NY BUSINESS LAW JOURNAL WINTER 2003 Vol. 7, No. 2 THE BUSINESS LAW SECTION NEW YORK STATE BAR ASSOCIATION in cooperation with ALBANY LAW SCHOOL © 2003 New York State Bar Association ISSN 1521-7183 BUSINESS LAW SECTION—OFFICERS—2003-2004 Chair......................................................................................Grace Sterrett Hudson Cook, LLP 636 Plank Road, Suite 107 Clifton Park, NY 12065 First Vice-Chair....................................................................Gregory J. Blasi Nixon Peabody LLP 437 Madison Avenue New York, NY 10022 Second Vice-Chair ..............................................................Samuel F. Abernethy and Fiscal Officer Menaker & Herrmann LLP 10 East 40th Street New York, NY 10016 Secretary ..............................................................................David L. Glass Clifford Chance US LLP 200 Park Avenue, 54th Floor New York, NY 10166 NYSBA NY Business Law Journal | Winter 2003 | Vol. 7 | No. 2 3 NY BUSINESS LAW JOURNAL Advisory Board Chair ....................................................................................Stuart B. Newman Salon, Marrow, Dyckman & Newman, LLP 685 Third Avenue New York, NY 10017 (212) 661-7100 (212) 661-3339 (fax) Members Frederick G. Attea ..............................................................Phillips, Lytle, Hitchcock, Blaine & Huber LLP 3400 HSBC Center Buffalo, NY 14203 (716) 847-7010 Robert E. Ganz ....................................................................Ganz & Wolkenbreit One Columbia Circle Albany, NY 12203 (518) 869-9500 Richard E. Gutman..............................................................Exxon Mobil Corporation 5959 Las Colinas Boulevard Irving, TX 75039 (972) 444-1480 Guy P. Lander......................................................................Davies Ward Phillips & Vineberg LLP 625 Madison Avenue, 12th Floor New York, NY 10022 (212) 308-8866 Raymond H. Seitz ..............................................................Phillips, Lytle, Hitchcock, Blaine & Huber LLP 3400 HSBC Center Buffalo, NY 14203 (716) 847-7065 4 NYSBA NY Business Law Journal | Winter 2003 | Vol. 7 | No. 2 Editorial Board Editors-in-Chief ..................................................................James D. Redwood David A. Pratt Professors Albany Law School 80 New Scotland Avenue Albany, NY 12208 Editorial Panel ....................................................................John T. Baker Professor Albany Law School 80 New Scotland Avenue Albany, NY 12208 Nancy K. Ota Professor Albany Law School 80 New Scotland Avenue Albany, NY 12208 David A. Pratt Professor Albany Law School 80 New Scotland Avenue Albany, NY 12208 James D. Redwood Professor Albany Law School 80 New Scotland Avenue Albany, NY 12208 Alex Y. Seita Professor Albany Law School 80 New Scotland Avenue Albany, NY 12208 Student Editor ....................................................................Arthur Chen Albany Law School 80 New Scotland Avenue Albany, NY 12208 NYSBA NY Business Law Journal | Winter 2003 | Vol. 7 | No. 2 5 Business Law Section Committees Chair: Banking Law........................................................................James W. Orband Hinman Howard & Kattell 80 Exchange Street Binghamton, NY 13901 (607) 231-6727 Bankruptcy Law..................................................................Margaret M. Cangilos-Ruiz Whiteman Osterman & Hanna LLP 1 Commerce Plaza Albany, NY 12260 (518) 487-7665 Consumer Financial Services ............................................Vincent N. Amato Law Offices of Vincent N. Amato 1 Blue Hill Plaza PO Box 1537 Pearl River, NY 10965 (845) 735-5980 Corporations and Other Business Entities......................Edward H. Cohen Katten Muchin Zavis Rosenman 575 Madison Avenue New York, NY 10022 (212) 940-8580 Franchise, Distribution and Licensing Law....................Harold L. Kestenbaum Farrell Fritz EAB Plaza West Tower, 14th Floor Uniondale, NY 11556 (516) 745-0099 Futures and Derivatives Law............................................Sherri Venokur Stroock Stroock & Lavan LLP 180 Maiden Lane New York, NY 10038 (212) 806-5855 Insurance Law .....................................................................Jeffrey R. Gaylord Lewis, Brisbois, Bisgaard & Smith 100 Wall Street, 9th Floor New York, NY 10005 (212) 232-1302 Internet and Technology Law ...........................................Micalyn S. Harris 625 North Monroe Street Ridgewood, NJ 07450 (201) 447-0561 Securities Regulation..........................................................Michael J. Holliday 327 Jefferson Avenue Westfield, NJ 07090 (908) 654-9038 6 NYSBA NY Business Law Journal | Winter 2003 | Vol. 7 | No. 2 Editor’s Message As I write this in early November, the mutual fund relating to employee benefit plans. Richard Nelson industry is receiving intense attention. Investors have points out that corporate board members, senior execu- withdrawn billions of dollars from Putnam; Putnam’s tives, and administrative committee members may be CEO has resigned; Attorney General Spitzer is again liable under ERISA even though they are not them- leading the charge, and investigations of other mutual selves named as plan fiduciaries. fund families appear to be imminent. Earlier this week Our final article is the paper that was awarded sec- Vanguard, one of the largest and most respected of all ond prize in the Section’s student writing competition. mutual fund companies, released a report that lambast- David Lampman argues that The Digital Millennium ed companies generally for a half-hearted response to Copyright Act of 1998 upsets the traditional balance of calls for improved corporate governance. copyright law by providing copyright owners with a As a result of the recent dramatic growth of self- monopoly while preventing society from benefiting directed 401(k) plans, more Americans are investors from fair use access. than ever before, and they receive conflicting advice I would like to thank the authors and the Section’s from the financial experts. Will the uncertainty affect officers, notably Grace Sterrett and Stuart Newman, for the flow of funds into the mutual fund industry? Will all their help. Publication of this Journal would be employees begin to clamor (as they probably should) impossible without the unfailing support of our friends for employers again to assume responsibility for the at the New York State Bar Association, particularly investment of pension plan assets? Richard Martin, Wendy Pike and Lyn Curtis. We begin this issue with reports from the Commit- Finally, I encourage you to enhance the benefits of tees on Corporations and Other Business Entities, Inter- Section membership by attending meetings sponsored net and Technology Law and Securities Regulation. As by the Section and its Committees. In September, the the reports indicate, the Committees have been very Section put on an excellent program at its meeting in active in preparing comments and holding meetings. Cooperstown, and later this month the Section’s Com- In our first article, Grace Sterrett explores the com- mittee on Securities Regulation is sponsoring a program plexities of the New York State and New York City laws on Private Offering Exemptions and Exclusions Under governing “high cost home loans” and their relation- the New York State Martin Act and section 18 of the ship to, and possible preemption by, federal law. Securities Act of 1933. The Section’s presentation at the NYSBA annual meeting will take place on the morning The second article, by Vincent Amato, discusses of Wednesday, January 28, 2004, at the Marriott Marquis predatory lending and mortgage fraud, and outlines in New York City. To those of you who are unable to various types of sophisticated frauds perpetrated by attend, I commend the excellent written program mat- groups of individuals, covering multiple properties in erials available from NYSBA. elaborate schemes to defraud lenders. The third article reflects the changed environment David Pratt resulting from the Enron debacle and the claims Professor of Law brought by the U.S. Department of Labor and individ- Albany Law School ual plan participants for alleged fiduciary violations NYSBA NY Business Law Journal | Winter 2003 | Vol. 7 | No. 2 7 Committee Reports Committee on Corporations and Other Business tal form); e-commerce and contracting; and protection Entities of trademarks and other intellectual property on the The Committee has been focusing on two major Internet, both when being sent and being used on or efforts and a number of smaller ones. The major efforts accessed from Internet Web sites. are a complete revision and updating of the New York Over time, some of these issues have been resolved. Not-for-Profit Corporation Law and a proposal to adopt ProCD, Inc. v. Zeidenberg1 put to rest most if not all of a Business Trust Law. the questions as to whether software licenses are The work on the Not-for-Profit Corporation Law is enforceable. (They are if the contract was validly headed by Fred Attea and Greg Blasi and has involved formed—offer, acceptance, consideration, absence of very significant help from Professor Peter Pitegoff, Vice fraud, etc.) Courts have also found that in appropriate Dean for Academic Affairs and Professor at the Univer- circumstances, corporations must produce electronic sity at Buffalo Law School, and Ms. Lauren Breen, Clini- records in response to discovery requests and requests cal Instructor at the University at Buffalo Law School. for electronic records are now routine.