The Law of Corporate Finance and Financial Markets

Readings

The textbook for this course (referred to below as “Bagley”) is: Bagley, Constance, E., and Craig E. Dauchy. The Entrepreneur’s Guide to Business Law. 2nd ed. South-Western College Publishing, 2002. ISBN: 0324042914.

LEC #	TOPICS	READINGS
Module I - Basic Building Blocks
1	Introduction The Law of Duties	Akula, John. “Tort Law in a Peanut.” (PDF)
2	The Law of Duties (cont.)	Mills Acquisition Co. v. Macmillan, Inc ., 559 A.2d 1261, 1287-88 (Del. 1989).  (Conflicts of interest in a management buy-out) Wickline v. State of California, 192 Cal. App. 3d 1630, 239 Cal. Rptr. 810 (Ct. App. 1986). (Early case on liability of an HMO for poor medical care; raises issues of accountability for professional judgments in the context of an innovative business model)
3	The Hard Edge of Regulation	Akula, John. “Business Crime: What To Do When the Law Pursues You.” In the matter of John Gutfreund. (SEC release on action against Solomon executives) Article on Ernst & Young and PeopleSoft. (Auditor independence issues) (not required for exercise because not discussed in class)
4	Contracts	Bagley. Chapter 8 (“Contracts and Leases”), pp. 176-191 (then skip “Electronic Contracts”) and 193-210 (stop before “Promissory Estoppel”). Texaco, Inc. v. Pennzoil Co., 784 F.2d 1133, 1154 (2d Cir. 1986).  (Formation of contract to purchase a company)
5	Contracts (cont.)	IBP, Inc. v. Tyson Foods, Inc., 789 A.2d 14 (Del. Ch. Ct 2001).  (Interpretation of material adverse effect clause in merger agreement) Filanto, SPA v. Chilewich Int’l Corp., 984 F.2d 58, 60 (2d Cir. 1993).  (Dispute over inclusion of arbitration term) Transatlantic Financing Corp. v. United States, 363 F.2d 312 (D.C. Cir. 1966). (Allocating risk) Delchi Carrier SpA v. Rotorex Corp., 71 F.3d 1024, 1027-28 (2d Cir. 1995). (Damages)
6	Module I Wrap-up	Akula, John. “Contracts in a Peanut.” ———. “Business Disputes Outline.” (Not required for exercise)
Module II - M&A
7	Key Players, Stages and Deal Structures Guest: Terry Mahoney, Partner, LeBoeuf, Lamb, Greene & McRae	The general background for this module is Bagley. Chapter 16 (“Buying and Selling a Business”) except skip the sections on “Securities Law Requirements” (pp. 611-617), “Putting it into practice” (pp. 640-645), and the “Sample Term Sheet” (pp. 646-648). For some of the classes below, sections of Bagley that are especially relevant are noted. Bagley. pp. 585-604 (stop at “Tax Treatment”), and pp. 618-628. ———. “Letter of Intent.” (Does not need to be read closely) ———. “Acquisition Review Checklist.” (Due diligence)
8	Tax Considerations in Structuring a Deal Guest: Martin Allen, Partner, Kirkpatrick & Lockhart	Bagley. “Tax Treatment.” pp. 604-610. Martin Allen’s outline on acquisitions and dispositions of businesses. Martin Allen’s “Fact Patterns.” Note: For the exercise, you are required to be familiar only with the sections of Allen’s written materials that he discussed in class. So my advice is review your class notes and refer to Allen’s materials to the extent necessary to understand any of the points he made in class.
9	The Basic Terms of a Purchase Agreement Guest: Terry Mahoney, Partner, Leboeuf Lamb Greene & McRae	Bagley. pp. 628-639. Stock purchase agreement (marked-up copy to reflect negotiations). Terry will provide guidance on which sections you should focus on. Assumed Liabilities excerpt from a model agreement, with comments.
10	Buying a Publicly-held Company I Guests: Stu Cable and Jim Matarese, Partners, Goodwin Procter	Ball, Corinne. “Advising the Board of Directors in Mergers and Acquisitions.” Review of Securities and Commodities Regulation 31, no. 7. Sections I, II, and III.
11	Buying a Publicly-held Company II Guests: Stu Cable and Jim Matarese, Partners, Goodwin Procter	Ball, Corinne. “Advising the Board of Directors in Mergers and Acquisitions.” Review of Securities and Commodities Regulation 31, no. 7. Sections IV and V. Note: Sections VI, VII, and VIII of the Ball article are not assigned.
12	International M&A and Joint Ventures Guest: David Walek, Ropes & Gray	Libby, Gerold. “Joint Ventures: Definitions and Legal Issues.” In Joint Ventures in the International Arena. Edited by Darell Prescott, and Salli Swartz. American Bar Association, 2002. Barrett, John. “Joint Venture Governance.” In Joint Ventures in the International Arena. Edited by Darell Prescott, and Salli Swartz. American Bar Association, 2002.
Module III - Forms of Business Entities
13	Forms of Doing Business - An Introduction	Bagley. “Deciding Whether to Incorporate.” Chapter 4, pp. 49-70.
14	The Publicly-held Corporation I - Insider Trading and Disclosure Guest: Jocelyn Arel, Partner, Testa Hurwitz & Thibeault	Bagley. “Going Public.” Chapter 17, pp. 685-698. (Starting with “Responsibilities of a Public Company and its Board of Directors”)
15	The Publicly-held Corporation II - Governance and Accountability Guest: Lisa Wood, Partner, Foley Hoag	Foley Hoag Securities Law Updates (Each article is available at the Web site of Foley Hoag LLP): “The Sarbanes-Oxley Act of 2002.” 1 August 2002. “SEC Issues Final Rules on Code of Ethics.” 28 February 2003. “SEC Adopts Rules to Prohibit Improper Influence of Auditors.” 13 June 2003. “New SEC Rules Oblige Attorneys to Report Material Violations ‘Up the Ladder’.” 30 June 2003. “Sarbanes-Oxley Compliance Update - What to Focus on in the Upcoming Reporting Season.” 31 December 2003.
Module IV - Raising and Investing Money
16	Venture Capital Guest: Edward Freedman, Corporate Counsel, Flagship Ventures	Bagley. “Venture Capital.” Chapter 13.
17	Other Private Equity Guest: John LeClaire and David Watson, Partners, Goodwin Procter	Excerpts from: Fenn, George W., Nellie Liang, and Stephen Prowse. “Economics of the Private Equity Market.” Federal Reserve Board, December 1995. The full report is available (PDF) as well as a summary (PDF).
18	Public Offerings and Investment Banking Guest: James Hackett, Partner, Choate Hall & Stewart	Bagley. “Going Public.” Chapter 17, pp. 649-685.
19	Commercial Lending and Securitization Guest: Matthew Furlong, Partner, Bingham McCutchen	Bagley. “Creditors’ Rights and Bankruptcy.” Chapter 12, pp. 384-398. Roever, W. A. “The Joys of Securitization: Understanding Securitization and Its Appeal.” In Issuer Perspectives on Securitization. Edited by F. Fabozzi. Newhope, PA: Fabozzi and Associates, 1998, pp. 1-16.
20	Building a Hedge Fund Portfolio Guest: Tim Diggins, Partner, Ropes & Gray	Vujovich, Dian. “Hedge Funds.” Dian’s Fund Freebies, 7 January 2001 Available at  Dian’s Fund Freebies . Borla, Simone, and Denis Masetti. “Hedge Funds and Alternative Investments in Europe.” Chapter 1 in Hedge Funds. Wiley, 2003, pp. 1-17. ISBN: 0470850957. (Note: This chapter title is misleading - some later parts of the book focus on Europe, but this introductory chapter is an overview of the hedge fund industry generally.)
Module V - Competition, Mobility and Insolvency
21	Antitrust	Akula, John. “Antitrust Law in a Peanut.” (For general background) Varta Bosch. (EU ruling on a proposed merger) Summary of Appeals Court ruling on Microsoft. GemStar - TV Guide (the “gun-jumping” problem in mergers). Department of Justice Press Release (PDF). Oesterle, Dale A. “Antitrust Legislation on Acquisitions.” Chapter 13 in Mergers and Acquisitions in a Nutshell. West Publishing, 2001, pp. 273-9. ISBN: 0314253157. Newspaper clippings on airlines settling suit by government on fares.
22	Bankruptcy and Reorganization I Guest: John Whitlock, Partner, Palmer & Dodge	Bagley. “Creditors’ Rights and Bankruptcy.” Chapter 12, pp. 398-428.
23	Bankruptcy and Reorganization II Guest: John Whitlock, Partner, Palmer & Dodge
24	Wrap-up