Recent Developments Concerning the Duty of Care, the Duty of Loyalty, and the Business Judgment Rule

The judiciary faces a difficult task in attempting to define the proper standards of conduct for corporate directors and officers. Although courts have enunciated various standards, the prevailing theme has been that corporate directors and officers are fiduciaries who have a distinct legal relationship with the corporation and its shareholders. As fiduciaries, directors and officers must con-form to the duty of care and the duty of loyalty. The business judgment rule, which creates a presumption of propriety for directors\u27 and officers\u27 substantive business decisions, developed concurrently with these duties. Several recent court decisions concerning corporate director and officer liability appear to have placed a greater duty on directors and officers to investigate, inquire, and more actively participate in corporate governance. In contrast, two recent state statutory amendments have lessened the fiduciary burden on directors and officers. Meanwhile, the business judgment rule remains a significant limitation on courts\u27 ability to question the substantive business decisions made by directors and officers. These developments have evoked differing philosophical responses, the two most notable of which are the neoclassical model and the monitoring model. This Special Project Note will discuss recent developments in three distinct areas of corporate law and will illustrate that many of the developments hailed as expressing a pervasive dissatisfaction with corporate governance actually are not significant deviations from the current law, but merely are clarifications of existing law. Part II of this Special Project Note will examine recent Delaware state court decisions and will evaluate their potential impact on corporate law. Part III will analyze three recent cases decided in jurisdictions outside Delaware and will compare them to Delaware law. Finally, Part IV will discuss two recent state statutory amendments that drastically affect the traditional law governing director and officer liability by effectively eliminating corporate directors\u27and officers\u27 duty of care

Keeping Tabs on Financial Innovation: Product Identifiers in Consumer Financial Regulation

The financial crisis of 2008 gave rise to renewed discussion about whether financial innovations should undergo higher scrutiny for potential harm and, if so, what type? In this Article, the authors propose a new system for monitoring financial innovations through a system of registration, data collection and analysis using unique product identifiers. Creating product identifiers would increase monitoring abilities substantially at relatively low cost by facilitating the linkage of separate databases. The assignment of unique product identifiers would also minimize errors in the identification and classification of different financial products. These identifiers would be available to both the government and the public to harness outside analysis by independent researchers in order to improve the monitoring of financial risk

Characterization of a graphite epoxy optical bench during thermal vacuum cycling

In-situ monitoring of the Wide-Field/Planetary Camera, a Hubble Space Telescope science instrument, was performed in a vacuum environment to better understand the formation of ice on cooled optical detectors. Several diagnostic instruments were mounted on an access plate to view the interior of the instrument housing and the graphite epoxy optical bench. The instrumentation chosen and the rationale for choosing the instrumentation are discussed. In addition, the performance of the instrumentation during monitoring operations is discussed

A Surrogate Model of Gravitational Waveforms from Numerical Relativity Simulations of Precessing Binary Black Hole Mergers

We present the first surrogate model for gravitational waveforms from the coalescence of precessing binary black holes. We call this surrogate model NRSur4d2s. Our methodology significantly extends recently introduced reduced-order and surrogate modeling techniques, and is capable of directly modeling numerical relativity waveforms without introducing phenomenological assumptions or approximations to general relativity. Motivated by GW150914, LIGO's first detection of gravitational waves from merging black holes, the model is built from a set of $276$ numerical relativity (NR) simulations with mass ratios $q \leq 2$, dimensionless spin magnitudes up to $0.8$, and the restriction that the initial spin of the smaller black hole lies along the axis of orbital angular momentum. It produces waveforms which begin $\sim 30$ gravitational wave cycles before merger and continue through ringdown, and which contain the effects of precession as well as all $\ell \in \{2, 3\}$ spin-weighted spherical-harmonic modes. We perform cross-validation studies to compare the model to NR waveforms \emph{not} used to build the model, and find a better agreement within the parameter range of the model than other, state-of-the-art precessing waveform models, with typical mismatches of $10^{-3}$. We also construct a frequency domain surrogate model (called NRSur4d2s_FDROM) which can be evaluated in $50\, \mathrm{ms}$ and is suitable for performing parameter estimation studies on gravitational wave detections similar to GW150914.Comment: 34 pages, 26 figure

Comment of Legal Scholars on Authority To Require Supervision and Regulation of Certain Nonbank Financial Companies, Financial Stability Oversight Council RIN 4030-AA00

Professor McCoy coauthored this comment on a proposal by the Financial Stability Oversight Council to overhaul systemic risk regulation for nonbank financial firms

Complementary Macroprudential Regulation of Nonbank Entities and Activities

In this blog entry, the authors describe their forthcoming law review article in Southern California Law Review

Regulating Entities and Activities: Complementary Approaches to Nonbank Systemic Risk

The recent financial crisis demonstrated that, contrary to longstanding regulatory assumptions, nonbank financial firms—such as investment banks and insurance companies—can propagate systemic risk throughout the financial system. After the crisis, policymakers in the United States and abroad developed two different strategies for dealing with nonbank systemic risk. The first strategy seeks to regulate individual nonbank entities that officials designate as being potentially systemically important. The second approach targets financial activities that could create systemic risk, irrespective of the types of firms that engage in those transactions. In the last several years, domestic and international policymakers have come to view these two strategies as substitutes, largely abandoning entity-based designations in favor of activities-based approaches. This Article argues that this trend is deeply misguided because entity- and activities-based approaches are complementary tools that are each essential for effectively regulating nonbank systemic risk. Eliminating an entity-based approach to nonbank systemic risk—either formally or through onerous procedural requirements—would expose the financial system to the same risks that it experienced in 2008 as a result of distress at nonbanks like AIG, Bear Stearns, and Lehman Brothers. This conclusion is especially salient in the United States, where jurisdictional fragmentation undermines the capacity of financial regulators to implement an effective activities-based approach. Significant reforms to the U.S. regulatory framework are necessary, therefore, before an activities-based approach can meaningfully complement domestic entity-based systemic risk regulation

Control of Reflexive Saccades following Hemispherectomy

Individuals who have undergone hemispherectomy for treatment of intractable epilepsy offer a rare and valuable opportunity to examine the ability of a single cortical hemisphere to control oculomotor performance. We used peripheral auditory events to trigger saccades, thereby circumventing dense postsurgical hemianopia. In an antisaccade task, patients generated numerous unintended short-latency saccades toward contralesional auditory events, indicating pronounced limitations in the ability of a single hemicortex to exert normal inhibitory control over ipsilateral (i.e., contralesional) reflexive saccade generation. Despite reflexive errors, patients retained an ability to generate correct antisaccades in both directions. The prosaccade task revealed numerous contralesional express saccades, a robust contralesional gap effect, but the absence of both effects for ipsilesional saccades. These results indicate limits to the saccadic control capabilities following hemispherectomy: A single hemicortex can mediate antisaccades in both directions, but plasticity does not extend fully to the bilateral inhibition of reflexive saccades. We posit that these effects are due to altered control dynamics that reduce the responsivity of the superior colliculus on the intact side and facilitate the release of an auditory-evoked ocular grasp reflex into the blind hemifield that the intact hemicortex has difficulty suppressing