ILE Annual Report 2009-2010 by Penn Law

Annual Report 2009â&#x20AC;&#x201C;2010

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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 Board of Advisors Message from the Dean Message from the Co-Directors Roundtable Programs Corporate Roundtable, Spring 2010 Corporate Roundtable, Fall 2009 Off the Record, Spring 2009 Corporate Roundtable, Spring 2009 Corporate Roundtable, Fall 2008 Corporate Roundtable, Spring 2008 Panel Programs Chancery Court Programs, Spring 2010

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Insights from Practice Delaware Chancery Program Lectures Law and Entrepreneurship Distinguished Jurist Past Lectures Academic Events Penn/NYU Conference, Spring 2010 NYU/Penn Conference, Spring 2009 ILE/Wharton Finance Seminars Publications and Papers Associate Faculty Institute Investors

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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 Pennâ&#x20AC;&#x2122;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 academicallyoriented 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 2009â&#x20AC;&#x201C;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 intersection 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

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message from the co-chairs

Board of Advisors advisors NewM. York, NY Roy Katzovicz Robert Friedman Joel E. L. Friedlander Paul G. J.Haaga, Jr. Simon Lorne Counsel Chair, 2001–2007 Bouchard Margules & Vice Chairman and Chief ViceGeneral Chairman James A. Ounsworth Pershing Squareand Capital Legal Senior Managing Director andCapital Friedlander Officer Research Managing Director Management, L.P. Chief Legal Officer Wilmington, DE Millennium Management Company The Musser Consulting Group York, CA NY The Blackstone Group L.P. LosNew Management LLC Angeles, Dennis J. NY Friedman Wayne, New York, New York, PA NY Bruce N. KuhlikJr. Gibson, Dunn & John G. Harkins, Morton A. Pierce Executive Vice President andJeffrey Joseph B. Frumkin Crutcher LLP Chair, 1980–1990 D. Marell Dewey & LeBoeuf General Counsel Co-Chair, New York,2008– NY Harkins Cunningham LLP Paul, Weiss, Rifkind,LLP New York, NY Merck & Co., Sullivan & Cromwell LLP Philadelphia, PAInc. Wharton & Garrison LLP Eric J. Friedman Whitehouse Station, NJ New York, NY New York, NY Executive Partner Leon C. Holt, Jr. Martha L. Rees Skadden, Arps, Slate, Retired Vice Chairman and Alan Miller Vice President and Assistant Mark Lebovitch Joseph D. Gatto William D.Aldridge Anderson, Jr. Vice General Counsel Bernstein LitowitzOfficer Berger &Co-Chairman Chairman Richard B. Meagher & Flom LLP Chief Administrative E. I. duM&A Pont de Nemours LLP Brothers Morgan Lewis & Bockius LLP Lehman Managing Director New York, NY Inc. AirGrossmann Products and Innisfree Incorporated & Company, New York,Inc. NY New York, NY Philadelphia, PA & Co. Goldman, Sachs Chemicals, New York, NY Inc. Robert L. Friedman Wilmington, DE New York, NY Allentown, PA Chair, 2001–2007 G. Daniel O’Donnell Paul S. Levy Joseph Glatt William D. Anderson, Jr. Marshall Babson Senior Managing B. Johnson Dechert MyronLLP J. Resnick Founder Principal Counsel Director William ManagingB. Director Hughes and Chief Legal Officer Chairman Emeritus Philadelphia, PAVice President Retired Senior JLL Partners Apollo Capital Goldman,Hubbard Sachs & Co. & Reed LLPNY and Chief Investment Officer New York, NY Management, L.P. New York, The Blackstone Whitman Corporation James E. Odell Allstate Insurance Company New York, New York, NY Group L.P.NY Chicago, IL Managing Director Northbrook, IL and Robert A. Lonergan Marshall B. Babson New York, NY Louis J. Hubbard Bevilacqua Brendan R. Kalb Executive Vice President, Head of Legal Hughes & Reed LLP Perry Golkin Cadwalader, Joseph B. Frumkin UBS Investment Co-General Counseland Robert H. RockBank General Counsel Member New York, NY Wickersham & Taft LLP Co-Chair, 2008– New York, NY Chairman and Publisher Corporate Kohlberg Kravis Roberts & Co. AQR CapitalSecretary New York, NY Sullivan Cromwell LLP Management, Directors & Boards Rohm and Haas New York,&NY Fred Blume LLCCompany James A. Ounsworth Philadelphia, PA Philadelphia, Chairman Emeritus New York, NY Greenwich, CT PA Fred Blume Managing Partner John G. Harkins, Jr. Blank Rome LLP Chairman Emeritus Joseph D. Gatto TheGerald SL Consulting Cynthia Kane RosenfeldGroup SimonB.M. Lorne Chair, 1980–1990 Philadelphia, PA Blank Rome LLP Chairman of Investment PA Deputy Chairman Vice Assistant Chairman to andthe Chief Philadelphia, Harkins Cunningham LLP Special Philadelphia, PA Banking Secretary of State Rothschild North America Legal Officer Philadelphia, PA Charles I. Cogut A. Pierce Barclays Capital New York, NY Millennium Management, Morton Co-Chair, 2008– Delaware Department Daniel H.Thacher Burch & Dewey & LeBoeuf LLP Americas LLC Leon C. Holt, Jr. Simpson of State Chairman & CEO New York, Peter G. NY Samuels New York, DE NY Retired Vice Chairman and Wilmington, Bartlett LLP New York, NY MacKenzie Partners, Inc. Chief Administrative Officer Proskauer Rose LLP New York, NY Allan N. Rauch New York, NY Joseph D. Glatt RoyMichael J. Katzovicz New York, NY E. Lubowitz Air Products and Chemicals, Inc. Vice President— General Counsel Weil, Gotshal & Manges LLP Allentown, PA Isaac D. Corré Chief Legal Officer Charles I. Cogut Legal and Apollo Capital John F. General SchmutzCounsel New York, NY Capital Senior Managing Director Pershing Square Co-Chair, 2008– BedChair, Bath1990–1994 & Beyond William B. Johnson Eton Park Capital Management, L.P. Management, L.P. Simpson Thacher Union, NJSenior Vice President Retired J. Anthony Chairman Emeritus Management New York, NY New York, NYMessina & Bartlett and General Counsel Buchanan Ingersoll & Whitman Corporation New York, LLP NY Martha L. Rees New York, NY Perry Golkin Roger Kimmel E. I. du Pont de Nemours Rooney PC Chicago, IL Vice Kohlberg Kravis VicePhiladelphia, Chairman PA & President Company,and Inc. Pamela Craven Isaac D. Corré Assistant General Roberts & Co. Wilmington, DECounsel Chief Administrative Officer Stephen J. Jones Rothschild Inc. Senior Managing Director E. I. du Pont de Nemours NewPresident, York, NYGeneral Alan Miller Vice Avaya Communications New York, NY Eton Park Capital & Company, Howard L. Inc. Shecter Co-Chairman Counsel and Secretary Basking Ridge, NJ Management Stuart M. Grant DE Bruce N. Kuhlik Orrick, Herrington & Innisfree M&A IncorporatedWilmington, Air Products and Chemicals, Inc. New York, NY Grant & Eisenhofer P.A. Executive ViceNY President Sutcliffe LLP New York, Allentown, PA Richard D’Avino Myron J. Resnick Wilmington, DE and General Counsel New York, NY V.P. Taxes-GE Capital and Richard B. Ford Retired Senior Vice President Merck & Co.,O’Donnell Inc. G. Daniel Cynthia B. Kane NBC Universal CT, a Wolters Kluwer Mark I.Assistant Greeneto the andRobert Chief Investment C. SheehanOfficer Dechert LLP General Electric Company Special Whitehouse Station, NJ Business Cravath, Swaine Allstate Insurance Executive Partner Company Philadelphia, PA Secretary of State Stamford, CT New York, NY & MooreDepartment LLP Northbrook, IL Slate, Mark Lebovitch Skadden, Arps, Delaware of State New York, NY Bernstein Litowitz Berger Meagher & Flom LLP James E. Odell Wilmington, DE Joel E. Friedlander Stephen Fraidin & Grossmann LLPThe New York, NY General Counsel, Bouchard, Margules & Kirkland & Ellis LLP New York, NY Americas Friedlander New York, NY Victoria E. Silbey UBS Investment Bank Wilmington, DE Senior Vice President–Legal and General Counsel SunGard Data Systems Inc. Barry M. James H.Abelson Agger Pepper1994–2001 Hamilton LLP Chair, Philadelphia, Retired SeniorPA Vice President, General James H. Agger Counsel and Secretary Chair, 1994–2001 Air Products and Retired SeniorInc. Vice Chemicals, President, General Allentown, PA Counsel and Secretary Air Products and Richard B. Aldridge Chemicals, Inc.& Bockius LLP Morgan Lewis Allentown, PAPA Philadelphia,

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Wayne, PA Peter G. Samuels Proskauer Rose LLP David M. Silk New York, NY Wachtell, Lipton, Victoria Silbey Rosen &E.Katz Senior Vice President— New York, NY Legal and General Counsel Bruce L. Data Silverstein SunGard Systems Inc. Young Conaway Stargatt Wayne, PA & Taylor, LLP David M. SilkDE Wilmington, Wachtell, Lipton, Rosen & KatzSparks III A. Gilchrist New York, NY Arsht Morris, Nichols, & Tunnell LLP Bruce L. Silverstein Wilmington, DE Young Conaway Stargatt &Hon. Taylor, LeoLLP E. Strine, Jr. Wilmington, DE Vice Chancellor Delaware Court of A. Gilchrist Sparks III Chancery Morris, Nichols, Wilmington, DE Arsht & Tunnell LLP Wilmington, Nancy StrausDE Sundheim Senior Vice President, Heidi Stam General Counsel and Managing Secretary Director and General Counsel Unisys Corporation Vanguard Blue Bell, PA Wayne, PA Jere R. Thomson Hon. JonesLeo DayE. Strine, Jr. Vice Chancellor New York, NY Delaware Court of Chancery Wilmington, DE Veasey Hon. E. Norman Chief Justice, Supreme Hon. E. Norman Veasey Court of Delaware, Chief Justice, Supreme Court 1992–2004 ofWeil, Delaware, 1992–2004 Gotshal & Weil, Gotshal Manges LLP & Manges LLP New and NewYork, York, NY, NY, and Wilmington, Wilmington, DE DE

Marc Weingarten Marc Weingarten Schulte Zabel LLP Schulte Roth Roth & & Zabel New NewYork, York, NY NY Gregory P. Williams Gregory P. Williams Richards, Layton & Richards, Layton & Finger, P.A. Finger, P.A. Wilmington, DE Wilmington, DE Donald J. Wolfe, Jr. Donald J. Wolfe & Potter Anderson Potter Anderson & Corroon LLP Corroon LLP Wilmington, DE Wilmington, DE

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

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

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Message from the Dean for over twenty years, the institute for law and economics has successfully demonstrated the benefits of a crossdisciplinary 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 intellectual 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

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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

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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 policymakers, 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 roundtables 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.

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Corporate Roundtable 9 April 2010 Rethinking the Regulation of Securities Intermediaries Jill E. Fisch, Perry Golkin Professor of Law, University of Pennsylvania Law School The author argues that existing regulation of mutual funds has serious shortcomings. In particular, the Investment Company Act, which is based primarily on principles of corporate governance and fiduciary duties, fails to support and, in some cases impedes, market forces. Existing evidence suggests that retail investing behavior and the dominance of sales agents with competing financial incentives further weakens market discipline. As a solution, the author proposes that funds should be treated primarily as financial products rather than corporations and, correspondingly, investors should be treated primarily as consumers rather than corporate shareholders. To implement this approach, the author proposes the creation of a new federal agency that would develop standardized financial products coupled with corresponding disclosure principles. Sellers of retail products would be required either to conform their products to these standards or to explain material differences. The goal is to enhance market discipline while making retail funds less complicated and more understandable for individual investors. Mutual Fund Performance Advertising: Inherently and Materially Misleading? Alan R. Palmiter, Professor of Law, Wake Forest University School of Law Ahmed Taha, Professor of Law, Wake Forest University School of Law

Welcome Michael A. Fitts, Dean and Bernard G. Segal Professor of Law, University of Pennsylvania Law School Morning Session Rethinking the Regulation of Securities Intermediaries Jill E. Fisch, Perry Golkin Professor of Law, University of Pennsylvania Law School

Commentators Tamar Frankel, Michaels Faculty Research Scholar and Professor of Law, Boston University School of Law Eric D. Roiter, Former General Counsel, Fidelity Management & Research Mutual Fund Performance Advertising: Inherently and Materially Misleading? Alan R. Palmiter, Professor of Law, Wake Forest University School of Law Ahmed Taha, Professor of Law, Wake Forest University School of Law Commentators Donald G. Bennyhoff, Senior Investment Analyst, Vanguard Eric Zitzewitz, Associate Professor of Economics, Dartmouth College Afternoon Session Panel on the Governance of Mutual Funds

Mutual funds are a mainstay of our national savings and retirement systems. Their effectiveness as investment vehicles is critical to our national financial well-being. With individual investors largely responsible for deciding how to allocate their money among different mutual funds, the question of how this allocation occurs is central to the functioning of the mutual fund market. The most important factor used by investors (and their advisers) in choosing among mutual funds is the past performance of the funds. Fund investors chase returns. Yet the consistent findings of academic studies—with the evidence growing stronger over time—is that return chasing is a fool’s game. Strong past returns, except those arising from lower fund 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.”

Moderators Jill E. Fisch, Perry Golkin Professor of Law, University of Pennsylvania Law School Michael L. Wachter, William B. Johnson Professor of Law and Economics, University of Pennsylvania Law School Panelists John E. Baumgardner, Jr., Sullivan & Cromwell LLP Edwin J. Elton, Nomura Professor of Finance, NYU Stern School of Business Scott Goebel, Senior Vice President and General Counsel, Fidelity Management & Research Company Susan B. Kerley, Strategic Management Advisors, LLC Ryan Leggio, Mutual Fund Analyst, Morningstar, Inc. Jeffrey S. Puretz, Dechert LLP

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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. Baumgardner, 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.

4 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: GĂŠrard 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.

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Corporate Roundtable 11 December 2009 Welcome Michael A. Fitts, Dean and Bernard G. Segal Professor of Law, University of Pennsylvania Law School

Embattled CEOs Marcel Kahan, George T. Lowy Professor of Law, New York University School of Law Edward Rock, Saul A. Fox Distinguished Professor of Business Law, University of Pennsylvania Law School The authors argue that chief executive officers of publicly-held corporations in the United States are losing power to their boards of directors and to their shareholders. This loss of power is recent (say, since 2000) and gradual, but nevertheless represents a significant move away from the imperial CEO who was surrounded by a handpicked board and lethargic shareholders. After discussing the concept of power and its dimensions, we document the causes and symptoms of the decline in CEO power in several areas: share ownership composition and shareholder activism; governance rules and the board response to shareholder activism; regulatory changes related to shareholder voting; changes in the board of directors; and executive compensation. The authors argue that this decline in CEO power represents a long-term trend, rather than a temporary response to economic and political conditions. The decline in CEO power has several important implications, including implications with respect to the possibility of a regulatory backlash against certain newly empowered shareholder groups, future development in Delawareâ&#x20AC;&#x2122;s corporate law, the type of persons who will serve on corporate boards in the future, the type of shareholder initiatives that will be introduced and the corporate response to them, the convergence of corporate laws across countries, the source of resistance to acquisitions and the legal regulation of target defenses, the desirability of legal reforms expanding shareholder voting rights, and the relationship between CEOs and private equity firms. The Case Against Shareholder Empowerment William W. Bratton, Peter P. Weidenbruch, Jr. Professor of Business Law, Georgetown University Law Center Michael L. Wachter, William B. Johnson Professor of Law and Economics, University of Pennsylvania Law School Many look toward enactment of the law reform agenda held out by proponents of shareholder empowerment as a part of the regulatory response to the financial crisis. The authors argue that the financial crisis exposes major weaknesses in the shareholder case. Their claim is that shareholder empowerment delivers management a simple and emphatic marching order: manage to maximize the market price of the stock. And that is exactly what the 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.

Morning Session Embattled CEOs Marcel Kahan, George T. Lowy Professor of Law, New York University School of Law Edward B. Rock, Saul A. Fox Distinguished Professor of Business Law, University of Pennsylvania Law School

Commentators Roy J. Katzovicz, Chief Legal Officer, Pershing Square Capital Management Reinier H. Kraakman, Ezra Ripley Thayer Professor of Law, Harvard Law School The Case Against Shareholder Empowerment William W. Bratton, Peter P. Weidenbruch, Jr. Professor of Business Law, Georgetown University Law Center Michael L. Wachter, William B. Johnson Professor of Law and Economics, University of Pennsylvania Law School Commentators William D. Anderson, Jr., Managing Director, Goldman, Sachs & Co. Roberta Romano, Oscar M. Ruebhausen Professor of Law, Yale Law School Afternoon Session Panel on the Reform Agenda

Moderators Jill E. Fisch, Perry Golkin Professor of Law, University of Pennsylvania Law School Edward B. Rock, Saul A. Fox Distinguished Professor of Business Law, University of Pennsylvania Law School Panelists Hon. Jeffrey W. Bullock, Secretary of State, Delaware Department of State Lucian A. Bebchuk, William J. Friedman and Alicia Townsend Friedman Professor of Law, Economics, and Finance, Harvard Law School Glenn Booraem, Principal and Assistant Fund Controller, Vanguard Marcy Engel, Chief Operating Officer and General Counsel, Eton Park Capital Management Scott Goebel, Senior Vice President and General Counsel, Fidelity Management & Research Company Robert McCormick, Chief Policy Officer, Glass, Lewis & Co., LLC

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roundtable programs

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. 3

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, Proskauer Rose LLP.

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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 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 Herring provided the context explaining how the crisis came about. Edward Rock’s presentation detailed several different plans for recovery and suggestions for reform moving forward. The program was hosted at the offices of Eton Park Capital Management in New York City.

Eton Park Capital Management, New York City

Moderators Isaac D. Corré, Senior Managing Director, Eton Park Capital Management Jill E. Fisch, Perry Golkin Professor of Law, University of Pennsylvania Law School Michael L. Wachter, William B. Johnson Professor of Law and Economics, University of Pennsylvania Law School 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 Michael A. Fitts, Dean and Bernard G. Segal Professor of Law, University of Pennsylvania Law School Morning Session Shareholder Primacy in a Corporatist Political Economy William W. Bratton, Peter P. Weidenbruch, Jr. Professor of Business Law, Georgetown University Law Center Michael L. Wachter, William B. Johnson Professor of Law and Economics, University of Pennsylvania Law School

Commentators Joseph B. Frumkin, Sullivan & Cromwell LLP Mark J. Roe, David Berg Professor of Law, Harvard Law School

Afternoon Session Panel on the Government as Shareholder

Moderators Edward B. Rock, Saul A. Fox Distinguished Professor of Business Law Michael L. Wachter, William B. Johnson Professor of Law and Economics, University of Pennsylvania Law School Panelists Alan Beller, Cleary Gottlieb Steen & Hamilton LLP Robert F. Hoyt, Department of the Treasury Roberta Romano, Oscar M. Ruebhausen Professor of Law, Yale 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

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

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, Wachtell, Lipton, Rosen & Katz.

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Corporate Roundtable 12 December 2008 Welcome Michael A. Fitts, Dean and Bernard G. Segal Professor of Law, University of Pennsylvania Law School

Afternoon Session Panel on How Do Institutional Investors Decide to Vote Their Shares? How Should They Decide?

Morning Session Are U.S. CEOs Overpaid? Steven N. Kaplan, Neubauer Family Professor of Entrepreneurship and Finance, The University of Chicago Graduate School of Business

Moderators Edward B. Rock, Saul A. Fox Distinguished Professor of Business Law Michael L. Wachter, William B. Johnson Professor of Law and Economics, University of Pennsylvania Law School

Commentators John E. Core, Ira A. Lipman Professor and Professor of Accounting, The Wharton School Damon Silvers, Associate General Counsel, AFL-CIO

Panelists Stephen L. Brown, Director of Corporate Governance, TIAA-CREF Jill E. Fisch, Perry Golkin Professor of Law, University of Pennsylvania Law School Paul G. Haaga, Jr., Executive Vice President, Capital Research and Management Company Michael McCauley, Senior Corporate Governance Officer, Florida State Board of Administration Robert McCormick, Chief Policy Officer, Glass Lewis & Co, LLC Eric D. Roiter, Lecturer, Boston University School of Law [former General Counsel, Fidelity Management & Research Company] Hon. Myron T. Steele, Chief Justice, Supreme Court of Delaware

Rating the Ratings: How Good Are Commercial Governance Ratings? Robert M. Daines, Pritzker Professor of Law and Business, Stanford Law School Ian D. Gow, Stanford University Graduate School of Business David F. Larcker, James Irvin Miller Professor in Finance, Stanford University Graduate School of Business 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 Opening Address Colin Mayer and Timothy Endicott, Deans of Saïd Business School and Faculty of Law, University of Oxford Morning Session Hedge Fund Activism in Europe Marco Becht, Director, European Corporate Governance Institute; Professor of Finance and Economics, Université Libre de Bruxelles Julian Franks, Professor of Finance, London Business School Jeremy Grant, Executive Director of the Centre for Corporate Governance, London Business School

Commentators John H. Armour, Lovells Professorship in Law and Finance, Oriel College, University of Oxford Roy Katzovicz, Chief Legal Officer, Pershing Square Capital Management, L.P. Hedge Fund Activism in the Enforcement of Bond Covenants Marcel Kahan, George T. Lowy Professor of Law, New York University School of Law Edward B. Rock, Saul A. Fox Distinguished Professor of Business Law, University of Pennsylvania Law School

Commentators Horst Eidenmüller, Professor, University of Munich Carolyn Conner, Allen & Overy LLP Afternoon Session Panel Discussion on Doing Deals When the Sky Is Falling

Moderators John H. Armour, Lovells Professorship in Law and Finance, Oriel College, University of Oxford Edward B. Rock, Saul A. Fox Distinguished Professor of Business Law, University of Pennsylvania Law School Panelists David S. Blitzer, Senior Managing Director, Private Equity Group, The Blackstone Group International Limited Charles Crawshay, Assistant Secretary, The Takeover Panel Todd Fisher, Kohlberg Kravis Roberts & Co. Chris Hale, Travers Smith Tim Jenkinson, Professor of Finance, Saïd Business School, University of Oxford Stephanie Keen, Lovells LLP Simon Walker, CEO, British Venture Capital Association

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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 Universitﾃｩ Libre de Bruxelles.

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 of Law窶年ewark. Back row: Faith Stevelman, New York Law School.

5 6 David S. Blitzer, The Blackstone Group International Limited; Chris Hale, Travers Smith; Tim Jenkinson, Saﾃｯd Business School, University of Oxford. 7 Paul S. Levy, JLL Partners.

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roundtable programs

institute for law and economics

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 Instituteâ&#x20AC;&#x2122;s associate faculty.

institute for law and economics

panel programs

Chancery Court Program 20 April 2010 NCS v. Omnicare Moderators Hon. Leo E. Strine, Jr., Vice Chancellor, Chancery Court of Delaware Michael L. Wachter, William B. Johnson Professor of Law and Economics, University of Pennsylvania Law School Panelists Stephen P. Lamb, Paul, Weiss, Rifkind, Wharton & Garrison LLP David McBride, Young Conaway Stargatt & Taylor, LLP H. Jeffrey Schwartz, DLA Piper LLP Donald J. Wolfe, Potter Anderson & Corroon LLP

NCS v. Omnicare This spring’s Chancery Court programs looked at key cases in corporate law jurisprudence. The panelists at this event had argued and decided the NCS v. Omnicare case. In this case, the board of directors of NCS had agreed to a merger with Genesis. The 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 NCS board of directors no longer recommended it. After approving the merger agreement but before the stockholder vote was scheduled, the NCS board of directors withdrew its recommendation for the Genesis merger after deciding that a competing proposal from Omnicare was a superior transaction. But two NCS stockholders holding a majority 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: Key Participants Look Back at Paramount Communications v. Time

Moderators Hon. Leo E. Strine, Jr., Vice Chancellor, Chancery Court of Delaware Michael L. Wachter, William B. Johnson Professor of Law and Economics, University of Pennsylvania Law School

This program looked at Paramount Communications v. Time from the perspective of lawyers who worked on the case, and the former Chancellor of the Delaware Chancery Court that decided it. The case involved Time, Warner, and Paramount, at that time three of the nation’s 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 with Warner. If the company was for sale, then its directors would have been obligated to respond to bids from Paramount and others. In his decision Chancellor Allen said Time’s board had not put the company up for sale and therefore was not required to get the best price for its stock. “Corporation law does not operate on the theory that directors, in 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.

Panelists William T. Allen, Nusbaum Professor of Law and Business, Director, Pollack Center for Law and Business, New York University School of Law Martin Lipton, Wachtell, Lipton, Rosen & Katz Theodore N. Mirvis, Wachtell, Lipton, Rosen & Katz Paul K. Rowe, Wachtell, Lipton, Rosen & Katz

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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. 4 Jon H. Outcalt, Former Chairman, NCS Healthcare, Inc. 5 Joel E. Friedlander, Bouchard Margules & Friedlander; Mark Lebovitch, Bernstein Litowitz Berger & Grossmann LLP.

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.

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panel programs

Insights from Practice 13 October 2009 Panel Co-Chairs Joseph B. Frumkin, Sullivan & Cromwell LLP G. Daniel Oâ&#x20AC;&#x2122;Donnell, Dechert LLP Panelists Kenneth A. Lefkowitz, Hughes Hubbard & Reed LLP Howard L. Meyers, Morgan, Lewis & Bockius LLP Peter G. Samuels, Proskauer Rose LLP

The new Insights from Practice series showcases cutting-edge issues in corporate practice. For this panel, five distinguished corporate lawyers shared their career paths and recent experiences with the audience. The discussion centered on three topics, viewed against the backdrop of the financial crisis that began in 2007: the current state of the mergers and acquisitions market, since it was most immediately and directly 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 Hon. Stephen P. Lamb, Vice Chancellor, Chancery Court of Delaware Edward B. Rock, Saul A. Fox Distinguished Professor of Business Law, University of Pennsylvania

This program explored examples of shareholder activism in corporate governance. Activist shareholders attempt to put pressure on corporate managers to meet a wide variety of goals. The program particularly focused on shareholder activism as practiced by hedge funds and labor unions, examining the similarities and differences between them. Daniel Pedrotty from the AFL-CIO talked about the investment strategies that his organization uses and the goals it hopes to achieve. Marc Weingarten discussed several cases in which he represented activist hedge funds in his practice with Schulte Roth & Zabel LLP.

Speakers Daniel Pedrotty, Director, Office of Investment, AFL-CIO Marc Weingarten, Schulte Roth & Zabel LLP

institute for law and economics

panel programs

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 Oâ&#x20AC;&#x2122;Donnell, Dechert LLP.

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panel programs

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lectures

lectures the institute for law and economics presents two series of public lectures: law and entrepreneurship and distinguished jurist. in sponsoring these events, the institute aims to spotlight and honor lawyers who have led noteworthy 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 Pennâ&#x20AC;&#x2122;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.

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lectures

Law and Entrepreneurship Lectures 3 March 2010 Managing Through Change, Managing Through Crisis in Financial Services Joseph D. Gatto, Chairman of Investment Banking, Barclays Capital Americas

30 September 2009 The ‘Ten Points’ for Maintaining a Risk-Taking Entrepreneurial Spirit in a Large Corporation J.P. Suarez, Senior Vice President and General Counsel, Wal-Mart Stores International Division

Joseph D. Gatto is Chairman of Investment Banking of Barclays Capital Americas. He is also a member of the Barclays Capital Investment Banking Executive Committee. In his March ILE lecture, he talked about the challenges of managing at Lehman Brothers during the financial crisis and Lehman’s subsequent filing for bankruptcy. Prior to joining Barclays Capital in 2008, Mr. Gatto was Vice Chairman of Lehman Brothers and Co-Head of Corporate Finance and was a member of the firm’s Investment Banking Executive Committee and Senior Client Council. At Lehman, he had also served as Global Chairman of Mergers and Acquisitions. Before joining Lehman Brothers in 2005, Mr. Gatto spent 21 years at Goldman, Sachs & Co. becoming a partner in that firm in 1994 and serving as Chairman of Consumer Products Banking. Over the course of the last ten years, he has advised clients on over $300 billion of transactions, primarily in the consumer, industrial and retail sectors. Mr. Gatto earned his AB (magna cum laude) from Princeton University, his MBA from the University of Pennsylvania’s Wharton School and his JD (cum laude) from the University of Pennsylvania Law School.

John Peter Suarez (J.P.) is the Senior Vice President and General Counsel for Wal-Mart Stores International Division, responsible for managing all legal affairs for the 14 countries in which Wal-Mart operates. His areas of responsibility include franchising, operational support, mergers & acquisitions, employment, tax, compliance, and supervision over all other legal affairs. J.P. is responsible for providing advice and legal counseling to all members of the International management team, including the CEO of the International Division. Prior to being named to this position, J.P. was the Senior Vice President and Chief Compliance Officer for Wal-Mart Stores, Inc., responsible for helping to identify all regulatory issues facing the company, implementing mitigation plans, and monitoring overall compliance with legal obligations in the areas of Operations, Pharmacy, Privacy, Environmental, Immigration and Financial Services, and Food Safety. J.P. also led the company’s Product Safety area, helping to ensure that all Wal-Mart’s products meet appropriate safety standards. J.P. joined Wal-Mart Stores, Inc. in 2004 and began his career as the Vice President and General Counsel for Sam’s Club Legal. He was responsible for managing the legal affairs for Sam’s Club, 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

lectures

institute for law and economics

lectures

Law and Entrepreneurship Lectures 3 March 2009 Defining the 21st Century Campus: The Intersection of Education and Community Hon. Michael Nutter, Mayor, City of Philadelphia

31 March 2009 The PeopleSoft Deal Safra Catz, President, Oracle Corporation Safra Catz is President of Oracle Corporation. In her lecture for ILE, Catz provided an inside look at Oracle’s acquisition of PeopleSoft and the lessons she learned from that deal. Catz has been a member of Oracle’s Board of Directors since October 2001. She serves on Oracle’s Executive Management Committee and is responsible for global operations. Previously, she served as Executive Vice President and Senior Vice President. Prior to joining Oracle, Catz was at Donaldson, Lufkin & Jenrette, a global investment bank that has since merged with Credit Suisse First Boston, where she was a Managing Director from February 1997 to March 1999, and a Senior Vice President from January 1994 until February 1997. Catz is a graduate of the Wharton School and the University of Pennsylvania Law School.

In his first public appearance at Penn since his election, Mayor Nutter delivered a noteworthy speech on the importance of education in the scope of his plans for the city. The Hon. Michael A. Nutter was sworn-in as the 98th Mayor of Philadelphia on January 7th, 2008. Mayor Nutter is a native Philadelphian with an accomplished career in public service, business and financial administration. He served as a Philadelphia City Councilman for nearly 15 years representing the city’s Fourth District. Before pursuing his career in public service, Mayor Nutter worked as an investment manager at one of the nation’s leading minority-owned investment banking and brokerage firms. Mayor Nutter is a graduate of the Wharton School of Business.

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lectures

institute for law and economics

lectures

Distinguished Jurist Lectures 29 October 2009 Private Securities Litigation—Time for a Fresh Start? Hon. Lewis A. Kaplan, United States District Judge, Southern District of New York Judge Kaplan was appointed United States District Judge for the Southern District of New York on August 9, 1994 and entered on duty August 22, 1994. He received his A.B. with high honors in political science from the University of Rochester in 1966 and his J.D. cum laude from Harvard Law School in 1969. He then served as law clerk to Honorable Edward M. McEntee of the United States Court of Appeals for the First Circuit. Judge Kaplan joined the New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison in 1970 and was a partner in the firm from 1977 until joining the bench. Since his appointment to the bench, Judge Kaplan has handled a number of well known cases. He now is presiding over the first criminal prosecution in a federal 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 copyrighted 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.

11 November 2008 Delaware Directors’ Fiduciary Duties: The Focus on Loyalty Hon. Randy Holland, Justice, Supreme Court of Delaware The Honorable Randy J. Holland presently serves on the Delaware Supreme Court. He is the youngest person to serve on the Delaware Supreme Court, having been recommended to the Governor by a bipartisan merit selection committee. Prior to his appointment and confirmation in 1986, Justice Holland was in private practice as a partner at Morris, Nichols, Arsht & Tunnell. In January 1999, he was reappointed and confirmed unanimously for a second twelve-year term. Justice Holland graduated from Swarthmore College. He also graduated from the University of Pennsylvania Law School, cum laude, where he received an award for legal ethics. Justice Holland received a Master of Laws in the Judicial Process from the University of Virginia Law School.

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lectures

institute for law and economics

lectures

Past Law and Entrepreneurship Lectures 17 September 2008 Retailers in a Recession: A Fireside Chat on Investing with Bill Ackman William A. Ackman, Managing Member, Pershing Square Capital Management, L.P. 31 March 2008 Making Every Mistake Once Safra Catz, President, Oracle Corporation 19 September 2007 Tales from Blackstone’s IPO Robert L. Friedman, Senior Managing Director and Chief Legal Officer, The Blackstone Group L.P 28 February 2007 Law, Legal Risks, and the Financial Markets Isaac D. Corré, Senior Managing Director, Eton Park Capital Management

26 October 2006 Managing in the 21st Century Henry R. Silverman, Chairman & CEO, Realogy Corporation 16 February 2006 The Banker as Entrepreneur Michael J. Biondi, Co-Chairman, Investment Banking, Lazard Frères & Co. LLC 26 October 2005 Founding and Building a New Venture: The Story of the National Women’s Law Center Marcia Greenberger, Founder and Co-President, National Women’s Law Center 7 April 2005 A Swing of the Pendulum: 20 Years in M&A Joseph D. Gatto, Managing Director, Goldman, Sachs & Co.

29 November 2006 Large-Scale Entrepreneurship: Business Development at GE Pamela Daley, Senior Vice President for Corporate Business Development, General Electric Company

24 March 2004 The WNBA and Women’s Team Sports: A New Sports Marketing Proposition for the New Millennium Val Ackerman, President, Women’s National Basketball Association 30 October 2003 The Role of Entrepreneurship in Urban Education: Past, Present and Future James E. Nevels, Chairman and CEO, The Swarthmore Group, Inc.; Chairman, Philadelphia School Reform Commission 6 November 2002 Public Trust—and Distrust— in American Business: What Needs to Be Done Peter G. Peterson, Chairman, The Blackstone Group; Chairman, Federal Reserve Bank of New York; Co-Chair, Conference Board Commission on Public Trust and Private Enterprise

26 September 2002 What They Did Not Teach Me in Law School Robert M. Potamkin, Co-Chairman and Co-CEO, Planet Automotive Group, Inc.

2 March 2000 Perspectives on the Health Care Revolution Charles A. Heimbold, Jr., Chairman and CEO, Bristol-Myers Squibb Company

19 April 2002 Smart People Making and Losing Money: Some Recent Examples Perry Golkin, Kohlberg Kravis Roberts & Co.

18 November 1999 Ethics in Sports: Deciding the Game Anita DeFrantz, Vice President, International Olympic Committee; President, Amateur Athletic Foundation

25 October 2001 The Economics of Sports Team Franchises for Cities Hon. Edward G. Rendell, Governor, Commonwealth of Pennsylvania 21 February 2001 Private Equity: Difficult Investing in a Difficult Time Paul S. Levy, Senior Managing Director, Joseph Littlejohn & Levy

23 October 1997 How to Maintain Entrepreneurial Values While Your Company Climbs into the Fortune 500 Brian L. Roberts, President, Comcast Corporation 27 March 1997 The Unique Impact of the Law on the Leveraged Buyout Business Saul A. Fox, Fox Paine & Company, LLC

Past Distinguished Jurist Lectures 28 October 2004 A Twelve-Year Retrospective on Delaware Corporate Jurisprudence and Governance Issues Hon. E. Norman Veasey, Chief Justice, Delaware Supreme Court

6 March 2001 Administering Capital Punishment: Is Texas Different? Hon. Patrick E. Higginbotham, U.S. Court of Appeals for the Fifth Circuit

11 February 1997 What Economics of Law Must Address Next: Some Thoughts on Theory Hon. Guido Calabresi, U.S. Court of Appeals for the Second Circuit

11 October 2006 The Embattled Corporation Hon. Richard A. Posner, U.S. Seventh Circuit Court of Appeals and University of Chicago Law School

4 March 2004 Corporate Decision-Making in Delaware Courts Hon. Carolyn Berger, Justice, Delaware Supreme Court

24 February 2000 The Court of Chancery as Teacher of Corporate Law Hon. William B. Chandler III, Chancellor, Delaware Court of Chancery

7 February 1996 The MTV Constitution Hon. Alex Kozinski, U.S. Court of Appeals for the Ninth Circuit

16 March 2006 Technology Mergers in a Shrinking World Hon. Vaughn R. Walker, Chief Judge, U.S. District Court for the Northern District of California

27 February 2003 The Effects of Collegiality on Judicial Decision Making Hon. Harry T. Edwards, Circuit Judge, U.S. Court of Appeals for the D.C. Circuit

3 March 2005 Corporate Federalism: Event Horizons in Corporate Governance Hon. Myron T. Steele, Chief Justice, Delaware Supreme Court

29 November 2001 Fee Shifting as a Control Against the Rogue Litigant Hon. Jack B. Jacobs, Justice, Supreme Court of Delaware

24 October 2007 The Future of Securities Regulation Brian G. Cartwright, General Counsel, Securities and Exchange Commission

11 February 1999 Why Do People Bring Employment Discrimination Cases When They Usually Lose? Hon. Diane Wood, U.S. Court of Appeals for the Seventh Circuit 12 February 1998 The Value of Predictability in Corporate Law Hon. E. Norman Veasey, Chief Justice, Delaware Supreme Court

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22 March 1995 Accountability: Popular Will, Interest Groups, or the Invisible Hand Hon. Stephen F. Williams, U.S. Court of Appeals for the District of Columbia 13 April 1994 On the Constitution Hon. Antonin Scalia, Associate Justice, U.S. Supreme Court

lectures

14 October 1992 Nonprice Competition Hon. Douglas H. Ginsberg, U.S. Court of Appeals for the District of Columbia 3 December 1991 Corporate Takeovers and Our Schizophrenic Conception of the Corporation Hon. William T. Allen, Chancellor, Delaware Court of Chancery 1990 The Constitution and the Spirit of Freedom Hon. Anthony M. Kennedy, Associate Justice, U.S. Supreme Court

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

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

14 institute for law and economics

lectures

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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

academic events

Penn/NYU Conference on Law and Finance 26–27 February 2010 University of Pennsylvania Law School Jointly sponsored by Institute for Law and Economics University of Pennsylvania Financial Institutions Center The Wharton School Center for Law & Business New York University

Commentator Robert M. Daines, Stanford Law School

Organized by William T. Allen, NYU Stern School of Business and NYU School of Law, New York University Yakov Amihud, Stern School of Business, New York University Jill E. Fisch, University of Pennsylvania Law School Michael Roberts, The Wharton School, University of Pennsylvania

Session II Asset Fire Sales and Credit Easing Andrei Shleifer, Harvard University Department of Economics Robert W. Vishny, Booth School of Business, University of Chicago

Moderator Hon. Jack B. Jacobs, Supreme Court of Delaware

Commentator Jonathan R. Macey, Yale Law School

Moderator Session I Michael Roberts, Is Delaware’s Antitakeover The Wharton School, Statute Unconstitutional? University of Pennsylvania Evidence from 1988–2008 Guhan Subramanian, Harvard Law School Steven Herscovici, Analysis Group, Inc. Brian Barbetta, Analysis Group, Inc.

Commentator Moderator William T. Allen, NYU Stern School Alan Schwartz, Yale Law School of Business and NYU School of Moderator Law, New York University Richard E. Kihlstrom, The Wharton School, Session V University of Pennsylvania When the Government Is the Controlling Shareholder Session VII Marcel Kahan, New York The Price of Pay To Play in University School of Law Securities Class Actions Edward B. Rock, University of Stephen J. Choi, New York Pennsylvania Law School University Law School Drew T. Johnson-Skinner, Commentator Heitor V. Almeida, University of Law Clerk to Judge John G. Koeltl of the United States, Illinois at Urbana-Champaign District Court for the Southern District of New York Moderator A.C. Pritchard, University of Hon. Travis Laster, Michigan Law School Delaware Court of Chancery

Session III Are Securities Class Actions ‘Supplemental’ to SEC Enforcement? An Empirical Analysis Michael Klausner, Stanford Law School Commentator Simi Kedia, Rutgers Business School Moderator William T. Allen, NYU Stern School of Business and NYU School of Law, New York University Session IV The Impact of Investor Protection Law on Corporate Policy: Evidence from the Blue Sky Laws Ashwini K. Agrawal, Stern School of Business, New York University

Session VI A Lintner Model of Dividends and Managerial Rents Bart M. Lambrecht, Lancaster University Management School Stewart C. Myers, MIT Sloan School of Management

Commentator Allen Ferrell, Harvard Law School

Commentator Sanjai Bhagat, Leeds School of Business, University of Colorado at Boulder Moderator Richard E. Kihlstrom, The Wharton School, University of Pennsylvania

NYU/Penn Conference on Law and Finance 27–28 February 2009 New York University School of Law Moderator Moderator William T. Allen, NYU Stern School Marcel Kahan, New York of Business and NYU School of University School of Law Law, New York University Session IV The Decisions of Corporate Session II Special Litigation Committees: Motions for Lead Plaintiff in An Empirical Investigation Securities Class Actions Minor Myers, Brooklyn Law School Stephen Choi, New York Organized by University School of Law William T. Allen, NYU Stern Commentator School of Business and NYU Sanjai Bhagat, Leeds School of Commentator School of Law, New York Business, University of Alexander Dyck, Joseph J. University Rotman School of Management, Colorado at Boulder Yakov Amihud, Stern School of University of Toronto Business, New York University Moderator Michael Roberts, Gerald Rosenfeld, NYU Stern Moderator The Wharton School, School of Business Edward B. Rock, University of University of Pennsylvania Pennsylvania Law School Edward B. Rock, University of Session V Pennsylvania Law School The Market Value of the Session III Vote: A Contingent Claims and Internal Governance of Firms Session I Viral V. Acharya, London Business One Share-One Vote Is Comparing Legal and Unenforceable and Sub-Optimal School Alternative Institutions in Stewart C. Myers, Sloan School Avner Kalay, David Eccles School Finance and Commerce of Business, University of Utah of Management, MIT H. Franklin Allen, The Wharton Raghuram Rajan, Graduate School Shagun Pant, David Eccles School School, University of Pennsylvania of Business, University of Chicago of Business, University of Utah Jun Qian, Carroll School of Management, Boston College Commentator Commentator Henry Hu, The University of Alan Schwartz, Yale Law School Commentator Texas Law School Curtis Milhaupt, Columbia University Law School Jointly sponsored by Institute for Law and Economics University of Pennsylvania Financial Institutions Center The Wharton School Center for Law & Business New York University

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Moderator Gerald Rosenfeld, NYU Stern School of Business

Commentator Daniel Wolfenzon, Columbia Business School

Session VI The Returns to Hedge Fund Activism Alon Brav, Duke University Graduate School Wei Jiang, Columbia Business School Frank Partnoy, University of San Diego School of Law Randall Thomas, Vanderbilt University Law School

Moderator Richard Kihlstrom, The Wharton School, University of Pennsylvania

Commentator Stuart Gillan, Rawls College of Business Administration, Texas Tech University

Session VIII Does Board Classification Matter for Industry Rivals? Evidence of Spillover Effects in the Market for Corporate Control Kose John, NYU Stern School of Business Dalida Kadyrzhanova, Robert H. Smith School of Business, University of Maryland Commentator Alicia Davis Evans, University of Michigan Law School

Moderator Richard Kihlstrom, The Wharton School, University of Pennsylvania Moderator Michael L. Wachter, University of Pennsylvania Law School Session VII Rationalizing Appraisal Standards in Compulsory Buyouts Lawrence Hamermesh, Widener University School of Law Michael L. Wachter, University of Pennsylvania Law School

academic events

penn/NYU 10 1 Alan Schwartz, Yale Law School; Michael A. Fitts, University of Pennsylvania Law School. 2 Klaus Hopt, Max-PlanckInstitut f端r ausl. und intern. Privatrecht.

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

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, The Wharton School.

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ILE/Wharton Finance Seminars Co-Sponsored by Institute for Law and Economics and Department of Finance, The Wharton School 18 February 2010 Will the U.S. Bank Recapitalization Succeed? Eight Lessons from Japan (co-authored with Takeo Hoshi) Anil Kashyap, Edward Eagle Brown Professor of Economics and Finance, The University of Chicago Booth School of Business Commentators Todd Gormley, Wharton Finance Charles W. Mooney, Jr., Penn Law Michael R. Roberts, Wharton Finance Edward B. Rock, Penn Law 5 November 2009 Regulatory Reform in the Real World Howell Jackson, James S. Reid, Jr. Professor of Law, Harvard Law School Commentators Cary Coglianese, Penn Law Jill Fisch, Penn Law Todd Gormley, Wharton Finance Mark Jenkins, Wharton Finance

18 February 2010 Will the U.S. Bank Recapitalization Succeed? Eight Lessons from Japan (co-authored with Takeo Hoshi) Anil Kashyap, Edward Eagle Brown Professor of Economics and Finance, The University of Chicago Booth School of Business During the financial crisis that started in 2007, the U.S. government has used a variety of tools to try to rehabilitate the U.S. banking industry. Many of those strategies were used also in Japan to combat its banking problems in the 1990s. There are also a surprising number of other similarities between the current U.S. crisis and the recent Japanese crisis. The Japanese policies were only partially successful in recapitalizing the banks until the economy finally started to recover in 2003. From these unsuccessful attempts, 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 evaluate the U.S. policies with respect to four of the others. So far the U.S. has avoided Japan’s problem of having impaired banks prop up zombie firms. 5 November 2009 Regulatory Reform in the Real World Howell Jackson, James S. Reid, Jr. Professor of Law, Harvard Law School 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.

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1 H. Franklin Allen, The Wharton School. 2 Anil Kashyap, The University of Chicago Booth School of Business.

3 3 Robert F. Stambaugh, The Wharton School. 4 Howell Jackson, Harvard Law School.

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Publications and Papers Listed below is a sampling of recently published papers and work in progress by members of the Associate Faculty of the Institute for Law and Economics. ILE maintains a series of research papers and provides copies—electronic or paper—to interested parties upon request to vhewitt@law.upenn.edu. The Institute is a member of the Legal Scholarship Network (LSN), a subset of the Social Science Research Network. Current ILE research papers are posted in the University of Pennsylvania Law and Economics Research Paper Series on the LSN Web site. Abstracts as well as complete papers can be downloaded (www.ssrn.com/ link/penn-lawecon. html). Faculty appointments are in the University of Pennsylvania Law School unless otherwise noted. Matthew D. Adler, Leon Meltzer Professor of Law Regulatory Theory, in A Companion to Philosophy of Law and Legal Theory, 2010. Future Generations: A Prioritarian View, George Washington University Law Review, 2009.

The Myth of Equality in the Employment Relation, Michigan State Law Review, 2010. Intention, Torture and the Concept of State Crime, Penn State Law Review, 2009. Howard F. Chang, Earle Hepburn Professor of Law

Presidential Control of Administrative Agencies: A Debate over Law or Politics?, Journal of Constitutional Law, 2010. Engaging Business in the Regulation of Nanotechnology, in Governing Uncertainty: Environmental Regulation in the Age of Nanotechnology, 2010. Jill Fisch, Perry Golkin Professor of Law; Co-Director, Institute for Law and Economics The Overstated Promise of Corporate Governance, University of Chicago Law Review, 2010. The Power of Proxy Advisors: Myth or Reality? (with Stephen Choi and Marcel Kahan), Emory Law Journal, 2010. Rethinking the Regulation of Securities Intermediaries, University of Pennsylvania Law Review, 2010.

Lawrence A. Hamermesh, Ruby R. Vale Professor of Corporate and Implications of Globalization Business Law, Widener University Bounded Rationality and and Trade for Water Quality in School of Law (Attorney Legal Scholarship, in Theoretical Transboundary Rivers (with Fellow, Securities and Exchange Foundations of Law and Hilary Sigman), in Global Change: Commission Division of Economics, 2009. Impacts on Water and Food Corporation Finance, 2010–2011) Security, 2010. Franklin Allen, Nippon Life ProfesLoyalty’s Core Demand: The sor of Finance and Professor of Cultural Communities in a Defining Role of Good Faith in Economics, The Wharton School Global Labor Market: Corporate Law (with Leo Strine, Immigration Restrictions as Jr., R. Franklin Balotti & Jeffrey Credit Market Competition and Residential Segregation, in Gorris), Georgetown Law Journal, Capital Regulation (with E. Challenges of Globalization: 2010. Carletti and R. Marquez), Review Immigration, Social Welfare, of Financial Studies, forthcoming. Global Governance, 2009. Rationalizing Appraisal Standards in Compulsory Interbank Market Liquidity and Immigration Restriction as Buyouts (with Michael Central Bank Intervention (with Redistributive Taxation: Working Wachter), Boston College Law E. Carletti and D. Gale), Journal Women and the Costs of Review, 2009. of Monetary Economics, 2009. Protectionism in the Labor Market, Journal of Law, Economics The Short and Puzzling Life of Mark-to-Market Accounting and and Policy, 2009. the “Implicit Minority Discount” Liquidity Pricing (with E. in Delaware Appraisal Law (with Carletti), Journal of Accounting Cary Coglianese, Deputy Dean Michael Wachter), University of and Economics, 2008. for Academic Affairs, Edward B. Pennsylvania Law Review, 2007. Shils Professor of Law and Aditi Bagchi, Assistant Professor Professor of Political Science of Law Management-Based Regulation: Unequal Promises, Working Implications for Public Policy, in Paper. Risk and Regulatory Policy: Improving the Governance of Risk, 2010.

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Robert P. Inman, Richard King Mellon Professor of Finance; Professor of Finance and Economics, Business and Public Policy, Real Estate, The Wharton School How Should Suburbs Help Their Central Cities? Growth and Welfare Enhancing Intra-Metropolitan Fiscal Distributions, Annals of the American Academy of Political and Social Sciences, 2009. Making Cities Work: Prospects and Policies for Urban America, Princeton University Press, 2009. The Flypaper Effect, The New Palgrave Dictionary of Economics, 2009.

Kristin Madison, Professor of Law Defragmenting Health Care Delivery Through Quality Reporting, in The Fragmentation of U.S. Health Care: Causes and Solutions, 2010. Patients as “Regulators”?: Patients’ Evolving Influence Over Health Care Delivery, Journal of Legal Medicine, 2010. Patients as Mercenaries?: The Ethics of Using Financial Incentives in the War on Unhealthy Behaviors (with Scott D. Halpern & Kevin G. Volpp), Circulation: Cardiovascular Quality & Outcomes, 2009.

George J. Mailath, Walter H. Annenberg Professor in the Social Sciences, Professor of Economics, Michael S. Knoll, Theodore K. Warner Professor of Law, Professor School of Arts and Sciences of Real Estate, The Wharton School; Co-Director, Center for Tax Common Learning (with Martin W. Cripps, Jeffrey C. Ely, and Larry Law & Policy. Samuelson), Econometrica, July 2008. The Taxation and Competitiveness of Sovereign Wealth Funds: Purification in the InfinitelyDo Taxes Encourage Sovereign Repeated Prisoners’ Dilemma Wealth Funds to Invest in the (with V. Bhaskar and Stephen United States?, Southern Morris), Review of Economic California Law Review, 2009. Dynamics, July 2008. Samuel Zell, the Chicago Tribune Does Competitive Pricing Cause and the Emergence of the S Market Breakdown Under ESOP: Understanding the Tax Advantages and Disadvantages Extreme Adverse Selection? (with Georg Nöldeke), Journal of of S ESOPs, Ohio State Law Economic Theory, May 2008. Journal, 2009. Friedrich K. Kübler, Professor and Director of the Banking Law Institute Emeritus, University of Frankfurt, Germany; Professor of Law European Initiatives for the Regulation of Nonbank Financial Institutions, International Monetary Fund, 2010. Medien, Menschenrechte und Demokratie (Media, Human Rights, and Democracy), 2008. Recht und Sozialwissenschaften—Herausforderungen und Chancen der Verhaltensökonomie (Law and Social Sciences—the Challenge and the Promise of Behavioral Economics) (with Dorothea Kübler), Kritische Vierteljahresschrift für Gesetzgebung und Rechtswissenschaft, 2007.

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Charles W. Mooney, Jr., Charles A. Heimbold, Jr. Professor of Law Sales of Receivables: Potpourri of Puzzles [tentative title] (with Steven Harris), Gonzaga Law Review Symposium, 2010. Core Issues Under the UNIDROIT [Draft] Convention on Intermediated Securities: Views From the United States and Japan (with Hideki Kanda), 2010.

Law and Systems for Intermediated Securities and the Relationship of Private Property Law to Securities Clearance and Settlement: United States, Japan, and the UNIDROIT Draft Convention, Bank of Japan Institute for Monetary and Economic Studies, 2008. David K. Musto, Ronald O. Perelman Professor in Finance, The Wharton School What do Consumers’ Fund Flows Maximize? Evidence from their Brokers’ Incentives, Working Paper, 2010.

Social Assets (with G. Mailath), International Economic Review, 2006. Michael R. Roberts, Associate Professor of Finance, The Wharton School

Progressivity and Potential Income: Measuring the Effect of Changing Work Patterns on Income Tax Progressivity, Columbia Law Review, 2008. David A. Skeel, Jr., S. Samuel Arsht Professor of Corporate Law

Renegotiation of Financial Contracts: Evidence from Private Assessing the Chrysler Bankruptcy (with Mark Roe), Credit Agreements (with Amir Michigan Law Review, 2010. Sufi), Journal of Financial Economics, 2009. Governance in the Ruins, Harvard Law Review, 2008 (essay How does Financing Impact review of Curtis Milhaupt & Investment? The Role of Debt Katharina Pistor, Law and Covenants (with Sudheer Chava), Journal of Finance, 2008. Capitalism).

Systemic Risk Through Securitization: The Result of Deregulatory and Regulatory Failure (with Patricia McCoy and Andrey Pavlov), Connecticut Law Review, 2009. State and Local Anti-Predatory Lending Laws: The Effect of Legal Enforcement Mechanism (with Raphael W. Bostic et al.), Journal of Economics and Business, 2008. Amy Wax, Robert Mundheim Professor of Law Race, Wrongs, and Remedies: Group Justice in the 21st Century, Hoover Institution Press/ Rowman and Littlefield, 2009.

Who Makes the Rules for Hostile Takeovers, and Why? The Peculiar Divergence of US Stereotype Threat: A Case of and UK Takeover Regulation (with John Armour), Georgetown Overclaim Syndrome?, in Stereotype Threat and Law Journal, 2007. Vote Trading and Information Unconscious Bias: The State of the Aggregation (with Susan Research, American Enterprise Michael L. Wachter, William B. Edward B. Rock, Saul A. Fox Christoffersen, Chris Geczy, Institute, 2009. Distinguished Professor of Business Johnson Professor of Law and and Adam Reed), Journal of Law; Co-Director, Institute for Law Economics; Co-Director, Institute Finance, 2007. The Family Law Doctrine of for Law and Economics and Economics Equivalence, Michigan Law Gideon Parchomovsky, Professor Review, 2009. The Case Against Shareholder Embattled CEOs (with Marcel of Law Kahan), Texas Law Review, 2010. Empowerment (with William Bilge Yilmaz, Associate Professor W. Bratton), University of The Hidden Function of Takings of Finance, The Wharton School Pennsylvania Law Review, 2010. The Anatomy of Corporate Law Compensation (with Abraham (second edition) (with Bell), Virginia Law Review, Adverse Selection and Rationalizing Appraisal Kraakman, Armour, Davies, forthcoming. Convertible Bonds (with Standards in Compulsory Enriques, Hansmann, Hertig, Archishman Chakraborty), Buyouts (with Lawrence A. Hopt, and Kanda), 2009. The Distortionary Effect of Hamermesh), Boston College Law Review of Economic Studies, Evidence on Primary Behavior forthcoming. Review, 2009. How to Prevent Hard Cases from (with Alex Stein), Harvard Law Making Bad Law: Bear Stearns, Review, forthcoming. Predatory Mortgage Lending Delaware and the Strategic Use of Shareholder Primacy’s Corporatist Origins: Adolf Berle (with Philip Bond and David Comity (with Marcel Kahan), Beyond Fair Use (with Phil Musto), Journal of Financial and The Modern Corporation Emory Law Journal, 2009. Weiser), Cornell Law Review, Economics, 2009. (with William W. Bratton), forthcoming. Chris W. Sanchirico, Professor of Journal of Corporate Law, 2008. Information and Efficiency in Andrew W. Postlewaite, Harry P. Law, Professor of Business and Tender Offers (with Robert Public Policy, The Wharton School Susan M. Wachter, Richard B. Kamen Professor of Economics, Marquez), Econometrica, 2008. Worley Professor of Financial School of Arts and Sciences; Professor of Finance, The Wharton Tax Eclecticism, Tax Law Review, Management, Professor of Real Estate and Finance, The Wharton forthcoming. School School; Co-Director, Institute for A Critical Look at the Economic Urban Research Political Reputations and Argument for Taxing Only Labor Campaign Promises (with E. Systemic Risk and Market Income, Tax Law Review, Aragones and T. Palfrey), Institutions (with Andrey Journal of the European Economic forthcoming. Pavlov), Yale Journal on Association, 2007. Regulation, 2009. Courts of Law and Unforeseen Contingencies (with L. Anderlini and L. Felli), Journal of Law, Economics and Organization, 2007. Predatory Mortgage Lending (with Philip Bond and Bilge Yilmaz), Journal of Financial Economics, 2009.

Back to the Beginning: Persistence and the CrossSection of Corporate Capital Structure (with Michael Lemmon and Jaime Zender, Journal of Finance, 2008.

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Associate Faculty

11 1 Matthew Adler 2 Aditi Bagchi 3 Richard E. Kihlstrom 4 Howard F. Chang 5 Cary Coglianese 6 Robert W. Holthausen 7 Richard J. Herring 8 Michael R. Roberts

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12 9 Charles W. Mooney, Jr. 10 Michael S. Knoll 11 Friedrich K. K端bler 12 Kristin Madison 13 Franklin Allen 14 Gideon Parchomovsky 15 David K. Musto 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

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 of Oxford University, and the Yale Law School. Prior to teaching at Penn, he worked as a law clerk for Judge Harry Edwards, U.S. Court of Appeals for the D.C. Circuit, and for Justice Sandra Day O’Connor, U.S. Supreme Court, and practiced law at Paul, Weiss, Rifkind, Wharton & Garrison in New York City. At the Penn Law School, Professor Adler teaches administrative law, constitutional law, and regulation. His current research focuses on policy analysis and on risk regulation.

Professor Chang received a Ph.D. in economics from the Massachusetts Institute of Technology in 1992, a J.D. from Harvard Law School in 1987, a Master in Public Affairs from Princeton University in 1985, and an A.B. from Harvard College in 1982. Prior to joining the Penn faculty in 1999, he was a Professor of Law at the University of Southern California Law School, where he began teaching in 1992. He was a Visiting Professor of Law at Stanford Law School in 1998, at Harvard Law School and at the New York University School of Law in 2001, at the University of Michigan Law School in 2002, and at the University of Chicago Law School in 2007, and a Visiting Associate Professor of Law at the Georgetown University Law Center from 1996 to 1997. He served as a law clerk for the Honorable Ruth Bader Ginsburg on the U.S. Court of Appeals for the D.C. Circuit from 1988 to1989. He served on the Board of Directors of the American Law and Economics Association from 2004 to 2007. He has written on a wide variety of subjects including environmental protection, international trade, immigration, intellectual property, and the economics of litigation and settlement.

Franklin Allen, Nippon Life Professor of Finance and Professor of Economics, The Wharton School Franklin Allen is the Nippon Life Professor of Finance and Professor of Economics at the Wharton School of the University of Pennsylvania. He has been on the faculty since 1980. He is currently Co-Director of the Wharton Financial Institutions Center. He was formerly Vice Dean and Director of Wharton Doctoral Programs and Executive Editor of the Review of Financial Studies, one of the leading academic finance journals. He is a past President of the American Finance Association, the Western Finance Association, the Society of Financial Studies, and the Financial Intermediation Research Society. He received his doctorate from Oxford University. Dr. Allen’s main areas of interest are corporate finance, asset pricing, comparative financial systems, and financial crises. He is a co-author with Richard Brealey and Stewart Myers of the eighth and ninth editions of the textbook Principles of Corporate Finance. Aditi Bagchi, Assistant Professor of Law Professor Bagchi received a J.D. from Yale Law School in 2003 and a M.Sc. in economic and social history from Oxford University in 2000. She clerked for United States Court of Appeals Judge Julio Fuentes and practiced law with Cravath, Swaine & Moore LLP in New York. She joined the Penn Law faculty in 2006 and currently teaches contracts and labor law. Her areas of research include normative theories of private law and comparative political economy.

Cary Coglianese, Associate Dean for Academic Affairs, Edward B. Shils Professor of Law and Professor of Political Science Cary Coglianese is the Associate Dean for Academic Affairs and the Edward B. Shils Professor of Law at the University of Pennsylvania Law School, as well as Professor of Political Science and the director of the Penn Program on Regulation. Coglianese is the founder of the Law & Society Association’s international collaborative research network on regulatory governance, a council member of the American Bar Association’s section on Administrative Law and Regulatory Practice, and a fellow of the American Bar Foundation. He is also a founder of the peerreviewed journal Regulation & Governance, for which he now serves on the editorial board. Coglianese received his J.D., M.P.P., and Ph.D. in political science from the University of Michigan, and for twelve years served on the faculty of the John F. Kennedy 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.

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Patricia M. Danzon, Celia Z. Moh Professor of Health Care Systems, Insurance and Risk Management, The Wharton School Professor Danzon received her Ph.D. in economics from the University of Chicago in 1973 and joined the Penn faculty from Duke University in 1985. She is a member of the Institute of Medicine and the National Academy of Social Insurance, and she has served as a consultant to many private and public institutions in the U.S. and worldwide. Professor Danzon’s research interests are in health care, pharmaceuticals, insurance, law, and economics. She has published widely in scholarly journals on a broad range of subjects related to medical care, pharmaceuticals, insurance, and the economics of law. Jill Fisch, Perry Golkin Professor of Law; Co-Director, Institute for Law and Economics Professor Fisch received her J.D. from Yale Law School in 1985. Before joining the Penn faculty in 2008, she held the T.J. Maloney Chair in Business Law at Fordham Law School and served as founding director of the Fordham Corporate Law Center. She has also been a visiting professor at Harvard Law School, Columbia Law School and Georgetown University Law Center. Prior to entering academia, Professor Fisch practiced law with the United States Department of Justice and the New York office of Cleary, Gottlieb, Steen and Hamilton. Her research focuses on corporate governance, business litigation, and securities regulation. Michael A. Fitts, Dean of the Law School and Bernard G. Segal Professor of Law Michael A. Fitts was named Dean of the Law School in March 2000. Before joining the Penn Law faculty in 1985, Dean Fitts served as clerk to the Honorable A. Leon Higginbotham, Jr., U.S. Court of Appeals for the Third Circuit, and as attorney advisor in the Office of Legal Counsel in the U.S. Department of Justice. At Penn he was appointed Associate Professor of Law in 1990, Professor of Law in 1992 and Robert G. Fuller, Jr. Professor of Law in 1996. From 1996 to 1998 he served as Associate Dean for Academic Affairs at the Law School and was active in establishing a variety of joint programs with other schools within the University. In 1999 he served as Visiting Professor in Political Science at Swarthmore College. Dean Fitts’ research has focused on the 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.

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Lawrence Hamermesh, Ruby R. Vale Professor of Corporate and Business Law, Widener University School of Law (Attorney Fellow, Securities and Exchange Commission Division of Corporation Finance, 2010–2011) Professor Hamermesh received a B.A. from Haverford College in 1973, and a J.D. from Yale Law School in 1976. Professor Hamermesh practiced law with Morris, Nichols, Arsht & Tunnell, Wilmington, Delaware, as an associate from 1976–84, and as a partner from 1985–94. Professor Hamermesh joined the faculty at Widener in 1994, and teaches and writes in the areas of corporate finance, mergers and acquisitions, securities regulation, business organizations, and professional responsibility. Since 1995, Professor Hamermesh has been a member of the Council of the Corporation Law Section of the Delaware State Bar Association, which is responsible for the annual review and modernization of the Delaware General Corporation Law, and served as Chair of the Council from 2002 to 2004. In 2002 and 2003 he also served as the Reporter for the American Bar Association’s Task Force on Corporate Responsibility. He served from 2001 to 2007 as a member of the Committee on Corporate Laws of the American Bar Association Section of Business Law, which supervises the drafting of the Model Business Corporation Act. In 2007 Professor Hamermesh was appointed as Chair of the Section of Business Law’s Committee on Corporate Documents and Process. In 1999 Professor Hamermesh was elected as a member of the American Law Institute. Professor Hamermesh is also a member of the Board of Directors of ACLU Delaware, Inc. Richard J. Herring, Jacob Safra Professor of International Banking, Professor of Finance, The Wharton School; Co-Director, Wharton Financial Institutions Center Richard J. Herring is Jacob Safra Professor of International Banking and Professor of Finance at The Wharton School, University of Pennsylvania, where he is also founding director of the Wharton Financial Institutions Center, one of Wharton’s largest research centers. From 2000 to 2006, he served as the Director of the Lauder Institute of International Management Studies and from 1995 to 2000, he served as Vice Dean and Director of Wharton’s Undergraduate Division. During 2006, he was a Professorial Fellow at the Reserve Bank of New Zealand and Victoria University.

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He is the author of more than 100 articles, monographs and books on various topics in financial regulation, international banking, and international finance. At various times his research has been funded by grants from the National Science Foundation, the Ford Foundation, the Brookings Institution, the Sloan Foundation, and the Council on Foreign Relations. Outside the university, he is co-chair of the US Shadow Financial Regulatory Committee and Executive Director of the Financial Economist’s Roundtable, the Advisory Board of the European Banking Report in Rome, and the Institute for Financial Studies in Frankfurt. He served as co-chair of the Multinational Banking seminar from 1992–2004 and was a Fellow of the World Economic Forum in Davos from 1992–95. He was a member of the Group of 30 task force on the reinsurance industry, as well as an earlier study group on international supervision and regulation. Currently, he is an independent director of the DWS Scudder mutual fund complex and has served on the predecessor Deutsche Asset Management and Bankers Trust boards since 1990. He is also an independent director of the Daiwa closed end funds. Herring received his undergraduate degree from Oberlin College in 1968 and his PhD from Princeton University in 1973. He has been a member of the Finance Department since 1972. He is married, with two children, and lives in Bryn Mawr, Pennsylvania. Robert W. Holthausen, The Nomura Securities Company Professor, Professor of Accounting and Finance, and Chairman, Accounting Department, The Wharton School Professor Holthausen earned his doctorate and his M.B.A. at the University of Rochester. Prior to his academic career, he was a C.P.A. He worked at Price Waterhouse and was also a financial analyst with Mobil. He was on the accounting and finance faculty at the Graduate School of Business of the University of Chicago for ten years, joining the Penn faculty in 1989. During the 2001– 2002 academic year, he was a visiting professor at Harvard Business School. Since 1998 he has served as the academic director of Wharton’s Mergers and Acquisitions program. Professor Holthausen’s research interests include the effects of management compensation and governance structures on firm performance, the effects of information on volume and prices, corporate restructuring and valuation, the effects of large block sales on common stock prices, and numerous other topics. He is widely published in both finance and accounting journals and is currently an editor of the Journal of Accounting and Economics. His most recent work is entitled “Accounting Standards, Financial Reporting Outcomes and Enforcement” and appears in the Journal of Accounting Research (May, 2009, pp. 447-458) as part of the Conference on the Regulation of Securities Markets: Perspectives from Accounting, Law and Financial Economics.

Robert P. Inman, Richard King Mellon Professor of Finance, Professor of Finance and Economics, Business and Public Policy, Real Estate, The Wharton School Professor Inman received his Ph.D. in economics from Harvard University and joined the Penn faculty in 1972. He is a research associate of the National Bureau of Economic Research. He has served as a consultant to the city of Philadelphia, the state of Pennsylvania, CitiGroup, Chemical Bank, the U.S. Department of the Treasury, the Financial and Fiscal Commission of the Republic of South Africa, the National Bank of Sri Lanka, the National Academy of Sciences, and numerous U.S. federal government agencies. His research is currently focused on fiscal federalism, the urban fiscal crisis, and the political and legal institutions of fiscal policymaking. Professor Inman held the Florence Chair in Economics at the European University Institute, Florence, Italy, for the spring quarter of 2000. He was a Visiting Scholar at the Rockefeller Foundation’s Bellagio Study Center, Fall 2007. Richard E. Kihlstrom, Ervin Miller-Arthur M. Freedman Professor of Finance and Economics, Chairman, Finance Department, The Wharton School Richard Kihlstrom holds a doctorate from the University of Minnesota. He has been a member of the Wharton faculty since 1979, was named to the Miller-Freedman professorship in 1986, and previously served as Chair of the Finance Department from 1988 to 1994. Before coming to Penn, he taught at Northwestern University, the University of Illinois, the State University of New York at Stony Brook, and the University of Massachusetts. He is a Fellow of the Econometric Society. His areas of research interest include information and uncertainty in economics, financial market equilibrium, and corporate finance. Michael S. Knoll, Theodore K. Warner Professor of Law; Professor of Real Estate, The Wharton School; Co-Director, Center for Tax Law & Policy Professor Knoll joined the Penn Law and Wharton faculties from the University of Southern California Law School in 2000. He teaches courses in corporate finance and taxation in the Law School, the Wharton School, and the Wharton Executive Program. He is also an affiliate of the Zell/Lurie Real Estate Center at the Wharton School, and the editor of Forensic Economic Abstracts, an electronic journal published by the Social Science Research Network. Professor Knoll’s undergraduate and J.D. degrees are from the University of Chicago. He also earned a Ph.D. in Economics at the University of Chicago. In 1990 he joined the USC Law faculty as an Assistant Professor, and in 1995 he was promoted to full Professor. He has been a Visiting Professor of Law at Georgetown (1999), Penn (1998–99), and Virginia (2000).

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Professor Knoll was also a John M. Olin Senior Research Scholar at Columbia University School of Law (1996–97), a Visiting Scholar at New York University Law School (1996–97), and a John M. Olin Distinguished Visiting Professor of Law at Toronto University. He clerked for the Honorable Alex Kozinski on the U.S. Court of Appeals, Ninth Circuit, from January to August 1986, when he was appointed legal advisor to the Vice Chairman of the U.S. International Trade Commission. During 2009–2010, he was the Nathaniel Fensterstock Visiting Professor of Law at Columbia Law School. He has published extensively in the fields of corporate finance, taxation, economics, and real estate finance. Friedrich K. Kübler, Professor and Director of the Banking Law Institute Emeritus, University of Frankfurt, Germany; Professor of Law After earning a Dr. iur. from the University of Tübingen in 1961, Professor Kübler held appointments as teaching assistant in Tübingen and Paris; Professor of Law, University of Giessen (1966–70); Visiting Lecturer, Harvard Law School (1968–69); Professor of Law and Dean of the Graduate School of Social Sciences, University of Konstanz (1971–76); and Professor of Law, University of Frankfurt (1976–98). He first came to Penn in 1975 and again in 1983 as a Visiting Professor of Law, and in 1985 he joined the faculty as Professor of Law. He has served on the board of the Deutscher Juristentag and is a member of the American Law Institute. He was one of the six commissioners regulating concentration in the German television industry and is a member of the European Shadow Financial Regulatory Committee, as well as of the Frankfurt Academy of Arts and Sciences. Professor Kübler’s teaching interests are the European Union, corporations, international finance, and mass communication. His current (comparative) research interests are in the areas of corporate governance and finance, the supervision of transnational financial markets, and broadcast regulation. Kristin Madison, Professor of Law

Review of Economic Studies, the Journal of Economic Theory, Games and Economic Behavior, the International Economic Review, and Economic Theory. He is co-editor of the Econometric Society Monograph Series and is a member of the Economics Advisory Panel of the National Science Foundation. His research interests include the organization of the firm, noncooperative game theory, evolutionary game theory, social norms, and the foundations of reputations, law, and authority. Charles W. Mooney, Jr., Charles A. Heimbold, Jr. Professor of Law Professor Mooney received his J.D. from Harvard Law School in 1972. He practiced law with the Oklahoma firm of Crowe and Dunlevy and as a partner of the New York firm of Shearman & Sterling. Professor Mooney joined the Penn faculty in 1986, and during 1999 and 2000 he served as Interim Dean of the Law School. From 1998 to 2000 and from 2008 to 2009 he served as Associate Dean for Academic Affairs. He is an active member of the American Law Institute and the American Bar Association. He served as a member of the Uniform Commercial Code Permanent Editorial Board Article 2 (Sales) Study Committee and also served as a reporter for that Board’s Article 9 (Secured Transactions) Study Committee and as a reporter for the Revised Article 9 drafting committee. He served as a member of the U.S. Security and Exchange Commission’s Advisory Committee on Market Transactions. Mooney was awarded the Distinguished Service Award, presented by the American College of Commercial Finance Lawyers. He also served as U.S. Delegate and Position Coordinator (appointed by U.S. Department of State) at the Diplomatic Conference for the Cape Town Convention on International Interests in Mobile Equipment and the Protocol on Matters Specific to Aircraft Equipment, in Cape Town, South Africa. He currently serves as a U.S. Delegate for the UNIDROIT draft convention on intermediated securities. His current research centers on intermediated securities, security interests in bankruptcy, 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

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Robert H. Mundheim, University Professor of Law and Finance Emeritus, University of Pennsylvania; Of Counsel, Shearman & Sterling; formerly General Counsel, U.S. Treasury and Senior Executive Vice President and General Counsel of Salomon Smith Barney Holdings, Inc. Professor Mundheim received his LL.B. from Harvard Law School in 1957. He joined the New York firm of Shearman & Sterling, of which he is now Of Counsel, and then served as special counsel to the U.S. Securities and Exchange Commission before joining the Penn faculty in 1965. Professor Mundheim served as Dean of the Law School from 1982 to 1989. He has been a visiting professor at Harvard Law School, UCLA Law School, the James E. Rogers College of Law at The University of Arizona, and the University of Konstanz in Germany. Between 1977 and 1980, he served as general counsel to the U.S. Department of the Treasury. He also has served as chairman of the U.S. Tax Court Nominating Commission, a director of the Securities Investor Protection Corporation, and general counsel to the Chrysler Loan Guarantee Board. He was co-chairman of the New York firm Fried, Frank, Harris, Shriver and Jacobson from 1989 to 1992. In 1992, he joined Salomon Inc. as its General Counsel and as a Managing Director and member of the Executive Committee of Salomon Brothers. Professor Mundheim is the organizer and presiding officer emeritus of the International Faculty for Corporate and Capital Market Law, a former Trustee and President of the American Academy in Berlin, a Trustee of the New School University, a former director and President of the Appleseed Foundation, and a member of the Council of the American Law Institute and Chairman of its Governance Committee. He also serves on the American Bar Association’s Standing Committee on Ethics and Professional Responsibility. He most recently served as the chairman of the Quadra Realty Trust Board of Directors and as a director of eCollege, Inc. and of Arnhold & S. Bleichroeder Holdings, Inc. He is also the Chairman of the Legal Advisory Board of NASDAQ. Mr. Mundheim has served as a Consultant to the American Law Institute’s Principles of Corporate Governance: Analysis and Recommendations (1978–1994), as a member of the American Bar Association President’s Task Force on Corporate Responsibility (2002–2003), and as a member of the Association of the Bar of the City of New York’s Presidential Task Force on Lawyers’ Role in Corporate Governance. He has written in the areas of corporate governance, securities regulation, corporations, and professional responsibility.

David K. Musto, Ronald O. Perelman Professor in Finance, The Wharton School David K. Musto is the Ronald O. Perelman Professor in Finance at the Wharton School, where he has been on the faculty since 1995. He has a B.A. from Yale University and a Ph.D. from the University of Chicago, and between college and graduate school he worked for Roll and Ross Asset Management in Los Angeles. He is an editor of the Journal of Financial Services Research and an Associate Editor of the Journal of Finance. Most of his work, both theoretical and empirical, is in the area of consumer financial services, mutual funds and consumer credit in particular. He has also published work on corporate and political voting, option pricing, short selling, and cross-border taxation. Gideon Parchomovsky, Professor of Law Professor Parchomovsky received his LL.B. from the Hebrew University of Jerusalem in 1993, his LL.M. from the University of California at Berkeley in 1995, and his S.J.D. from Yale Law School in 1998. Prior to joining the Penn Law faculty in fall 2002, Professor Parchomovsky served as an Associate Professor at Fordham Law School and a Visiting Lecturer at Yale Law School. His research interests include intellectual property law and property theory. His recent work focuses on unlocking synergies among sub-fields of intellectual property and devising innovative mechanisms for protecting property entitlements. Andrew W. Postlewaite, Harry P. Kamen Professor of Economics, School of Arts and Sciences; Professor of Finance, The Wharton School Professor Postlewaite received his Ph.D. from Northwestern University in 1974 and joined the Penn faculty from the University of Illinois in 1980. He is editor of American Economic Journal: Microeconomics, past editor of the International Economic Review and past co-editor of Econometrica. He serves on the Board of Directors of the National Bureau of Economic Research, the Executive Committee of the Game Theory Society, and on the Executive Committee of the American Economic Association. He has published widely in the areas of strategic behavior and industrial organization.

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Michael R. Roberts, Associate Professor of Finance, The Wharton School

Chris W. Sanchirico. Professor of Law; Professor of Business and Public Policy, The Wharton School

Michael R. Roberts is a tenured Associate Professor of Finance at the Wharton School of the University of Pennsylvania. Professor Roberts earned his B.A. in Economics from the University of California at San Diego, and his M.A. in Statistics and Ph.D. in Economics from the University of California at Berkeley. In addition to his experience at the Wharton School, he has taught at Duke University’s Fuqua School of Business. His primary research is in the area of corporate finance and in particular: capital structure, investment policy, financial contracting, and payout policy. Recent work has examined issues including the design of debt securities and the role of control rights in influencing financial and investment policy. His research has received several awards including the Brattle Prize for Distinguished Paper published in the Journal of Finance, and Best Paper awards at the Financial Management Association and Southwestern Finance Association annual conferences. In addition to his research, Professor Roberts has earned a number of teaching awards including the Daimler-Chrysler Core Teaching Award at the Fuqua School of Business and the David W. Hauk Award for Outstanding Teaching at the Wharton School. He has taught undergraduate, M.B.A., Ph.D., and executive education courses in corporate finance, econometrics, and statistics. Prior to joining academia, Professor Roberts was a Financial Engineer at Financial Engineering Associates Inc. and a Senior Analyst for Regional Economic Research Inc.

Professor Sanchirico received his A.B. from Princeton and both his law degree and his Ph.D. in economics from Yale. Before joining the Penn Law and Wharton faculties in 2003, he was a law professor at the University of Virginia and an economics professor at Columbia. Professor Sanchirico has written widely on tax policy, distributive justice, the information problems of legal enforcement, the rules governing trial evidence and pretrial discovery, and the evolution and stability of social norms. Professor Sanchirico has published extensively in top law reviews as well as the premier peer-reviewed journals in both law and economics and economic theory.

Edward B. Rock, Saul A. Fox Distinguished Professor of Business Law; Co-Director, Institute for Law and Economics Professor Rock received his J.D. from the University of Pennsylvania in 1983. He joined the Penn faculty in 1989 from the Philadelphia law firm of Fine, Kaplan and Black, where he specialized in antitrust, corporate, and securities litigation. He has written widely in corporate law, on topics including: hedge funds; the role of institutional investors in corporate governance; close corporations; the role of norms in corporate law; the overlap between corporate law and antitrust; the overlap between corporate law and labor law; comparative corporate law; and the regulation of mutual funds. In 1994, Professor Rock was a Visiting Professor of International Banking and Capital Markets at the Institut für Arbeits-, Wirtschafts- und Zivil Recht, Johann Wolfgang Goethe-Universität, Frankfurt am Main, Germany. During the 1995–96 academic year, he was a Fulbright Senior Scholar and Visiting Professor of Law at the Law Faculty of the Hebrew University of Jerusalem, Israel. In 2001, he was appointed the first Saul A. Fox Distinguished Professor of Business Law. During 2005–06, he was again a Visiting Professor of Law, and Lady Davis Fellow, at Hebrew University. Professor Rock’s current research focuses on government ownership of corporations, mergers and acquisitions, hedge funds, and corporate voting.

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Reed Shuldiner, Alvin L. Snowiss Professor of Law Professor Shuldiner is a recognized expert in the taxation of financial instruments and transactions. His area of research is taxation and tax policy. His current research includes the taxation of risk under income, wealth and consumption taxes, and the viability and effects of a federal wealth tax (with David Shakow). Professor Shuldiner served as Associate Dean at Penn Law from 2000–02. During spring 2005, Professor Shuldiner was the William K. Jacobs, Jr. Visiting Professor of Law at Harvard Law School. He was a Visiting Assistant Professor at Yale Law School during 1994–95. Before joining the Penn law faculty in 1990, he served in the Office of Tax Legislative Counsel of the U.S. Department of the Treasury, was counsel to the law firm of Cadwalader, Wickersham and Taft, and was an associate with the Washington, D.C., law firm of Wilmer, Cutler and Pickering. Professor Shuldiner received his J.D. from Harvard University in 1983 and his Ph.D. in economics from the Massachusetts Institute of Technology in 1985. David A. Skeel, Jr., S. Samuel Arsht Professor of Corporate Law Professor Skeel joined the Penn faculty in 1999. He graduated in 1987 from the University of Virginia School of Law, where he was editor of the Virginia Law Review and a member of the Order of the Coif. He clerked for the Honorable Walter K. Stapleton on the U.S. Court of Appeals for the Third Circuit, and practiced for several years at Duane, Morris & Heckscher in Philadelphia, before joining the Temple University School of Law in 1990. Professor Skeel has also held visiting appointments at the University of Wisconsin Law School (1993–94), the University of Virginia School of Law (spring 1994), Georgetown University Law Center (fall 2004), and the University of Pennsylvania Law School (fall 1997). Professor Skeel specializes in corporate and commercial law and has written widely on corporate law, bankruptcy, and sovereign debt. He has also has written on law and religion, and poetry and law.

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Michael L. Wachter, William B. Johnson Professor of Law and Economics; Co-Director, Institute for Law and Economics Professor Wachter received his Ph.D. in economics from Harvard University and joined the Penn faculty in 1970. He has held full professorships in three of Penn’s schools: the School of Arts and Sciences, where he has been professor of economics since 1976; the Wharton School, where he was professor of management, 1980–92; and the Law School, where he became professor of law and economics in 1984. He has been senior advisor to the Brookings Panel on Economic Activity in addition to consulting for the Federal Reserve’s Board of Governors and the Council of Economic Advisors. He has also served as a member of the National Council on Employment Policy and as a commissioner on the Minimum Wage Study Commission. Professor Wachter served as Deputy Provost of the University of Pennsylvania from July 1995 to January 1998, and as Interim Provost from January to December 1998. He is the author of numerous articles in law and economics, as well as in corporation law and labor law and economics. Susan M. Wachter, Richard B. Worley Professor of Financial Management, Professor of Real Estate and Finance, The Wharton School; Co-Director, Institute for Urban Research From 1998 to 2001, as Assistant Secretary for Policy Development and Research, U.S. Department of Housing and Urban Development, Dr. Wachter served as the senior urban policy official and principal advisor to the Secretary on overall HUD policies and 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.

Amy Wax, Robert Mundheim Professor of Law A graduate of Yale College and Harvard Medical School, Professor Wax trained as a neurologist at New York Hospital before completing a law degree at Columbia Law School in 1987. She served as a clerk to the Honorable Abner J. Mikva of the U.S. Court of Appeals for the D.C. Circuit and worked for six years at the Office of the Solicitor General at the U.S. Department of Justice, where she argued 15 cases before the U.S. Supreme Court. She taught from 1994 to 2001 at the University of Virginia Law School. Her areas of teaching and research include civil procedure, remedies, labor and employment law, poverty law and welfare policy, the law and economics of work and family, and social science and the law. Professor Wax joined the Penn Law Faculty in fall 2001. Bilge Yilmaz, Associate Professor of Finance, The Wharton School Bilge Yılmaz is an Associate Professor of Finance at the Wharton School. Prior to his current appointment, he taught at the Graduate School of Business, Stanford University, and held visiting positions at the University of Chicago and INSEAD. He received ˘ his BS degrees in Electrical Engineering and Physics from Bogaziçi University, and his PhD in Economics from Princeton University. His research focuses on corporate finance, political economy and game theory. Recently, he has published articles on the inefficiency of tender offers, optimal security design, corporate bankruptcy, strategic trading, and predatory lending. His current research interests also include corporate governance and private equity.

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ILE Investors, 2009â&#x20AC;&#x201C;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 $25,000 or above Charles I. Cogut Robert L. Friedman Paul G. Haaga, Jr. Skadden, Arps, Slate, Meagher & Flom LLP Sullivan & Cromwell LLP Sponsors $10,000 to $24,999 Apollo Capital Management, L.P. AQR Capital Management, LLC Barclays Capital Americas Bernstein Litowitz Berger & Grossmann LLP Cadwalader, Wickersham & Taft LLP Isaac D. CorrĂŠ Cravath, Swaine & Moore LLP CT, a Wolters Kluwer Business Dechert LLP Delaware Department of State Dewey & LeBoeuf LLP DuPont Stephen Fraidin

Joel E. Friedlander Gibson, Dunn & Crutcher LLP Goldman, Sachs & Co. Perry Golkin Grant & Eisenhofer P.A. Hughes Hubbard & Reed LLP Innisfree M&A Incorporated Roy J. Katzovicz MacKenzie Partners, Inc Merck & Co., Inc. Millennium Management Foundation Morgan, Lewis & Bockius LLP Morris, Nichols, Arsht & Tunnell LLP Paul, Weiss, Rifkind, Wharton & Garrison LLP Potter Anderson & Corroon LLP Proskauer Rose LLP Allan N. Rauch Richards, Layton & Finger, P.A. Rothschild Inc. Schulte Roth & Zabel LLP A. Gilchrist Sparks III Sungard Data Systems Inc. UBS Investment Bank

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Vanguard Wachtell, Lipton, Rosen & Katz Young Conaway Stargatt & Taylor, LLP Members $5,000 to $9,999 James H. Agger Blank Rome LLP Harkins Cunningham LLP Leon C. Holt, Jr. Donors Up to $4,999 Covington & Burling Christopher Foulds Mary J. Grendell James A. Ounsworth Myron J. Resnick John F. Schmutz Simpson Thacher & Bartlett LLP Konstantin Vertsman Eric Wilensky Gregory P. Williams Kenneth W. Willman

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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 mwachter@law.upenn.edu Edward B. Rock, Co-Director Saul A. Fox Distinguished Professor of Business Law 215.898.8631 erock@law.upenn.edu Jill E. Fisch, Co-Director Perry Golkin Professor of Law 215.746.3454 jfisch@law.upenn.edu Vicki L. Hewitt, Program Director 215.898.7719 vhewitt@law.upenn.edu