance, The Blackstone Group International Limited Oriel College, University of Oxford Charles Crawshay, Assistant Secretary, The Takeover Panel Roy Katzovicz, Chief Legal Officer, Pershing Square Capital Todd Fisher, Kohlberg Kravis Roberts & Co. Management, L.P. Chris Hale, Travers Smith Tim Jenkinson, Professor of Finance, Saïd Business School, Hedge Fund Activism in the Enforcement of Bond Covenants University of Oxford Marcel Kahan, George T. Lowy Professor of Law, New York University Stephanie Keen, Lovells LLP School of Law Simon Walker, CEO, British Venture Capital Association Edward B. Rock, Saul A. Fox Distinguished Professor of Business Law, University of Pennsylvania Law School

institute for law and economics 14 roundtable programs 1 Paul G. Haaga, Jr., Capital Research and Management Company.

2 Front row: Simon Walker, British Venture Capital Association; Todd Fisher, Kohlberg Kravis Roberts & Co. Back row: Joseph B. Frumkin, Sullivan & Cromwell LLP; Jill Fisch, Fordham University School of Law.

1 3 Marco Becht, European Corporate Governance Institute and Université Libre de Bruxelles.

2 3

4 Front row: Carolyn Conner, Allen & Overy LLP; David Jackson, BP plc. Back row: Joshua Getzler, Faculty of Law, University of Oxford; Wanjiru Njoya, Faculty of Law, University of Oxford.

5 Front Row: Stephen L. Brown, TIAA-CREF; Hon. Myron T. Steele, Supreme Court of Delaware. Middle row: Anna Gelpern, Rutgers School 4 of Law—Newark. Back row: Faith Stevelman, New York Law School. 5

6 David S. Blitzer, The Blackstone Group International Limited; Chris Hale, Travers Smith; Tim Jenkinson, Saïd Business School, University of Oxford.

7 Paul S. Levy, JLL Partners.

7

6 institute for law and economics 14 roundtable programs institute for law and economics 15 roundtable programs institute for law and economics 16 panel programs panel programs in addition to the roundtable series, the institute hosts several panel programs each year that explore important topics in the areas of law and finance. the panelists on these programs provide students and other attendees with real-world examples of the complex situations they face in their professional careers.

These programs are usually followed by Corporate Governance Dinners with further commentary and discussion. The Corporate Governance Dinners provide an opportunity for off-the-record commentary and conversation among presenters and members of the board of advisors, their invited colleagues, and the Institute’s associate faculty.

institute for law and economics 16 panel programs institute for law and economics 17 panel programs Chancery Court Program 20 April 2010

NCS v. Omnicare NCS v. Omnicare

Moderators Hon. Leo E. Strine, Jr., Vice Chancellor, Chancery Court This spring’s Chancery Court programs looked at key cases in corporate law jurisprudence. of Delaware The panelists at this event had argued and decided the NCS v. Omnicare case. Michael L. Wachter, William B. Johnson Professor In this case, the board of directors of NCS had agreed to a merger with Genesis. The of Law and Economics, University of Pennsylvania Law School merger agreement between NCS and Genesis contained a provision that required the Genesis agreement be placed before the corporation’s stockholders for a vote, even if the Panelists NCS board of directors no longer recommended it. After approving the merger agreement Stephen P. Lamb, Paul, Weiss, Rifkind, Wharton & but before the stockholder vote was scheduled, the NCS board of directors withdrew its Garrison LLP David McBride, Young Conaway Stargatt & Taylor, LLP recommendation for the Genesis merger after deciding that a competing proposal H. Jeffrey Schwartz, DLA Piper LLP from Omnicare was a superior transaction. But two NCS stockholders holding a majority Donald J. Wolfe, Potter Anderson & Corroon LLP of the voting power had already agreed to vote all of their shares in favor of the Genesis merger, guaranteeing the merger with Genesis would obtain NCS stockholder approval. After applying the Unocal standard of enhanced judicial scrutiny, the Delaware Court of Chancery held in NCS v. Omnicare that the defensive measures were reasonable and denied a request by stockholders to stop the merger between NCS and Genesis. The decision was reversed by the Supreme Court of Delaware in a controversial ruling.

Chancery Court Program 16 February 2010

High-Stakes Showdown in Delaware: High-Stakes Showdown in Delaware: Key Participants Look Back at Key Participants Look Back at Paramount Communications v. Time Paramount Communications v. Time

Moderators This program looked at Paramount Communications v. Time from the perspective of lawyers Hon. Leo E. Strine, Jr., Vice Chancellor, who worked on the case, and the former Chancellor of the Delaware Chancery Court that Chancery Court of Delaware Michael L. Wachter, William B. Johnson Professor decided it. of Law and Economics, University of Pennsylvania The case involved Time, Warner, and Paramount, at that time three of the nation’s Law School largest entertainment companies. The central issue in Paramount’s suit was whether Time’s directors had in effect put the company up for sale when they agreed to a merger Panelists William T. Allen, Nusbaum Professor of Law and with Warner. If the company was for sale, then its directors would have been obligated to Business, Director, Pollack Center for Law and Business, respond to bids from Paramount and others. In his decision Chancellor Allen said Time’s New York University School of Law board had not put the company up for sale and therefore was not required to get the Martin Lipton, Wachtell, Lipton, Rosen & Katz Theodore N. Mirvis, Wachtell, Lipton, Rosen & Katz best price for its stock. “Corporation law does not operate on the theory that directors, in Paul K. Rowe, Wachtell, Lipton, Rosen & Katz exercising their powers to manage the firm, are obligated to follow the wishes of a majority of shares,” he wrote. “Directors, not shareholders, are charged with the duty to manage the firm.” The ruling was seen as an affirmation of the rights of corporate directors to control the fate of their companies.

institute for law and economics 18 panel programs 1

1 Victoria Silbey, SunGard Data Systems Inc.

2 Hon. Leo E. Strine, Jr., Delaware Court of Chancery.

3 Martin Lipton, Wachtell, Lipton, Rosen & Katz; William T. Allen, New York University School of Law. 2 4 Jon H. Outcalt, Former Chairman, NCS Healthcare, Inc.

5 Joel E. Friedlander, Bouchard Margules & Friedlander; Mark Lebovitch, Bernstein Litowitz Berger & Grossmann LLP.

3 4

5 6

6 H. Jeffrey Schwartz, DLA Piper LLP; Stephen P. Lamb, Paul, Weiss, Rifkind, Wharton & Garrison LLP.

7 Morton A. Pierce, Dewey & LeBoeuf LLP.

8 David McBride, Young Conaway Stargatt & Taylor, LLP; Donald J. Wolfe, Potter Anderson & Corroon LLP.

7 institute for law and economics 18 panel programs institute for law and economics 19 panel programs Insights from Practice 13 October 2009

Panel Co-Chairs The new Insights from Practice series showcases cutting-edge issues in corporate Joseph B. Frumkin, Sullivan & Cromwell LLP practice. For this panel, five distinguished corporate lawyers shared their career paths G. Daniel O’Donnell, Dechert LLP and recent experiences with the audience. The discussion centered on three topics, Panelists viewed against the backdrop of the financial crisis that began in 2007: the current state Kenneth A. Lefkowitz, Hughes Hubbard & Reed LLP of the mergers and acquisitions market, since it was most immediately and directly Howard L. Meyers, Morgan, Lewis & Bockius LLP Peter G. Samuels, Proskauer Rose LLP affected by the crisis; changes in compensatory practices that have emerged as a result of the crisis; and the impact of the crisis on what a corporate lawyer does day-to-day. For the students in the audience, the panelists emphasized the necessity of following your interests and being nimble in response to changes in the profession, since different business environments require different skills from corporate lawyers.

Delaware Chancery Court Program 11 February 2009

Shareholder Activism Shareholder Activism

Moderators This program explored examples of shareholder activism in corporate governance. Activist Hon. Stephen P. Lamb, Vice Chancellor, Chancery Court of Delaware shareholders attempt to put pressure on corporate managers to meet a wide variety of Edward B. Rock, Saul A. Fox Distinguished Professor of goals. The program particularly focused on shareholder activism as practiced by hedge Business Law, University of Pennsylvania funds and labor unions, examining the similarities and differences between them. Daniel Speakers Pedrotty from the AFL-CIO talked about the investment strategies that his organization Daniel Pedrotty, Director, Office of Investment, AFL-CIO uses and the goals it hopes to achieve. Marc Weingarten discussed several cases in which Marc Weingarten, Schulte Roth & Zabel LLP he represented activist hedge funds in his practice with Schulte Roth & Zabel LLP.

institute for law and economics 20 panel programs 1

1 Daniel Pedrotty, AFL-CIO; Marc Weingarten, Schulte Roth & Zabel LLP; Hon. Stephen P. Lamb, Delaware Court of Chancery; Edward B. Rock, University of Pennsylvania Law School.

2 2 Peter G. Samuels, Proskauer Rose LLP.

3

3 Howard L. Meyers, Morgan, Lewis & Bockius LLP; Kenneth A. Lefkowitz, Hughes Hubbard & Reed LLP; Joseph B. Frumkin, Sullivan & Cromwell LLP.

4 G. Daniel O’Donnell, Dechert LLP.

4

institute for law and economics 20 panel programs institute for law and economics 21 panel programs institute for law and economics 22 lectures lectures the institute for law and economics presents two series of public lectures: law and entrepreneurship and distin- guished jurist. in sponsoring these events, the institute aims to spotlight and honor lawyers who have led note- worthy careers and made significant contributions as corporate executives and entrepreneurs, or as jurists at the state and federal levels.

Audiences are drawn from all sectors of the University and the legal and business communities. These eminent speakers hold particular appeal and inspiration for students of Penn’s Law School and the Wharton School, with whom they talk informally at receptions following each lecture. The Law and Entrepreneurship lecture is supported in part by the Ronald N. Rutenberg Fund.

institute for law and economics 22 lectures institute for law and economics 23 lectures Law and Entrepreneurship Lectures

3 March 2010 30 September 2009 Managing Through Change, Managing Through Crisis in The ‘Ten Points’ for Maintaining a Risk-Taking Entrepreneurial Financial Services Spirit in a Large Corporation Joseph D. Gatto, Chairman of Investment Banking, J.P. Suarez, Senior Vice President and General Counsel, Barclays Capital Americas Wal-Mart Stores International Division

Joseph D. Gatto is Chairman of Investment Banking of Barclays John Peter Suarez (J.P.) is the Senior Vice President and General Capital Americas. He is also a member of the Barclays Capital Counsel for Wal-Mart Stores International Division, responsible for Investment Banking Executive Committee. In his March ILE managing all legal affairs for the 14 countries in which Wal-Mart lecture, he talked about the challenges of managing at Lehman operates. His areas of responsibility include franchising, operational Brothers during the financial crisis and Lehman’s subsequent support, mergers & acquisitions, employment, tax, compliance, filing for bankruptcy. and supervision over all other legal affairs. J.P. is responsible Prior to joining Barclays Capital in 2008, Mr. Gatto was Vice for providing advice and legal counseling to all members of the Chairman of Lehman Brothers and Co-Head of Corporate Finance International management team, including the CEO of the and was a member of the firm’s Investment Banking Executive International Division. Prior to being named to this position, J.P. Committee and Senior Client Council. At Lehman, he had also was the Senior Vice President and Chief Compliance Officer served as Global Chairman of Mergers and Acquisitions. Before for Wal-Mart Stores, Inc., responsible for helping to identify all joining Lehman Brothers in 2005, Mr. Gatto spent 21 years at regulatory issues facing the company, implementing mitigation Goldman, Sachs & Co. becoming a partner in that firm in 1994 plans, and monitoring overall compliance with legal obligations and serving as Chairman of Consumer Products Banking. Over the in the areas of Operations, Pharmacy, Privacy, Environmental, course of the last ten years, he has advised clients on over $300 Immigration and Financial Services, and Food Safety. J.P. also led billion of transactions, primarily in the consumer, industrial and the company’s Product Safety area, helping to ensure that all retail sectors. Wal-Mart’s products meet appropriate safety standards. Mr. Gatto earned his AB (magna cum laude) from Princeton J.P. joined Wal-Mart Stores, Inc. in 2004 and began his career University, his MBA from the University of Pennsylvania’s as the Vice President and General Counsel for Sam’s Club Legal. Wharton School and his JD (cum laude) from the University of He was responsible for managing the legal affairs for Sam’s Club, Pennsylvania Law School. a $44 billion Warehouse Club. His responsibilities included ensuring compliance with regulatory obligations such as OSHA, environmental, and food safety issues and managing operations, employment, merchandise and marketing issues. J.P. also served as the Senior Vice President for Asset Protection for Wal-Mart Stores U.S. Division. Prior to joining Wal-Mart, J.P. served as the U.S. EPA Assistant Administrator for compliance and enforcement, where he was nominated by President Bush and confirmed by the U.S. Senate and was responsible for directing the nation’s environmental compliance and enforcement efforts. He also served as a federal and state prosecutor, and was the chief enforcement officer overseeing New Jersey’s gaming industry. J.P. graduated from the University of Pennsylvania Law School, where he was an Articles Editor for the law review. He completed his undergraduate studies at Tufts University, where he received a B.A. in English and Drama with honors in both majors.

institute for law and economics 24 lectures institute for law and economics 24 lectures institute for law and economics 25 lectures Law and Entrepreneurship Lectures

31 March 2009 3 March 2009 The PeopleSoft Deal Defining the 21st Century Campus: The Intersection of Safra Catz, President, Oracle Corporation Education and Community Hon. Michael Nutter, Mayor, City of Philadelphia Safra Catz is President of Oracle Corporation. In her lecture for ILE, Catz provided an inside look at Oracle’s acquisition of PeopleSoft In his first public appearance at Penn since his election, and the lessons she learned from that deal. Mayor Nutter delivered a noteworthy speech on the importance Catz has been a member of Oracle’s Board of Directors since of education in the scope of his plans for the city. October 2001. She serves on Oracle’s Executive Management The Hon. Michael A. Nutter was sworn-in as the 98th Mayor Committee and is responsible for global operations. Previously, she of Philadelphia on January 7th, 2008. Mayor Nutter is a native served as Executive Vice President and Senior Vice President. Prior Philadelphian with an accomplished career in public service, to joining Oracle, Catz was at Donaldson, Lufkin & Jenrette, a global business and financial administration. He served as a Philadelphia investment bank that has since merged with Credit Suisse First City Councilman for nearly 15 years representing the city’s Fourth Boston, where she was a Managing Director from February 1997 District. Before pursuing his career in public service, Mayor Nutter to March 1999, and a Senior Vice President from January 1994 until worked as an investment manager at one of the nation’s leading February 1997. minority-owned investment banking and brokerage firms. Catz is a graduate of the Wharton School and the University Mayor Nutter is a graduate of the Wharton School of Business. of Pennsylvania Law School.

institute for law and economics 26 lectures institute for law and economics 26 lectures institute for law and economics 27 lectures Distinguished Jurist Lectures

29 October 2009 11 November 2008 Private Securities Litigation—Time for a Fresh Start? Delaware Directors’ Fiduciary Duties: The Focus on Loyalty Hon. Lewis A. Kaplan, United States District Judge, Hon. Randy Holland, Justice, Supreme Court of Delaware Southern District of New York The Honorable Randy J. Holland presently serves on the Delaware Judge Kaplan was appointed United States District Judge for the Supreme Court. He is the youngest person to serve on the Delaware Southern District of New York on August 9, 1994 and entered on Supreme Court, having been recommended to the Governor by duty August 22, 1994. He received his A.B. with high honors in a bipartisan merit selection committee. Prior to his appointment political science from the University of Rochester in 1966 and his and confirmation in 1986, Justice Holland was in private practice J.D. cum laude from Harvard Law School in 1969. He then served as a partner at Morris, Nichols, Arsht & Tunnell. In January 1999, he as law clerk to Honorable Edward M. McEntee of the United was reappointed and confirmed unanimously for a second States Court of Appeals for the First Circuit. twelve-year term. Judge Kaplan joined the New York law firm of Paul, Weiss, Justice Holland graduated from Swarthmore College. He also Rifkind, Wharton & Garrison in 1970 and was a partner in the firm graduated from the University of Pennsylvania Law School, cum from 1977 until joining the bench. Since his appointment to the laude, where he received an award for legal ethics. Justice Holland bench, Judge Kaplan has handled a number of well known cases. received a Master of Laws in the Judicial Process from the University He now is presiding over the first criminal prosecution in a federal of Virginia Law School. district court of a Guantanamo detainee. He tried what the government called the largest criminal tax case in U.S. history, the prosecution of many former members of the accounting firm, KPMG, and others, for conspiracy to defraud the United States and for tax evasion. He was responsible for the civil antitrust price-fixing cases brought against Sotheby’s Holdings, Inc. and Christie’s and the companion criminal antitrust case against Sotheby’s. He is presiding over multidistrict litigations relating to the failed Italian company, Parmalat, and to Lehman Brothers Holdings. He has been the trial judge in such intellectual property cases as Universal City Studios, Inc. v. Reimerdes, in which he held that dissemination of a computer program that decrypts copy- righted motion pictures stored on DVDs violated the Digital Millenium Copyright Act, and Larson v. Thomson, which dealt with a claim of joint copyright ownership in the show Rent by a dramaturg who worked on the script. Other noteworthy decisions include his 1998 ruling enjoining the City of New York from interfering with the so-called Million Youth March in Harlem on the ground that the regulations relied upon by the City in banning the march violated the First Amendment as well as a 1997 decision upholding the Welfare Reform Act of 1996 against constitutional challenge. In 2009, Judge Kaplan received the Federal Bar Council’s Learned Hand Medal for excellence in federal jurisprudence and the Judicial Recognition Award of the National Association of Criminal Defense Lawyers. The New York State Bar Association Section on Commercial and Federal Litigation in 2007 awarded him its Stanley H. Fuld Award for “outstanding contributions to commercial law and litigation.” Judge Kaplan is a Judicial Fellow of the American College of Trial Lawyers, judicial liaison to the Council of the ABA Section of Antitrust Law, and a member of the American Law Institute. He is chair of the Technology Committee of the United States District Court for the Southern District of New York, was a member of the Committee on Automation and Technology of the Judicial Conference of the United States from 1997 through 2003, and has served as a director and member of the executive committee of the Federal Judges’ Association.

institute for law and economics 28 lectures institute for law and economics 28 lectures institute for law and economics 29 lectures Past Law and Entrepreneurship Lectures

17 September 2008 26 October 2006 24 March 2004 26 September 2002 2 March 2000 Retailers in a Recession: Managing in the 21st The WNBA and Women’s What They Did Not Teach Perspectives on the Health A Fireside Chat on Investing Century Team Sports: A New Sports Me in Law School Care Revolution with Bill Ackman Henry R. Silverman, Chairman Marketing Proposition for Robert M. Potamkin, Charles A. Heimbold, Jr., William A. Ackman, Managing & CEO, Realogy Corporation the New Millennium Co-Chairman and Co-CEO, Chairman and CEO, Member, Pershing Square Val Ackerman, President, Planet Automotive Group, Inc. Bristol-Myers Squibb Company Capital Management, L.P. 16 February 2006 Women’s National Basketball The Banker as Entrepreneur Association 19 April 2002 18 November 1999 31 March 2008 Michael J. Biondi, Co-Chairman, Smart People Making and Ethics in Sports: Making Every Mistake Once Investment Banking, Lazard 30 October 2003 Losing Money: Some Recent Deciding the Game Safra Catz, President, Oracle Frères & Co. LLC The Role of Entrepreneurship Examples Anita DeFrantz, Vice President, Corporation in Urban Education: Perry Golkin, Kohlberg Kravis International Olympic 26 October 2005 Past, Present and Future Roberts & Co. Committee; President, Amateur 19 September 2007 Founding and Building a James E. Nevels, Chairman and Athletic Foundation Tales from Blackstone’s IPO New Venture: The Story CEO, The Swarthmore Group, 25 October 2001 Robert L. Friedman, Senior of the National Women’s Inc.; Chairman, Philadelphia The Economics of Sports 23 October 1997 Managing Director and Chief Law Center School Reform Commission Team Franchises for Cities How to Maintain Legal Officer, The Blackstone Marcia Greenberger, Founder Hon. Edward G. Rendell, Entrepreneurial Values Group L.P and Co-President, National 6 November 2002 Governor, Commonwealth of While Your Company Climbs Women’s Law Center Public Trust—and Pennsylvania into the Fortune 500 28 February 2007 Distrust— in American Brian L. Roberts, President, Law, Legal Risks, and the 7 April 2005 Business: What Needs to 21 February 2001 Comcast Corporation Financial Markets A Swing of the Pendulum: Be Done Private Equity: Difficult Isaac D. Corré, Senior 20 Years in M&A Peter G. Peterson, Chairman, Investing in a Difficult Time 27 March 1997 Managing Director, Eton Park Joseph D. Gatto, Managing The Blackstone Group; Paul S. Levy, Senior Managing The Unique Impact of the Capital Management Director, Goldman, Sachs & Co. Chairman, Federal Reserve Bank Director, Joseph Littlejohn & Levy Law on the Leveraged of New York; Co-Chair, Buyout Business 29 November 2006 Conference Board Commission Saul A. Fox, Fox Paine & Large-Scale on Public Trust and Private Company, LLC Entrepreneurship: Business Enterprise Development at GE Pamela Daley, Senior Vice President for Corporate Business Development, General Electric Company

Past Distinguished Jurist Lectures

24 October 2007 28 October 2004 6 March 2001 11 February 1997 14 October 1992 The Future of Securities A Twelve-Year Retrospective Administering Capital What Economics of Law Nonprice Competition Regulation on Delaware Corporate Punishment: Must Address Next: Hon. Douglas H. Ginsberg, U.S. Brian G. Cartwright, General Jurisprudence and Is Texas Different? Some Thoughts on Theory Court of Appeals for the District Counsel, Securities and Exchange Governance Issues Hon. Patrick E. Higginbotham, Hon. Guido Calabresi, of Columbia Commission Hon. E. Norman Veasey, Chief U.S. Court of Appeals for the U.S. Court of Appeals for Justice, Delaware Supreme Court Fifth Circuit the Second Circuit 3 December 1991 11 October 2006 Corporate Takeovers and The Embattled Corporation 4 March 2004 24 February 2000 7 February 1996 Our Schizophrenic Hon. Richard A. Posner, Corporate Decision-Making The Court of Chancery as The MTV Constitution Conception of the U.S. Seventh Circuit Court of in Delaware Courts Teacher of Corporate Law Hon. Alex Kozinski, U.S. Court Corporation Appeals and University of Hon. Carolyn Berger, Justice, Hon. William B. Chandler III, of Appeals for the Ninth Circuit Hon. William T. Allen, Chicago Law School Delaware Supreme Court Chancellor, Delaware Court Chancellor, Delaware Court of Chancery 22 March 1995 of Chancery 16 March 2006 27 February 2003 Accountability: Popular Technology Mergers in a The Effects of Collegiality 11 February 1999 Will, Interest Groups, 1990 Shrinking World on Judicial Decision Making Why Do People Bring or the Invisible Hand The Constitution and the Hon. Vaughn R. Walker, Chief Hon. Harry T. Edwards, Circuit Employment Hon. Stephen F. Williams, Spirit of Freedom Judge, U.S. District Court for the Judge, U.S. Court of Appeals for Discrimination Cases When U.S. Court of Appeals for the Hon. Anthony M. Kennedy, Northern District of California the D.C. Circuit They Usually Lose? District of Columbia Associate Justice, Hon. Diane Wood, U.S. Court of U.S. Supreme Court 3 March 2005 29 November 2001 Appeals for the Seventh Circuit 13 April 1994 Corporate Federalism: Fee Shifting as a Control On the Constitution Event Horizons in Corporate Against the Rogue Litigant 12 February 1998 Hon. Antonin Scalia, Associate Governance Hon. Jack B. Jacobs, Justice, The Value of Predictability Justice, U.S. Supreme Court Hon. Myron T. Steele, Chief Supreme Court of Delaware in Corporate Law Justice, Delaware Supreme Court Hon. E. Norman Veasey, Chief Justice, Delaware Supreme Court

institute for law and economics 30 lectures 1 2

Past Law and Entrepreneurship Lectures 1 William A. Ackman 2 Val Ackerman 3 Isaac D. Corré 4 Pamela Daley 5 Robert L. Friedman 6 Marcia Greenberger 7 James E. Nevels 3 4

5 6 7

Past Distinguished Jurist Lectures 8 Brian G. Cartwright 9 Hon. Myron T. Steele 10 Hon. Carolyn Berger 11 Hon. William B. Chandler III 12 Hon. E. Norman Veasey 13 Hon. Jack B. Jacobs 14 Hon. Harry T. Edwards

8 9 10

11 12

13 14 institute for law and economics 30 lectures institute for law and economics 31 lectures institute for law and economics 32 academic events Academic Events major one-and two-day symposia are organized under the sole sponsorship of the institute for law and economics, and in cooperation with other organizations.

In February 2005 we launched an annual conference on Law and Finance, jointly sponsored by ILE, the Wharton School’s Financial Institutions Center, and NYU’s Pollack Center for Law and Business. The conference location alternates between Penn and NYU. In October 2002 ILE debuted the ILE/Wharton Finance series, providing an opportunity for faculty and advanced students from the Law School, the Wharton School, and the Department of Economics to come together around an area of common interest and strengthening the Institute’s core academic relationships. A dinner follows each presentation, with commentary presented by members of ILE’s Associate Faculty from Law, Wharton Finance, and the Department of Economics and a general discussion.

institute for law and economics 32 academic events institute for law and economics 33 academic events Penn/NYU Conference on Law and Finance 26–27 February 2010

University of Pennsylvania Law School Jointly sponsored by Commentator Session III Moderator Commentator Institute for Law and Economics Robert M. Daines, Are Securities Class Actions William T. Allen, NYU Stern School Alan Schwartz, Yale Law School University of Pennsylvania Stanford Law School ‘Supplemental’ to SEC of Business and NYU School of Financial Institutions Center Enforcement? An Empirical Law, New York University Moderator The Wharton School Moderator Analysis Richard E. Kihlstrom, Center for Law & Business Hon. Jack B. Jacobs, Michael Klausner, Session V The Wharton School, New York University Supreme Court of Delaware Stanford Law School When the Government Is the University of Pennsylvania Controlling Shareholder Organized by Session II Commentator Marcel Kahan, New York Session VII William T. Allen, NYU Stern Asset Fire Sales and Simi Kedia, University School of Law The Price of Pay To Play in School of Business and NYU Credit Easing Rutgers Business School Edward B. Rock, University of Securities Class Actions School of Law, New York Andrei Shleifer, Harvard University Pennsylvania Law School Stephen J. Choi, New York University Department of Economics Moderator University Law School Yakov Amihud, Stern School of Robert W. Vishny, Booth School William T. Allen, NYU Stern School Commentator Drew T. Johnson-Skinner, Business, New York University of Business, University of Chicago of Business and NYU School of Heitor V. Almeida, University of Law Clerk to Judge John G. Jill E. Fisch, University of Law, New York University Illinois at Urbana-Champaign Koeltl of the United States, Pennsylvania Law School Commentator District Court for the Southern Michael Roberts, Jonathan R. Macey, Session IV Moderator District of New York The Wharton School, Yale Law School The Impact of Investor Hon. Travis Laster, A.C. Pritchard, University of University of Pennsylvania Protection Law on Corporate Delaware Court of Chancery Michigan Law School Moderator Policy: Evidence from the Blue Session I Michael Roberts, Sky Laws Session VI Commentator Is Delaware’s Antitakeover The Wharton School, Ashwini K. Agrawal, A Lintner Model of Dividends Sanjai Bhagat, Leeds School of Statute Unconstitutional? University of Pennsylvania Stern School of Business, and Managerial Rents Business, University of Evidence from 1988–2008 New York University Bart M. Lambrecht, Lancaster Colorado at Boulder Guhan Subramanian, University Management School Harvard Law School Commentator Stewart C. Myers, MIT Sloan Moderator Steven Herscovici, Allen Ferrell, Harvard Law School School of Management Richard E. Kihlstrom, Analysis Group, Inc. The Wharton School, Brian Barbetta, Analysis Group, Inc. University of Pennsylvania

NYU/Penn Conference on Law and Finance 27–28 February 2009

New York University School of Law Jointly sponsored by Moderator Moderator Moderator Commentator Institute for Law and Economics William T. Allen, NYU Stern School Marcel Kahan, New York Gerald Rosenfeld, NYU Stern Daniel Wolfenzon, Columbia University of Pennsylvania of Business and NYU School of University School of Law School of Business Business School Financial Institutions Center Law, New York University The Wharton School Session IV Session VI Moderator Center for Law & Business Session II The Decisions of Corporate The Returns to Hedge Richard Kihlstrom, The Wharton New York University Motions for Lead Plaintiff in Special Litigation Committees: Fund Activism School, University of Pennsylvania Securities Class Actions An Empirical Investigation Alon Brav, Duke University Organized by Stephen Choi, New York Minor Myers, Brooklyn Law School Graduate School Session VIII William T. Allen, NYU Stern University School of Law Wei Jiang, Columbia Business Does Board Classification School of Business and NYU Commentator School Matter for Industry Rivals? School of Law, New York Commentator Sanjai Bhagat, Leeds School of Frank Partnoy, University of Evidence of Spillover Effects in University Alexander Dyck, Joseph J. Business, University of San Diego School of Law the Market for Corporate Control Yakov Amihud, Stern School of Rotman School of Management, Colorado at Boulder Randall Thomas, Vanderbilt Kose John, NYU Stern School University of Toronto University Law School of Business Business, New York University Moderator Michael Roberts, Dalida Kadyrzhanova, Robert H. Moderator Gerald Rosenfeld, NYU Stern Commentator Smith School of Business, The Wharton School, Edward B. Rock, University of School of Business University of Pennsylvania Stuart Gillan, Rawls College of University of Maryland Pennsylvania Law School Business Administration, Edward B. Rock, University of Session V Texas Tech University Commentator Pennsylvania Law School Session III The Market Value of the Alicia Davis Evans, University of Internal Governance of Firms Vote: A Contingent Claims and Moderator Michigan Law School Session I Viral V. Acharya, London Business One Share-One Vote Is Comparing Legal and Richard Kihlstrom, The Wharton School Unenforceable and Sub-Optimal School, University of Pennsylvania Moderator Alternative Institutions in Stewart C. Myers, Sloan School Avner Kalay, David Eccles School Michael L. Wachter, University of Finance and Commerce of Management, MIT of Business, University of Utah Session VII Pennsylvania Law School H. Franklin Allen, The Wharton Raghuram Rajan, Graduate School Shagun Pant, David Eccles School Rationalizing Appraisal School, University of Pennsylvania of Business, University of Chicago of Business, University of Utah Standards in Compulsory Jun Qian, Carroll School of Buyouts Management, Boston College Commentator Commentator Lawrence Hamermesh, Widener Alan Schwartz, Yale Law School Henry Hu, The University of University School of Law Commentator Texas Law School Curtis Milhaupt, Columbia Michael L. Wachter, University University Law School of Pennsylvania Law School

institute for law and economics 34 academic events 1 2

penn/NYU 10 1 Alan Schwartz, Yale Law School; Michael A. Fitts, University of Pennsylvania Law School.

2 Klaus Hopt, Max-Planck- Institut für ausl. und intern. Privatrecht. 5

3 Simi Kedia, Rutgers Business School. 4

4 Hon. Jack B. Jacobs, Supreme Court of Delaware; Stewart C. Myers, MIT Sloan School of Management. 3

6 7

NYU/Penn 09 5 Jennifer H. Arlen, New York University School of Law.

6 Raghuram G. Rajan, International Monetary Fund.

7 Marcel Kahan, New York University School of Law.

8 Alicia Davis Evans, The University of Michigan Law School.

9 H. Franklin Allen, 8 9 The Wharton School. institute for law and economics 34 academic events institute for law and economics 35 academic events ILE/Wharton Finance Seminars

Co-Sponsored by 18 February 2010 Institute for Law and Economics and Department of Will the U.S. Bank Recapitalization Succeed? Eight Lessons from Japan Finance, The Wharton School (co-authored with Takeo Hoshi) 18 February 2010 Anil Kashyap, Edward Eagle Brown Professor of Economics and Finance, Will the U.S. Bank Recapitalization Succeed? The University of Chicago Booth School of Business Eight Lessons from Japan (co-authored with Takeo Hoshi) Anil Kashyap, Edward Eagle Brown Professor of During the financial crisis that started in 2007, the U.S. government has used a variety of Economics and Finance, The University of Chicago tools to try to rehabilitate the U.S. banking industry. Many of those strategies were used Booth School of Business also in Japan to combat its banking problems in the 1990s. There are also a surprising Commentators number of other similarities between the current U.S. crisis and the recent Japanese Todd Gormley, Wharton Finance crisis. The Japanese policies were only partially successful in recapitalizing the banks Charles W. Mooney, Jr., Penn Law until the economy finally started to recover in 2003. From these unsuccessful attempts, Michael R. Roberts, Wharton Finance Edward B. Rock, Penn Law the authors derive eight lessons. In light of these eight lessons, they assess the policies the U.S. has pursued. The U.S. has ignored three of the lessons and it is too early to 5 November 2009 evaluate the U.S. policies with respect to four of the others. So far the U.S. has avoided Regulatory Reform in the Real World Howell Jackson, James S. Reid, Jr. Professor of Law, Japan’s problem of having impaired banks prop up zombie firms. Harvard Law School 5 November 2009 Commentators Regulatory Reform in the Real World Cary Coglianese, Penn Law Jill Fisch, Penn Law Howell Jackson, James S. Reid, Jr. Professor of Law, Harvard Law School Todd Gormley, Wharton Finance Mark Jenkins, Wharton Finance Over the past several decades, the structure of financial regulation has undergone dramatic transformations in many jurisdictions. The expansion of cross-sectoral competition, the emergence of financial conglomerates, and convergence of regulatory strategies all put intense pressure on tradition models of sectoral oversight. Most leading countries have consolidated regulatory functions to some degree, although there remains ample variation in organizational structures, with competing approaches ranging from highly consolidated agencies found in the United Kingdom and Japan, to functional divisions of authority adopted in Australia and the Netherlands. Against this backdrop, the United States with the world’s most fragmented system of financial supervision is currently engaged in a national debate over financial regulatory reform. In the opening round, the Obama Administration eschewed radical consolidation of administrative functions and proposed more modest organizational reforms that would retain most of our sectoral regulatory agencies while overlaying several new functional capabilities designed to police systemic risk and improve consumer protections. Although the Administration’s goal in limiting itself to modest organization reforms was designed to facilitate congressional action, even its modest recommendations are facing opposition and critics have offered alterative organizational structures, some more ambitious than the Administration’s approach and some less. In this paper, the author locates the structural reforms currently being considered in the United States within longstanding policy debates over optimal regulatory structure. These hybrid approaches on which national debate is now focused offer some of the advantages of more consolidated regulatory oversight but these approaches also have serious drawbacks that are likely to diminish the reforms efficacy and create supervisory problems in the years ahead. After reviewing the advantages and disadvantages of this hybrid approach to financial regulation, the author offers several suggestions as to how the Obama Administration proposals might be amended to improve the efficacy of a hybrid regulatory structure. The author also discusses refinements to existing proposals that would facilitate future rationalization of our financial regulatory structure.

institute for law and economics 36 academic events 1

1 H. Franklin Allen, The Wharton School.

2 Anil Kashyap, The University of Chicago Booth School of Business. 2

3

3 Robert F. Stambaugh, The Wharton School.

4 Howell Jackson, Harvard Law School.

4 institute for law and economics 36 academic events institute for law and economics 37 academic events Publications and Papers

Listed below is a sampling of recently published papers Presidential Control of Robert P. Inman, Richard King Kristin Madison, Professor of Law and work in progress by members of the Associate Administrative Agencies: Mellon Professor of Finance; A Debate over Law or Politics?, Professor of Finance and Defragmenting Health Care Faculty of the Institute for Law and Economics. ILE Journal of Constitutional Law, Economics, Business and Public Delivery Through Quality maintains a series of research papers and provides 2010. Policy, Real Estate, The Wharton Reporting, in The Fragmentation copies—electronic or paper—to interested parties upon School of U.S. Health Care: Causes and Engaging Business in the Solutions, 2010. request to [email protected]. Regulation of Nanotechnology, How Should Suburbs Help Their The Institute is a member of the Legal Scholarship in Governing Uncertainty: Central Cities? Growth and Patients as “Regulators”?: Network (LSN), a subset of the Social Science Research Environmental Regulation in the Welfare Enhancing Intra-Metro- Patients’ Evolving Influence Over Network. Current ILE research papers are posted in the Age of Nanotechnology, 2010. politan Fiscal Distributions, Health Care Delivery, Journal of Annals of the American Academy Legal Medicine, 2010. University of Pennsylvania Law and Economics Research Jill Fisch, Perry Golkin Professor of of Political and Social Sciences, Paper Series on the LSN Web site. Abstracts as well as Law; Co-Director, Institute for Law 2009. Patients as Mercenaries?: The complete papers can be downloaded (www.ssrn.com/ and Economics Ethics of Using Financial Making Cities Work: Prospects Incentives in the War on link/penn-lawecon. html). The Overstated Promise of and Policies for Urban America, Unhealthy Behaviors (with Faculty appointments are in the University of Corporate Governance, Princeton University Press, 2009. Scott D. Halpern & Kevin G. Pennsylvania Law School unless otherwise noted. University of Chicago Law Review, Volpp), Circulation: Cardiovascular 2010. The Flypaper Effect, The New Quality & Outcomes, 2009. Palgrave Dictionary of Economics, The Power of Proxy Advisors: 2009. George J. Mailath, Walter H. Matthew D. Adler, Leon Meltzer The Myth of Equality in the Myth or Reality? (with Stephen Annenberg Professor in the Social Professor of Law Employment Relation, Michigan Choi and Marcel Kahan), Emory Michael S. Knoll, Theodore K. Sciences, Professor of Economics, State Law Review, 2010. Law Journal, 2010. Warner Professor of Law, Professor School of Arts and Sciences Regulatory Theory, in A of Real Estate, The Wharton Companion to Philosophy of Law Intention, Torture and the Rethinking the Regulation of School; Co-Director, Center for Tax Common Learning (with Martin W. and Legal Theory, 2010. Concept of State Crime, Penn Securities Intermediaries, Law & Policy. Cripps, Jeffrey C. Ely, and Larry State Law Review, 2009. University of Pennsylvania Law Samuelson), Econometrica, July Future Generations: A Review, 2010. The Taxation and Competitive- 2008. Prioritarian View, George Howard F. Chang, Earle Hepburn ness of Sovereign Wealth Funds: Washington University Law Professor of Law Lawrence A. Hamermesh, Ruby Do Taxes Encourage Sovereign Purification in the Infinitely- Review, 2009. R. Vale Professor of Corporate and Wealth Funds to Invest in the Repeated Prisoners’ Dilemma Implications of Globalization Business Law, Widener University United States?, Southern (with V. Bhaskar and Stephen Bounded Rationality and and Trade for Water Quality in School of Law (Attorney California Law Review, 2009. Morris), Review of Economic Legal Scholarship, in Theoretical Transboundary Rivers (with Fellow, Securities and Exchange Dynamics, July 2008. Foundations of Law and Hilary Sigman), in Global Change: Commission Division of Samuel Zell, the Chicago Tribune Economics, 2009. Impacts on Water and Food Corporation Finance, 2010–2011) and the Emergence of the S Does Competitive Pricing Cause Security, 2010. ESOP: Understanding the Tax Market Breakdown Under Franklin Allen, Nippon Life Profes- Loyalty’s Core Demand: The Advantages and Disadvantages Extreme Adverse Selection? sor of Finance and Professor of Cultural Communities in a Defining Role of Good Faith in of S ESOPs, Ohio State Law (with Georg Nöldeke), Journal of Economics, The Wharton School Global Labor Market: Corporate Law (with Leo Strine, Journal, 2009. Economic Theory, May 2008. Immigration Restrictions as Jr., R. Franklin Balotti & Jeffrey Credit Market Competition and Residential Segregation, in Gorris), Georgetown Law Journal, Friedrich K. Kübler, Professor Charles W. Mooney, Jr., Charles Capital Regulation (with E. Challenges of Globalization: 2010. and Director of the Banking Law A. Heimbold, Jr. Professor of Law Carletti and R. Marquez), Review Immigration, Social Welfare, Institute Emeritus, University of Financial Studies, forthcoming. Global Governance, 2009. Rationalizing Appraisal of Frankfurt, Germany; Professor Sales of Receivables: Potpourri Standards in Compulsory of Law of Puzzles [tentative title] (with Interbank Market Liquidity and Immigration Restriction as Buyouts (with Michael Steven Harris), Gonzaga Law Central Bank Intervention (with Redistributive Taxation: Working Wachter), Boston College Law European Initiatives for the Review Symposium, 2010. E. Carletti and D. Gale), Journal Women and the Costs of Review, 2009. Regulation of Nonbank Financial of Monetary Economics, 2009. Protectionism in the Labor Institutions, International Core Issues Under the UNIDROIT Market, Journal of Law, Economics The Short and Puzzling Life of Monetary Fund, 2010. [Draft] Convention on Mark-to-Market Accounting and and Policy, 2009. the “Implicit Minority Discount” Intermediated Securities: Views Liquidity Pricing (with E. in Delaware Appraisal Law (with Medien, Menschenrechte und From the United States and Japan Carletti), Journal of Accounting Cary Coglianese, Deputy Dean Michael Wachter), University of Demokratie (Media, Human (with Hideki Kanda), 2010. and Economics, 2008. for Academic Affairs, Edward B. Pennsylvania Law Review, 2007. Rights, and Democracy), 2008. Shils Professor of Law and Aditi Bagchi, Assistant Professor Professor of Political Science Recht und Sozialwissen- of Law schaften—Herausforderungen Management-Based Regulation: und Chancen der Verhalten- Unequal Promises, Working Implications for Public Policy, in sökonomie (Law and Social Paper. Risk and Regulatory Policy: Sciences—the Challenge and Improving the Governance of Risk, the Promise of Behavioral 2010. Economics) (with Dorothea Kübler), Kritische Vierteljahress- chrift für Gesetzgebung und Rechtswissenschaft, 2007.

institute for law and economics 38 academic events Law and Systems for Social Assets (with G. Mailath), Progressivity and Potential Systemic Risk Through Intermediated Securities and the International Economic Review, Income: Measuring the Effect of Securitization: The Result of Relationship of Private Property 2006. Changing Work Patterns on Deregulatory and Regulatory Law to Securities Clearance and Income Tax Progressivity, Failure (with Patricia McCoy and Settlement: United States, Michael R. Roberts, Associate Columbia Law Review, 2008. Andrey Pavlov), Connecticut Law Japan, and the UNIDROIT Draft Professor of Finance, The Wharton Review, 2009. Convention, Bank of Japan School David A. Skeel, Jr., S. Samuel Institute for Monetary and Arsht Professor of Corporate Law State and Local Anti-Predatory Economic Studies, 2008. Renegotiation of Financial Lending Laws: The Effect of Contracts: Evidence from Private Assessing the Chrysler Legal Enforcement Mechanism David K. Musto, Ronald O. Credit Agreements (with Amir Bankruptcy (with Mark Roe), (with Raphael W. Bostic et al.), Perelman Professor in Finance, Sufi), Journal of Financial Michigan Law Review, 2010. Journal of Economics and Business, The Wharton School Economics, 2009. 2008. Governance in the Ruins, What do Consumers’ Fund How does Financing Impact Harvard Law Review, 2008 (essay Amy Wax, Robert Mundheim Flows Maximize? Evidence Investment? The Role of Debt review of Curtis Milhaupt & Professor of Law from their Brokers’ Incentives, Covenants (with Sudheer Katharina Pistor, Law and Working Paper, 2010. Chava), Journal of Finance, 2008. Capitalism). Race, Wrongs, and Remedies: Group Justice in the 21st Century, Predatory Mortgage Lending Back to the Beginning: Who Makes the Rules for Hoover Institution Press/ (with Philip Bond and Bilge Persistence and the Cross- Hostile Takeovers, and Why? Rowman and Littlefield, 2009. Yilmaz), Journal of Financial Section of Corporate Capital The Peculiar Divergence of US Economics, 2009. Structure (with Michael and UK Takeover Regulation Stereotype Threat: A Case of Lemmon and Jaime Zender, (with John Armour), Georgetown Overclaim Syndrome?, in Vote Trading and Information Journal of Finance, 2008. Law Journal, 2007. Stereotype Threat and Aggregation (with Susan Unconscious Bias: The State of the Christoffersen, Chris Geczy, Edward B. Rock, Saul A. Fox Michael L. Wachter, William B. Research, American Enterprise and Adam Reed), Journal of Distinguished Professor of Business Johnson Professor of Law and Institute, 2009. Finance, 2007. Law; Co-Director, Institute for Law Economics; Co-Director, Institute and Economics for Law and Economics The Family Law Doctrine of Gideon Parchomovsky, Professor Equivalence, Michigan Law of Law Embattled CEOs (with Marcel The Case Against Shareholder Review, 2009. Kahan), Texas Law Review, 2010. Empowerment (with William The Hidden Function of Takings W. Bratton), University of Bilge Yilmaz, Associate Professor Compensation (with Abraham The Anatomy of Corporate Law Pennsylvania Law Review, 2010. of Finance, The Wharton School Bell), Virginia Law Review, (second edition) (with forthcoming. Kraakman, Armour, Davies, Rationalizing Appraisal Adverse Selection and Enriques, Hansmann, Hertig, Standards in Compulsory Convertible Bonds (with The Distortionary Effect of Hopt, and Kanda), 2009. Buyouts (with Lawrence A. Archishman Chakraborty), Evidence on Primary Behavior Hamermesh), Boston College Law Review of Economic Studies, (with Alex Stein), Harvard Law How to Prevent Hard Cases from Review, 2009. forthcoming. Review, forthcoming. Making Bad Law: Bear Stearns, Delaware and the Strategic Use of Shareholder Primacy’s Predatory Mortgage Lending Beyond Fair Use (with Phil Comity (with Marcel Kahan), Corporatist Origins: Adolf Berle (with Philip Bond and David Weiser), Cornell Law Review, Emory Law Journal, 2009. and The Modern Corporation Musto), Journal of Financial forthcoming. (with William W. Bratton), Economics, 2009. Chris W. Sanchirico, Professor of Journal of Corporate Law, 2008. Andrew W. Postlewaite, Harry P. Law, Professor of Business and Information and Efficiency in Kamen Professor of Economics, Public Policy, The Wharton School Susan M. Wachter, Richard B. Tender Offers (with Robert School of Arts and Sciences; Worley Professor of Financial Marquez), Econometrica, 2008. Professor of Finance, The Wharton Tax Eclecticism, Tax Law Review, Management, Professor of Real School forthcoming. Estate and Finance, The Wharton School; Co-Director, Institute for Political Reputations and A Critical Look at the Economic Urban Research Campaign Promises (with E. Argument for Taxing Only Labor Aragones and T. Palfrey), Income, Tax Law Review, Systemic Risk and Market Journal of the European Economic forthcoming. Institutions (with Andrey Association, 2007. Pavlov), Yale Journal on Regulation, 2009. Courts of Law and Unforeseen Contingencies (with L. Anderlini and L. Felli), Journal of Law, Economics and Organization, 2007.

institute for law and economics 39 academic events institute for law and economics 41 associate faculty Associate Faculty

1 2 3 4

5 6 7 8

9 10 11 12

1 Matthew Adler 9 Charles W. Mooney, Jr. 2 Aditi Bagchi 10 Michael S. Knoll 3 Richard E. Kihlstrom 11 Friedrich K. Kübler 4 Howard F. Chang 12 Kristin Madison 5 Cary Coglianese 13 Franklin Allen 6 Robert W. Holthausen 14 Gideon Parchomovsky 7 Richard J. Herring 15 David K. Musto 13 14 15 8 Michael R. Roberts 16 Andrew Postlewaite 17 Susan M. Wachter 18 Chris W. Sanchirico 19 Reed Shuldiner 20 David A. Skeel, Jr. 21 Amy L. Wax 22 Bilge Yilmaz

16 17 18

19 20 21 22

institute for law and economics 41 associate faculty Associate Faculty

Matthew D. Adler, Leon Meltzer Professor of Law Howard F. Chang, Earle Hepburn Professor of Law Professor Adler is a graduate of Yale College, St. Antony’s College Professor Chang received a Ph.D. in economics from the Massa- of Oxford University, and the Yale Law School. Prior to teaching at chusetts Institute of Technology in 1992, a J.D. from Harvard Penn, he worked as a law clerk for Judge Harry Edwards, U.S. Law School in 1987, a Master in Public Affairs from Princeton Court of Appeals for the D.C. Circuit, and for Justice Sandra Day University in 1985, and an A.B. from Harvard College in 1982. Prior O’Connor, U.S. Supreme Court, and practiced law at Paul, Weiss, to joining the Penn faculty in 1999, he was a Professor of Law at Rifkind, Wharton & Garrison in New York City. At the Penn Law the University of Southern California Law School, where he began School, Professor Adler teaches administrative law, constitutional teaching in 1992. He was a Visiting Professor of Law at Stanford law, and regulation. His current research focuses on policy Law School in 1998, at Harvard Law School and at the New York analysis and on risk regulation. University School of Law in 2001, at the University of Michigan Law School in 2002, and at the University of Chicago Law Franklin Allen, Nippon Life Professor of Finance and Professor of School in 2007, and a Visiting Associate Professor of Law at the Economics, The Wharton School Georgetown University Law Center from 1996 to 1997. He served Franklin Allen is the Nippon Life Professor of Finance and Professor as a law clerk for the Honorable Ruth Bader Ginsburg on the U.S. of Economics at the Wharton School of the University of Pennsyl- Court of Appeals for the D.C. Circuit from 1988 to1989. He served vania. He has been on the faculty since 1980. He is currently on the Board of Directors of the American Law and Economics Co-Director of the Wharton Financial Institutions Center. He was Association from 2004 to 2007. He has written on a wide variety formerly Vice Dean and Director of Wharton Doctoral Programs of subjects including environmental protection, international trade, and Executive Editor of the Review of Financial Studies, one of the immigration, intellectual property, and the economics of litigation leading academic finance journals. He is a past President of the and settlement. American Finance Association, the Western Finance Association, the Society of Financial Studies, and the Financial Intermediation Cary Coglianese, Associate Dean for Academic Affairs, Edward B. Research Society. He received his doctorate from Oxford University. Shils Professor of Law and Professor of Political Science Dr. Allen’s main areas of interest are corporate finance, asset Cary Coglianese is the Associate Dean for Academic Affairs and pricing, comparative financial systems, and financial crises. He is the Edward B. Shils Professor of Law at the University of Pennsyl- a co-author with Richard Brealey and Stewart Myers of the eighth vania Law School, as well as Professor of Political Science and and ninth editions of the textbook Principles of Corporate Finance. the director of the Penn Program on Regulation. Coglianese is the founder of the Law & Society Association’s international Aditi Bagchi, Assistant Professor of Law collaborative research network on regulatory governance, a Professor Bagchi received a J.D. from Yale Law School in 2003 council member of the American Bar Association’s section on and a M.Sc. in economic and social history from Oxford University Administrative Law and Regulatory Practice, and a fellow of in 2000. She clerked for United States Court of Appeals Judge the American Bar Foundation. He is also a founder of the peer- Julio Fuentes and practiced law with Cravath, Swaine & Moore reviewed journal Regulation & Governance, for which he now serves LLP in New York. She joined the Penn Law faculty in 2006 and on the editorial board. Coglianese received his J.D., M.P.P., and currently teaches contracts and labor law. Her areas of research Ph.D. in political science from the University of Michigan, and include normative theories of private law and comparative for twelve years served on the faculty of the John F. Kennedy political economy. School of Government at Harvard University. He has also been a visiting professor of law at Stanford University and Vanderbilt University and an affiliated scholar at the Harvard Law School.

institute for law and economics 42 associate faculty Patricia M. Danzon, Celia Z. Moh Professor of Health Care Systems, Lawrence Hamermesh, Ruby R. Vale Professor of Corporate and Insurance and Risk Management, The Wharton School Business Law, Widener University School of Law (Attorney Fellow, Professor Danzon received her Ph.D. in economics from the Securities and Exchange Commission Division of Corporation Finance, University of Chicago in 1973 and joined the Penn faculty from 2010–2011) Duke University in 1985. She is a member of the Institute of Professor Hamermesh received a B.A. from Haverford College in Medicine and the National Academy of Social Insurance, and she 1973, and a J.D. from Yale Law School in 1976. Professor Hamer- has served as a consultant to many private and public institutions mesh practiced law with Morris, Nichols, Arsht & Tunnell, in the U.S. and worldwide. Professor Danzon’s research interests Wilmington, Delaware, as an associate from 1976–84, and as a are in health care, pharmaceuticals, insurance, law, and economics. partner from 1985–94. Professor Hamermesh joined the faculty at She has published widely in scholarly journals on a broad range Widener in 1994, and teaches and writes in the areas of corporate of subjects related to medical care, pharmaceuticals, insurance, finance, mergers and acquisitions, securities regulation, business and the economics of law. organizations, and professional responsibility. Since 1995, Professor Hamermesh has been a member of the Council of the Jill Fisch, Perry Golkin Professor of Law; Co-Director, Institute for Law Corporation Law Section of the Delaware State Bar Association, and Economics which is responsible for the annual review and modernization of Professor Fisch received her J.D. from Yale Law School in 1985. the Delaware General Corporation Law, and served as Chair of the Before joining the Penn faculty in 2008, she held the T.J. Maloney Council from 2002 to 2004. In 2002 and 2003 he also served as Chair in Business Law at Fordham Law School and served as the Reporter for the American Bar Association’s Task Force on founding director of the Fordham Corporate Law Center. She has Corporate Responsibility. He served from 2001 to 2007 as a also been a visiting professor at Harvard Law School, Columbia member of the Committee on Corporate Laws of the American Law School and Georgetown University Law Center. Prior to Bar Association Section of Business Law, which supervises the entering academia, Professor Fisch practiced law with the United drafting of the Model Business Corporation Act. In 2007 Professor States Department of Justice and the New York office of Cleary, Hamermesh was appointed as Chair of the Section of Business Gottlieb, Steen and Hamilton. Her research focuses on corporate Law’s Committee on Corporate Documents and Process. In 1999 governance, business litigation, and securities regulation. Professor Hamermesh was elected as a member of the American Law Institute. Professor Hamermesh is also a member of the Michael A. Fitts, Dean of the Law School and Bernard G. Segal Board of Directors of ACLU Delaware, Inc. Professor of Law Richard J. Herring, Jacob Safra Professor of International Banking, Michael A. Fitts was named Dean of the Law School in March Professor of Finance, The Wharton School; Co-Director, Wharton 2000. Before joining the Penn Law faculty in 1985, Dean Fitts Financial Institutions Center served as clerk to the Honorable A. Leon Higginbotham, Jr., U.S. Court of Appeals for the Third Circuit, and as attorney advisor in Richard J. Herring is Jacob Safra Professor of International Banking the Office of Legal Counsel in the U.S. Department of Justice. and Professor of Finance at The Wharton School, University of At Penn he was appointed Associate Professor of Law in 1990, Pennsylvania, where he is also founding director of the Wharton Professor of Law in 1992 and Robert G. Fuller, Jr. Professor of Law Financial Institutions Center, one of Wharton’s largest research in 1996. From 1996 to 1998 he served as Associate Dean for centers. From 2000 to 2006, he served as the Director of the Academic Affairs at the Law School and was active in establishing Lauder Institute of International Management Studies and from a variety of joint programs with other schools within the University. 1995 to 2000, he served as Vice Dean and Director of Wharton’s In 1999 he served as Visiting Professor in Political Science at Undergraduate Division. During 2006, he was a Professorial Swarthmore College. Dean Fitts’ research has focused on the Fellow at the Reserve Bank of New Zealand and Victoria University. effect of various structural changes (e.g., stronger political parties, presidents or centralized legal institutions) on government budgeting and legislation. He has also written more recently on the structure of non-profit institutions and their leadership.

institute for law and economics 42 associate faculty institute for law and economics 43 associate faculty He is the author of more than 100 articles, monographs and Robert P. Inman, Richard King Mellon Professor of Finance, Professor books on various topics in financial regulation, international banking, of Finance and Economics, Business and Public Policy, Real Estate, and international finance. At various times his research has been The Wharton School funded by grants from the National Science Foundation, the Ford Professor Inman received his Ph.D. in economics from Harvard Foundation, the Brookings Institution, the Sloan Foundation, and University and joined the Penn faculty in 1972. He is a research the Council on Foreign Relations. associate of the National Bureau of Economic Research. He has Outside the university, he is co-chair of the US Shadow served as a consultant to the city of Philadelphia, the state of Financial Regulatory Committee and Executive Director of the Pennsylvania, CitiGroup, Chemical Bank, the U.S. Department of Financial Economist’s Roundtable, the Advisory Board of the the Treasury, the Financial and Fiscal Commission of the Republic European Banking Report in Rome, and the Institute for Financial of South Africa, the National Bank of Sri Lanka, the National Studies in Frankfurt. He served as co-chair of the Multinational Academy of Sciences, and numerous U.S. federal government Banking seminar from 1992–2004 and was a Fellow of the World agencies. His research is currently focused on fiscal federalism, Economic Forum in Davos from 1992–95. He was a member the urban fiscal crisis, and the political and legal institutions of of the Group of 30 task force on the reinsurance industry, as well fiscal policymaking. Professor Inman held the Florence Chair in as an earlier study group on international supervision and Economics at the European University Institute, Florence, Italy, regulation. Currently, he is an independent director of the DWS for the spring quarter of 2000. He was a Visiting Scholar at the Scudder mutual fund complex and has served on the predecessor Rockefeller Foundation’s Bellagio Study Center, Fall 2007. Deutsche Asset Management and Bankers Trust boards since 1990. He is also an independent director of the Daiwa closed Richard E. Kihlstrom, Ervin Miller-Arthur M. Freedman end funds. Professor of Finance and Economics, Chairman, Finance Department, Herring received his undergraduate degree from Oberlin The Wharton School College in 1968 and his PhD from Princeton University in 1973. He has been a member of the Finance Department since 1972. He Richard Kihlstrom holds a doctorate from the University of is married, with two children, and lives in Bryn Mawr, Pennsylvania. Minnesota. He has been a member of the Wharton faculty since 1979, was named to the Miller-Freedman professorship in 1986, Robert W. Holthausen, The Nomura Securities Company Professor, and previously served as Chair of the Finance Department from Professor of Accounting and Finance, and Chairman, Accounting 1988 to 1994. Before coming to Penn, he taught at Northwestern Department, The Wharton School University, the University of Illinois, the State University of New York at Stony Brook, and the University of Massachusetts. He is a Professor Holthausen earned his doctorate and his M.B.A. at the Fellow of the Econometric Society. His areas of research interest University of Rochester. Prior to his academic career, he was a include information and uncertainty in economics, financial C.P.A. He worked at Price Waterhouse and was also a financial market equilibrium, and corporate finance. analyst with Mobil. He was on the accounting and finance faculty at the Graduate School of Business of the University of Chicago Michael S. Knoll, Theodore K. Warner Professor of Law; for ten years, joining the Penn faculty in 1989. During the 2001– Professor of Real Estate, The Wharton School; Co-Director, 2002 academic year, he was a visiting professor at Harvard Center for Tax Law & Policy Business School. Since 1998 he has served as the academic director of Wharton’s Mergers and Acquisitions program. Professor Professor Knoll joined the Penn Law and Wharton faculties from Holthausen’s research interests include the effects of management the University of Southern California Law School in 2000. He compensation and governance structures on firm performance, teaches courses in corporate finance and taxation in the Law the effects of information on volume and prices, corporate School, the Wharton School, and the Wharton Executive Program. restructuring and valuation, the effects of large block sales on He is also an affiliate of the Zell/Lurie Real Estate Center at the common stock prices, and numerous other topics. He is widely Wharton School, and the editor of Forensic Economic Abstracts, an published in both finance and accounting journals and is currently electronic journal published by the Social Science Research an editor of the Journal of Accounting and Economics. His most Network. Professor Knoll’s undergraduate and J.D. degrees are recent work is entitled “Accounting Standards, Financial Reporting from the University of Chicago. He also earned a Ph.D. in Economics Outcomes and Enforcement” and appears in the Journal of at the University of Chicago. In 1990 he joined the USC Law Accounting Research (May, 2009, pp. 447-458) as part of the faculty as an Assistant Professor, and in 1995 he was promoted Conference on the Regulation of Securities Markets: Perspectives to full Professor. He has been a Visiting Professor of Law at from Accounting, Law and Financial Economics. Georgetown (1999), Penn (1998–99), and Virginia (2000).

institute for law and economics 44 associate faculty Professor Knoll was also a John M. Olin Senior Research Scholar Review of Economic Studies, the Journal of Economic Theory, Games at Columbia University School of Law (1996–97), a Visiting and Economic Behavior, the International Economic Review, and Scholar at New York University Law School (1996–97), and a Economic Theory. He is co-editor of the Econometric Society John M. Olin Distinguished Visiting Professor of Law at Toronto Monograph Series and is a member of the Economics Advisory University. He clerked for the Honorable Alex Kozinski on the U.S. Panel of the National Science Foundation. His research interests Court of Appeals, Ninth Circuit, from January to August 1986, include the organization of the firm, noncooperative game theory, when he was appointed legal advisor to the Vice Chairman of the evolutionary game theory, social norms, and the foundations of U.S. International Trade Commission. During 2009–2010, he was reputations, law, and authority. the Nathaniel Fensterstock Visiting Professor of Law at Columbia Law School. He has published extensively in the fields of corporate Charles W. Mooney, Jr., Charles A. Heimbold, Jr. Professor of Law finance, taxation, economics, and real estate finance. Professor Mooney received his J.D. from Harvard Law School in 1972. He practiced law with the Oklahoma firm of Crowe and Friedrich K. Kübler, Professor and Director of the Banking Law Dunlevy and as a partner of the New York firm of Shearman & Institute Emeritus, University of Frankfurt, Germany; Professor of Law Sterling. Professor Mooney joined the Penn faculty in 1986, and After earning a Dr. iur. from the University of Tübingen in 1961, during 1999 and 2000 he served as Interim Dean of the Law Professor Kübler held appointments as teaching assistant in School. From 1998 to 2000 and from 2008 to 2009 he served as Tübingen and Paris; Professor of Law, University of Giessen Associate Dean for Academic Affairs. He is an active member (1966–70); Visiting Lecturer, Harvard Law School (1968–69); of the American Law Institute and the American Bar Association. Professor of Law and Dean of the Graduate School of Social He served as a member of the Uniform Commercial Code Sciences, University of Konstanz (1971–76); and Professor of Law, Permanent Editorial Board Article 2 (Sales) Study Committee and University of Frankfurt (1976–98). He first came to Penn in 1975 also served as a reporter for that Board’s Article 9 (Secured and again in 1983 as a Visiting Professor of Law, and in 1985 he Transactions) Study Committee and as a reporter for the Revised joined the faculty as Professor of Law. He has served on the board Article 9 drafting committee. He served as a member of the U.S. of the Deutscher Juristentag and is a member of the American Security and Exchange Commission’s Advisory Committee on Law Institute. He was one of the six commissioners regulating Market Transactions. Mooney was awarded the Distinguished concentration in the German television industry and is a member Service Award, presented by the American College of Commercial of the European Shadow Financial Regulatory Committee, as well Finance Lawyers. He also served as U.S. Delegate and Position as of the Frankfurt Academy of Arts and Sciences. Professor Coordinator (appointed by U.S. Department of State) at the Kübler’s teaching interests are the European Union, corporations, Diplomatic Conference for the Cape Town Convention on international finance, and mass communication. His current International Interests in Mobile Equipment and the Protocol on (comparative) research interests are in the areas of corporate Matters Specific to Aircraft Equipment, in Cape Town, South governance and finance, the supervision of transnational financial Africa. He currently serves as a U.S. Delegate for the UNIDROIT markets, and broadcast regulation. draft convention on intermediated securities. His current research centers on intermediated securities, security interests in bank- Kristin Madison, Professor of Law ruptcy, and bankruptcy theory. After receiving a J.D. from Yale Law School and a Ph.D. in economics from Stanford University, Kristin Madison joined the Penn Law faculty in 2001. She currently teaches contracts and health care law. Her main areas of research interest are health economics and the regulation of the health care industry. Professor Madison is currently studying the diffusion of new forms of health care regulation, particularly health care quality reporting requirements.

George J. Mailath, Walter H. Annenberg Professor in the Social Sciences, Professor of Economics, School of Arts and Sciences Professor Mailath received his Ph.D. in economics from Princeton University in 1985. He is a Fellow of the Econometric Society, a member of the Council of the Game Theory Society, a co-founder of the journal Theoretical Economics, and is or has served as an associate editor or editorial board member of Econometrica, the

institute for law and economics 44 associate faculty institute for law and economics 45 associate faculty Robert H. Mundheim, University Professor of Law and Finance David K. Musto, Ronald O. Perelman Professor in Finance, Emeritus, University of Pennsylvania; Of Counsel, Shearman & Sterling; The Wharton School formerly General Counsel, U.S. Treasury and Senior Executive Vice David K. Musto is the Ronald O. Perelman Professor in Finance at President and General Counsel of Salomon Smith Barney Holdings, Inc. the Wharton School, where he has been on the faculty since 1995. Professor Mundheim received his LL.B. from Harvard Law School He has a B.A. from Yale University and a Ph.D. from the University in 1957. He joined the New York firm of Shearman & Sterling, of of Chicago, and between college and graduate school he worked which he is now Of Counsel, and then served as special counsel to for Roll and Ross Asset Management in Los Angeles. He is an the U.S. Securities and Exchange Commission before joining the editor of the Journal of Financial Services Research and an Associate Penn faculty in 1965. Professor Mundheim served as Dean of the Editor of the Journal of Finance. Most of his work, both theoretical Law School from 1982 to 1989. He has been a visiting professor at and empirical, is in the area of consumer financial services, mutual Harvard Law School, UCLA Law School, the James E. Rogers funds and consumer credit in particular. He has also published College of Law at The University of Arizona, and the University of work on corporate and political voting, option pricing, short selling, Konstanz in Germany. Between 1977 and 1980, he served as and cross-border taxation. general counsel to the U.S. Department of the Treasury. He also has served as chairman of the U.S. Tax Court Nominating Gideon Parchomovsky, Professor of Law Commission, a director of the Securities Investor Protection Professor Parchomovsky received his LL.B. from the Hebrew Corporation, and general counsel to the Chrysler Loan Guarantee University of Jerusalem in 1993, his LL.M. from the University Board. He was co-chairman of the New York firm Fried, Frank, of California at Berkeley in 1995, and his S.J.D. from Yale Law Harris, Shriver and Jacobson from 1989 to 1992. In 1992, he joined School in 1998. Prior to joining the Penn Law faculty in fall 2002, Salomon Inc. as its General Counsel and as a Managing Director Professor Parchomovsky served as an Associate Professor at and member of the Executive Committee of Salomon Brothers. Fordham Law School and a Visiting Lecturer at Yale Law School. Professor Mundheim is the organizer and presiding officer His research interests include intellectual property law and emeritus of the International Faculty for Corporate and Capital property theory. His recent work focuses on unlocking synergies Market Law, a former Trustee and President of the American among sub-fields of intellectual property and devising innovative Academy in Berlin, a Trustee of the New School University, a mechanisms for protecting property entitlements. former director and President of the Appleseed Foundation, and a member of the Council of the American Law Institute and Andrew W. Postlewaite, Harry P. Kamen Professor of Economics, Chairman of its Governance Committee. He also serves on the School of Arts and Sciences; Professor of Finance, The Wharton School American Bar Association’s Standing Committee on Ethics and Professional Responsibility. He most recently served as the Professor Postlewaite received his Ph.D. from Northwestern chairman of the Quadra Realty Trust Board of Directors and as a University in 1974 and joined the Penn faculty from the University director of eCollege, Inc. and of Arnhold & S. Bleichroeder of Illinois in 1980. He is editor of American Economic Journal: Holdings, Inc. He is also the Chairman of the Legal Advisory Board Microeconomics, past editor of the International Economic Review of NASDAQ. Mr. Mundheim has served as a Consultant to the and past co-editor of Econometrica. He serves on the Board of American Law Institute’s Principles of Corporate Governance: Directors of the National Bureau of Economic Research, the Analysis and Recommendations (1978–1994), as a member of the Executive Committee of the Game Theory Society, and on the American Bar Association President’s Task Force on Corporate Executive Committee of the American Economic Association. Responsibility (2002–2003), and as a member of the Association He has published widely in the areas of strategic behavior and of the Bar of the City of New York’s Presidential Task Force on industrial organization. Lawyers’ Role in Corporate Governance. He has written in the areas of corporate governance, securities regulation, corporations, and professional responsibility.

institute for law and economics 46 associate faculty Michael R. Roberts, Associate Professor of Finance, Chris W. Sanchirico. Professor of Law; Professor of Business and The Wharton School Public Policy, The Wharton School Michael R. Roberts is a tenured Associate Professor of Finance at Professor Sanchirico received his A.B. from Princeton and both the Wharton School of the University of Pennsylvania. Professor his law degree and his Ph.D. in economics from Yale. Before Roberts earned his B.A. in Economics from the University of joining the Penn Law and Wharton faculties in 2003, he was a California at San Diego, and his M.A. in Statistics and Ph.D. in law professor at the University of Virginia and an economics Economics from the University of California at Berkeley. In addition professor at Columbia. Professor Sanchirico has written widely to his experience at the Wharton School, he has taught at Duke on tax policy, distributive justice, the information problems of University’s Fuqua School of Business. His primary research is in legal enforcement, the rules governing trial evidence and pretrial the area of corporate finance and in particular: capital structure, discovery, and the evolution and stability of social norms. investment policy, financial contracting, and payout policy. Recent Professor Sanchirico has published extensively in top law reviews work has examined issues including the design of debt securities as well as the premier peer-reviewed journals in both law and and the role of control rights in influencing financial and investment economics and economic theory. policy. His research has received several awards including the Brattle Prize for Distinguished Paper published in the Journal Reed Shuldiner, Alvin L. Snowiss Professor of Law of Finance, and Best Paper awards at the Financial Management Professor Shuldiner is a recognized expert in the taxation of Association and Southwestern Finance Association annual financial instruments and transactions. His area of research is conferences. In addition to his research, Professor Roberts has taxation and tax policy. His current research includes the taxation earned a number of teaching awards including the Daimler-Chrysler of risk under income, wealth and consumption taxes, and the Core Teaching Award at the Fuqua School of Business and the viability and effects of a federal wealth tax (with David Shakow). David W. Hauk Award for Outstanding Teaching at the Wharton Professor Shuldiner served as Associate Dean at Penn Law from School. He has taught undergraduate, M.B.A., Ph.D., and executive 2000–02. During spring 2005, Professor Shuldiner was the education courses in corporate finance, econometrics, and William K. Jacobs, Jr. Visiting Professor of Law at Harvard Law statistics. Prior to joining academia, Professor Roberts was a School. He was a Visiting Assistant Professor at Yale Law School Financial Engineer at Financial Engineering Associates Inc. and during 1994–95. Before joining the Penn law faculty in 1990, he a Senior Analyst for Regional Economic Research Inc. served in the Office of Tax Legislative Counsel of the U.S. Depart- ment of the Treasury, was counsel to the law firm of Cadwalader, Edward B. Rock, Saul A. Fox Distinguished Professor of Business Law; Wickersham and Taft, and was an associate with the Washington, Co-Director, Institute for Law and Economics D.C., law firm of Wilmer, Cutler and Pickering. Professor Shuldiner Professor Rock received his J.D. from the University of Pennsylvania received his J.D. from Harvard University in 1983 and his Ph.D. in in 1983. He joined the Penn faculty in 1989 from the Philadelphia economics from the Massachusetts Institute of Technology in 1985. law firm of Fine, Kaplan and Black, where he specialized in antitrust, corporate, and securities litigation. He has written widely in corpo- David A. Skeel, Jr., S. Samuel Arsht Professor of Corporate Law rate law, on topics including: hedge funds; the role of institutional Professor Skeel joined the Penn faculty in 1999. He graduated in investors in corporate governance; close corporations; the role of 1987 from the University of Virginia School of Law, where he was norms in corporate law; the overlap between corporate law editor of the Virginia Law Review and a member of the Order of the and antitrust; the overlap between corporate law and labor law; Coif. He clerked for the Honorable Walter K. Stapleton on the U.S. comparative corporate law; and the regulation of mutual funds. Court of Appeals for the Third Circuit, and practiced for several In 1994, Professor Rock was a Visiting Professor of International years at Duane, Morris & Heckscher in Philadelphia, before joining Banking and Capital Markets at the Institut für Arbeits-, the Temple University School of Law in 1990. Professor Skeel has Wirtschafts- und Zivil Recht, Johann Wolfgang Goethe-Universität, also held visiting appointments at the University of Wisconsin Frankfurt am Main, Germany. During the 1995–96 academic Law School (1993–94), the University of Virginia School of Law year, he was a Fulbright Senior Scholar and Visiting Professor of (spring 1994), Georgetown University Law Center (fall 2004), and Law at the Law Faculty of the Hebrew University of Jerusalem, the University of Pennsylvania Law School (fall 1997). Professor Israel. In 2001, he was appointed the first Saul A. Fox Distin- Skeel specializes in corporate and commercial law and has written guished Professor of Business Law. During 2005–06, he was again widely on corporate law, bankruptcy, and sovereign debt. He has a Visiting Professor of Law, and Lady Davis Fellow, at Hebrew also has written on law and religion, and poetry and law. University. Professor Rock’s current research focuses on govern- ment ownership of corporations, mergers and acquisitions, hedge funds, and corporate voting.

institute for law and economics 46 associate faculty institute for law and economics 47 associate faculty Michael L. Wachter, William B. Johnson Professor of Law and Amy Wax, Robert Mundheim Professor of Law Economics; Co-Director, Institute for Law and Economics A graduate of Yale College and Harvard Medical School, Professor Professor Wachter received his Ph.D. in economics from Harvard Wax trained as a neurologist at New York Hospital before University and joined the Penn faculty in 1970. He has held full completing a law degree at Columbia Law School in 1987. She professorships in three of Penn’s schools: the School of Arts and served as a clerk to the Honorable Abner J. Mikva of the U.S. Sciences, where he has been professor of economics since 1976; Court of Appeals for the D.C. Circuit and worked for six years at the Wharton School, where he was professor of management, the Office of the Solicitor General at the U.S. Department of 1980–92; and the Law School, where he became professor of law Justice, where she argued 15 cases before the U.S. Supreme Court. and economics in 1984. He has been senior advisor to the She taught from 1994 to 2001 at the University of Virginia Law Brookings Panel on Economic Activity in addition to consulting School. Her areas of teaching and research include civil procedure, for the Federal Reserve’s Board of Governors and the Council of remedies, labor and employment law, poverty law and welfare Economic Advisors. He has also served as a member of the policy, the law and economics of work and family, and social National Council on Employment Policy and as a commissioner science and the law. Professor Wax joined the Penn Law Faculty on the Minimum Wage Study Commission. Professor Wachter in fall 2001. served as Deputy Provost of the University of Pennsylvania from July 1995 to January 1998, and as Interim Provost from January Bilge Yilmaz, Associate Professor of Finance, The Wharton School to December 1998. He is the author of numerous articles in Bilge Yılmaz is an Associate Professor of Finance at the Wharton law and economics, as well as in corporation law and labor law School. Prior to his current appointment, he taught at the and economics. Graduate School of Business, Stanford University, and held visiting positions at the University of Chicago and INSEAD. He received Susan M. Wachter, Richard B. Worley Professor of Financial his BS degrees in Electrical Engineering and Physics from Bogaziçi˘ Management, Professor of Real Estate and Finance, The Wharton University, and his PhD in Economics from Princeton University. School; Co-Director, Institute for Urban Research His research focuses on corporate finance, political economy and From 1998 to 2001, as Assistant Secretary for Policy Development game theory. Recently, he has published articles on the inefficiency and Research, U.S. Department of Housing and Urban Develop- of tender offers, optimal security design, corporate bankruptcy, ment, Dr. Wachter served as the senior urban policy official and strategic trading, and predatory lending. His current research principal advisor to the Secretary on overall HUD policies and interests also include corporate governance and private equity. programs. At Wharton, Dr. Wachter was Chairperson of the Real Estate Department and Professor of Real Estate and Finance from July 1997 until her 1998 appointment to HUD. She founded and currently serves as Director of Wharton’s Geographical Information Systems Lab. Dr. Wachter served as a member of the Board of Directors of the Beneficial Corporation from 1985 to 1998 and of the MIG Residential REIT from 1994 to 1998. She was the editor of Real Estate Economics from 1997 to 1999 and serves on the editorial boards for several real estate journals. Dr. Wachter has been a member of the Advanced Studies Institute of the Homer Hoyt Institute since 1989. She is author of more than 100 scholarly publications and is the recipient of several awards for teaching excellence at the Wharton School.

institute for law and economics 48 associate faculty ILE Investors, 2009–2010 funding for the institute for law and economics comes from a diverse group of individuals, law firms, corporations, and foundations who endorse our work each year. we are pleased and privileged to recognize and thank the ile investors whose generous contributions underwrite the activities described in this report. we deeply appreciate their support and their active participation in institute programs.

Benefactors Joel E. Friedlander Vanguard $25,000 or above Gibson, Dunn & Crutcher LLP Wachtell, Lipton, Rosen & Katz Charles I. Cogut Goldman, Sachs & Co. Young Conaway Stargatt & Robert L. Friedman Perry Golkin Taylor, LLP Paul G. Haaga, Jr. Grant & Eisenhofer P.A. Skadden, Arps, Slate, Meagher Hughes Hubbard & Reed LLP Members & Flom LLP Innisfree M&A Incorporated $5,000 to $9,999 Sullivan & Cromwell LLP Roy J. Katzovicz James H. Agger MacKenzie Partners, Inc Blank Rome LLP Sponsors Merck & Co., Inc. Harkins Cunningham LLP $10,000 to $24,999 Millennium Management Leon C. Holt, Jr. Apollo Capital Management, L.P. Foundation AQR Capital Management, LLC Morgan, Lewis & Bockius LLP Donors Barclays Capital Americas Morris, Nichols, Arsht Up to $4,999 Bernstein Litowitz Berger & Tunnell LLP Covington & Burling & Grossmann LLP Paul, Weiss, Rifkind, Wharton Christopher Foulds Cadwalader, Wickersham & Garrison LLP Mary J. Grendell & Taft LLP Potter Anderson & Corroon LLP James A. Ounsworth Isaac D. Corré Proskauer Rose LLP Myron J. Resnick Cravath, Swaine & Moore LLP Allan N. Rauch John F. Schmutz CT, a Wolters Kluwer Business Richards, Layton & Finger, P.A. Simpson Thacher & Dechert LLP Rothschild Inc. Bartlett LLP Delaware Department of State Schulte Roth & Zabel LLP Konstantin Vertsman Dewey & LeBoeuf LLP A. Gilchrist Sparks III Eric Wilensky DuPont Sungard Data Systems Inc. Gregory P. Williams Stephen Fraidin UBS Investment Bank Kenneth W. Willman

institute for law and economics 48 associate faculty institute for law and economics 49 ile investors Institute for Law and Economics University of Pennsylvania 3400 Chestnut Street Philadelphia, PA 19104-6204 215.898.7719 www.law.upenn.edu/ile/

September 2010 .....

Michael L. Wachter, Co-Director William B. Johnson Professor of Law and Economics 215.898.7852 [email protected]

Edward B. Rock, Co-Director Saul A. Fox Distinguished Professor of Business Law 215.898.8631 [email protected]

Jill E. Fisch, Co-Director Perry Golkin Professor of Law 215.746.3454 [email protected]

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