Next Tuesday, November 13, the Conference Board will host a debate in New York City between Lucian Bebchuk, a professor of Law, Economics and Finance at Harvard Law School, and Martin Lipton, a founding partner of Wachtell, Lipton, Rozen & Katz (WLRK) on the regulation of outside blockholders. Those interested in attending the debate can do so by RSVP’ing at the Conference Board website here by Wednesday, November 7.
This debate will be the fourth time over the past decade that Bebchuk and Lipton will engage in an exchange:
- In 2002, in a University of Chicago Law Review Symposium, Bebchuk and Lipton debated takeover defenses, with Lipton offering a response, titled Pills, Polls, and Professors Redux, to Bebchuk’s article, The Case Against Board Veto in Corporate Takeovers.
- In 2003, in an exchange published by the Business Lawyer, Bebchuk (in The Case for Shareholder Access to the Ballot) and Lipton (in Election Contests in the Company’s Proxy: An Idea whose Time Has Not Come) put forward opposing views on the merits of proxy access.
- In 2007, in the University of Virginia Law Review, Lipton published a response, titled The Many Myths of Lucian Bebchuk, to Bebchuk’s article, titled The Myth of the Shareholder Franchise, calling for reform of corporate elections.
The 2012 debate concerns an issue that became prominent last year when WLRK submitted a rulemaking petition (available here) to the SEC, advocating a tightening of the rules governing disclosure by outside blockholders under the Williams Act. In particular, the WLRK petition advocates reducing the period of time before the owner of 5% or more of a public company’s stock must disclose that position, from ten days to one day.
Lucian Bebchuk and Robert Jackson then issued a paper, titled The Law and Economics of Blockholder Disclosure, which takes issue with the positions advanced by the WLRK petition. The Bebchuk & Jackson article seeks to provide a framework for the SEC to examine the rules governing outside blockholders. Until the SEC undertakes such an examination, Bebchuk & Jackson argue, existing research and empirical evidence provide no basis for concluding that WLRK’s proposed tightening would protect investors or promote efficiency. Rather, such research and empirical evidence raises concerns that WLRK’s proposed tightening would harm investors and reduce efficiency. Bebchuk & Jackson’s article is available here; PowerPoint slides describing the paper’s main points are available here; and a post by the authors discussing the paper is available here.
Four senior attorneys in the corporate and litigation departments at WLRK — Adam O. Emmerich, Theodore Mirvis, Eric S. Robinson, and William Savitt — have subsequently put forward a detailed critique of Bebchuk & Jackson’s analysis. Their paper, titled Fair Markets and Fair Disclosure: Some Thoughts on The Law and Economics of Blockholder Disclosure, and the Use and Abuse of Shareholder Power, is available here, and a post by the authors summarizing the paper is available here.
The next round will take place in New York City next week.