Suppose you represent a potential corporate acquirer who is filing or updating a Schedule 13D disclosure document. In a close cases in which reasonable people could differ as to whether disclosure is required, involving information your client would prefer not to make public if possible, should you err on the side of disclosure or non-disclosure? I was taught to err on the side of non-disclosure. Why?
In Rondeau v. Mosinee Paper Corp., 422 U.S. 49 (1975), the issuer brought suit for the defendant's failure to file a Schedule 13D. The Seventh Circuit granted an injunction that for a period of 5 years would have prevented the defendant from voting any shares purchased between the date when a Schedule 13D should have been filed and the date on which it was in fact filed. The Supreme Court reversed, on the grounds that the plaintiff had not shown such irreparable harm that a sterilizing injunction was appropriate. The Court suggested that less severe remedies might be available under appropriate fact settings, such as enjoining the defendant from voting, acquiring additional shares or commencing a takeover bid pending compliance. Since Rondeau, however, courts finding a § 13(d) violation generally have been quite conservative in fashioning a remedy. Typically, they merely issue an order directing that the violation be cured, either by amending the filing or by filing a Schedule 13D not previously filed. Courts have been unwilling, in the belief that they are unauthorized, to grant more effective relief. See, e.g., Dan River, Inc. v. Icahn, 701 F.2d 278, 287 (4th Cir.1983) (court would not order "sterilization" of shares due to the prior insufficient disclosure); Treadway Companies, Inc. v. Care Corp., 638 F.2d 357, 380 (2d Cir.1980) (refusing an injunction where defective filing was cured and "shareholders had ample time to digest th[e] information"); Chromalloy American Corp. v. Sun Chemical Corp., 611 F.2d 240, 248–49 (8th Cir.1979) (court would not require "cooling‑off" period after submission of corrected Schedule 13D); Energy Ventures, Inc. v. Appalachian Co., 587 F.Supp. 734, 743–44 (D.Del.1984) (interim injunctive relief deemed inappropriate where corrective filing had been made); University Bank & Trust Co. v. Gladstone, 574 F.Supp. 1006, 1010 (D.Mass.1983) (injunction denied where purchaser had made curative disclosure). A rare exception authorized disgorgement in a parking case brought by the SEC. SEC v. First City Fin. Corp., Ltd., 890 F.2d 1215 (D.C.Cir.1989).
The upshot is that if you fail to disclose, get sued, and the court determines that you should have disclosed the information, the worst case scenario is a slap on the wrist injunction requiring corrective disclosure. BFD.
Indeed, as I tell my Mergers & Acquisitions class, it gets better. If you get sued, you file an amendment to your Schedule 13D, containing an infodump that basically says: "The target has sued us alleging that we should have disclosed the following information. Blah, blach, blach. Yada, yada, yada. We believe that we were not required to disclose that information, but are voluntarily providing it now so as to return to the real issues that matter to the shareholders of Target."
You then file a motion to dismiss the target's lawsuit on grounds that it is moot. 99 times out of 100, you'll win. (To reiterate, I only endorse this where there is a colorable legal argument that disclosure is not required.)
Interestingly, as Alison Frankel reports, that seems to be the approach William Ackman is taking in response to the Allergan lawsuit we mentioned the other day:
If Allergan’s insider trading and disclosure suit against the hostile bidders Valeant and Pershing Square is a bluff, Pershing just called it.
William Ackman’s hedge fund dumped a pile of documents that Allergan complained it had improperly withheld on the Securities and Exchange Commission on Wednesday, including Pershing’s original confidentiality agreements with the Canadian drug company Valeant, as well as the share call option and forward contracts in which the hedge fund acquired its 9.7 percent stake in Allergan.
Pershing and Valeant also filed a brief in federal court in Santa Ana, California, agreeing to expedited discovery so it can dispose quickly of Allergan’s claims. ... [A]fter accusing Allergan of suing to impede shareholders from calling for a special meeting to oust directors, Pershing and Valeant said they’re raring to defend themselves against Allergan’s accusations.
This one'll get coverage in next year's M&A class.
A few days after the Canadian pharmaceutical company Valeant announced that it had teamed up with the activist investor William Ackman to bid for Botox maker Allergan, Wachtell, Lipton, Rosen & Katz wrote ateeth-gnashing client alert about the new threat to corporate targets from the unholy alliance of a strategic bidder with an activist hedge fund. Commentators were already raising questions about whether Ackman and Valeant had engaged in insider trading, because Ackman secretly accumulated Allergan shares based on his knowledge of Valeant’s imminent takeover bid. ...
... On Friday, Wachtell – now acting as counsel to Allergan, along with Latham & Watkins – filed a complaint in federal court in Los Angeles that accuses Valeant and Ackman of executing an “improper and illicit insider-trading scheme … flouting key provisions of the federal securities laws.” The suit not only claims that Valeant and Ackman didn’t make adequate disclosures to Allergan shareholders – reviving an old takeover defense tactic from the 1980s – but also pushes the novel theory that Ackman violated a provision of the Williams Act prohibiting anyone except an acquirer from trading on material non-public knowledge that the acquirer has taken “a substantial step” toward launching a tender offer.
Frankel doubts the complaint will hold up, but go read the whole thing and make up your mind.
My take? There's more likely to be a Section 13(d) problem than an insider trading case. Item 7 of Schedule 13D requires the filer (here Ackman and Valeant) to include as exhibits "copies of all written agreements, contracts, arrangements, understanding, plans or proposals relating to: (1) The borrowing of funds to finance the acquisition as disclosed in Item 3; (2) the acquisition of issuer control, liquidation, sale of assets, merger, or change in business or corporate structure, or any other matter as disclosed in Item 4; and (3) the transfer or voting of the securities, finder's fees, joint ventures, options, puts, calls, guarantees of loans, guarantees against loss or of profit, or the giving or withholding of any proxy as disclosed in Item 6."
Frankel tells us that "Pershing and Valeant had first executed a confidentiality agreement in February, though neither that agreement nor an amended version of it was disclosed to the SEC."
If that's all Wachtell has to go on, Achman and and Valeant would at most get a slap on the wrist, espcially if they amend their Schedule 13D to disclose the missing items. Energy Ventures, Inc. v. Appalachian Co., 587 F.Supp. 734, 743–44 (D.Del.1984) (interim injunctive relief deemed inappropriate where corrective filing had been made); University Bank & Trust Co. v. Gladstone, 574 F.Supp. 1006, 1010 (D.Mass.1983) (injunction denied where purchaser had made curative disclosure).
I liked this article a lot: Fisch, Jill E., The Broken Buck Stops Here: Embracing Sponsor Support in Money Market Fund Reform (June 16, 2014). U of Penn, Inst for Law & Econ Research Paper No. 14-24. Available at SSRN: http://ssrn.com/abstract=2456255:
Abstract: Since the 2008 financial crisis, in which the Reserve Primary Fund “broke the buck,” money market funds (MMFs) have been the subject of ongoing policy debate. Many commentators view MMFs as a key contributor to the crisis, in part because widespread redemption demands during the days following the Lehman bankruptcy led to a freeze in the credit markets. The response has been to deem MMFs a component of the nefarious shadow banking industry and to target them for regulatory reform.
Determining the appropriate approach to MMF reform has proven difficult. Banks regulators prefer a requirement that MMFs trade at a floating NAV rather than a stable $1 share price. By definition, a floating NAV would prevent future MMFs from breaking the buck, but it is unclear that it would eliminate the risk of large redemptions in a time of crisis. Other reform proposals have similar shortcomings. More fundamentally, pending reform proposals could substantially reduce the utility of MMFs for many investors, which could, in turn, dramatically reduce the availability of short term credit.
The complexity of regulating MMFs has been exacerbated by a turf war among regulators. The Securities and Exchange Commission has battled with bank regulators both about the need for additional reforms and about the structure and timing of any such reforms. Importantly, the involvement of bank regulators has shaped the terms of the debate. To justify their demands for greater regulation, bank regulators have framed the narrative of MMF fragility using banking rhetoric. This rhetoric masks critical differences between banks and MMFs, specifically the fact that, unlike banks, MMF sponsors have assets and operations that are separate from the assets of the MMF itself. Because of this structural difference, sponsor support is not a negative for MMFs but a stability-enhancing feature.
The difference between MMFs and banks provides the basis for a simple yet unprecedented regulatory solution: requiring sponsors of MMFs explicitly to guarantee a $1 share price. Taking sponsor support out of the shadows provides a mechanism for enhancing MMF stability that embraces rather than ignoring the advantage that MMFs offer over banks through asset partitioning.
As Dealbook explains, Jamie Dimon's announcement that he has cancer has once again raised the perennial problem of when corporations should disclose health issues on the part of a senior executive.
“JPMorgan hit the right note in its disclosure,” said Gary Hewitt, the head of research at accounting and governance research firm GMI Ratings. “It’s a difficult balance between the legitimate right to privacy on the part of the executive and the legitimate right to know when critical things might happen to an executive for shareholders.”
No specific securities regulations compel companies to disclose health-related information about their executives. Experts say such rules would probably violate an individual’s right to privacy under existing health care laws. A 2009 study of disclosures of chief executive illnesses found that many executives waited to go public until they believed their illness was manageable. Other companies made the disclosure only upon the executive’s death.
Disclosure of a CEO's health problem presents very difficult questions for securities regulation. I discussed them in some length a few years ago in a post about Apple's slowness to disclose Steve Jobs' illness, which I'd encourage interested readers to review. I concluded than that:
Given the social--and even constitutional--emphasis on personal privacy, surely it would be “silly” to “require management to accuse itself of [being ill].”
That still seems about right to me.
What I'd be curious to know from any health law lawyers out there is how HIPAA factors into the disclosure analysis.
My friend Richard Painter weighs in on the Supreme Court's Halliburton decision:
The Supreme Court’s decision in Halliburton affirms a legal doctrine that for several decades has set the United States apart from most other countries. Lawyers who claim to represent enormous numbers of investors, most of whom have never met the lawyers, are allowed to sue public companies for alleged misrepresentations of material facts even if a substantial number, perhaps most, of the plaintiff investors never heard or read, much less relied upon, the alleged misrepresentations. When these class actions settle (almost all of them do settle rather than go to trial) damages are paid by the company to the plaintiff class, with the lawyers taking their fees off the top. The company’s current shareholders thus bear the cost of compensating the plaintiff investors and their lawyers. To the extent the plaintiff class includes current shareholders, these shareholders are paying themselves damages, less of course the share that goes to the lawyers. ...
Although Congress should not be in a position of having to “veto” laws made up by the courts, perhaps it needs to do just that and pass legislation rejecting the fraud on the market theory in securities class actions. Congress could also consider stricter measures to hold corporate managers responsible for misleading statements to investors – for example requiring that a portion of SEC fines and civil judgments imposed against a company for securities law violations come out of executive compensation instead of being taken only out of the pocket of shareholders. If Congress does nothing, many issuers and investors may find our obsession with class action litigation, and our unwillingness to make individuals instead of shareholders pay for fraud, to be an aberration that they no longer have to put up with in a global market. They may simply take their business elsewhere.
Go read the whole thing.
Alison Frankel argues the Halliburton ruling could backfire on defendants:
According to David Boies of Boies, Schiller & Flexner who argued the Supreme Court case for investors — and shareholder lawyers Max Berger of Bernstein Litowitz Berger & Grossmannand Lawrence Sucharow of Labaton Sucharow, the Halliburton ruling not only won’t curb securities class action filings but could actually improve plaintiffs’ position after class certification.
Here’s why. The Supreme Court’s decision does not give securities defendants a new right: They’ve always been able to argue at various turning points in these cases that their supposed fraud didn’t affect share prices. The Halliburton opinion just clarifies that defendants can use those arguments to oppose class certification.
Realistically, said plaintiffs’ lawyer Berger, shareholders in almost all cases will be able to offer their own evidence that corporate misstatements led to drops in stock prices. Even if other factors contributed to the stock drop, Berger said, his side will be able to win class certification if alleged fraud had anything to do with the decline. ...
Securities fraud plaintiffs, in other words, are already equipped to counter price impact arguments opposing class certification with evidence from their own economics experts, who will say that share prices fell because of the alleged fraud. (And if investors can’t find experts to support their price impact theories, they should not have brought their cases in the first place.)
It’s true, said plaintiffs’ lawyer Sucharow, that if price impact battles take place at the class certification stage rather than in summary judgment briefing, plaintiffs’ lawyers will have to spend more time and money on experts earlier than they’re used to. But the reward for defeating price impact defenses at the class certification stage, he said, will be a better position in post-certification settlement talks: Defendants won’t be able to argue that shareholders can’t prove price impact.
Joan Heminway points out another way in which the case will affect settlement bargaining:
The longer the case goes on, the more incentive defendants have to settle--oftentimes (in my experience) foregoing the opportunity to defend themselves against specious claims because of the ongoing drain on financial and human resources.
CLS Blog posts a firm memo from Proskauer on the case:
The Halliburton decision likely will increase defendants’ incentive to pull out all stops to litigate price impact at the class-certification stage. Advancing the fight on this issue from the merits stage to an earlier phase of the case could help dispose of meritless claims that might otherwise have survived scrutiny under Basic’s presumptions. The defense bar has maintained – and argued to the Supreme Court – that settlement pressures can increase if a class is certified, so defendants likely will try to wage the price-impact war sooner, rather than later. The class-certification phase could thus become a more expensive, protracted part of the case.
In fact, three members of the six-Justice majority (Justices Ginsburg, Breyer, and Sotomayor) filed a one-paragraph concurrence acknowledging that “[a]dvancing price impact consideration from the merits stage to the class certification stage may broaden the scope of discovery available at class certification.” But they nevertheless concluded that the Court’s decision “should impose no heavy toll on securities-fraud plaintiffs with tenable claims.” Were the three concurring Justices leaving themselves an escape hatch to rethink their position if practice shows that the new discovery burdens are becoming too great?
Steven Davidoff has a very extended treatment with lots of background, concluding:
In the past years, the court has been steadily taking two to three securities law cases a year over the past years.
In the process, the court has erected an elaborate array of rules that mostly govern when class certification can be given. In other words, it has been tinkering with the process of determining when a case can proceed to a final settlement.
But it hasn’t done much. Securities cases continue to be filed, and this decision will not stop that. Indeed, the Supreme Court has cemented the position of the top plaintiffs’ law firms because the rules are so intricate only they and a handful of defense lawyers fully understand them.
This may serve fine for those who want these cases to continue and see such litigation as helping shareholders, but for the opponents, it seems like it is a lot of time spent for very little. It means securities litigation, for better or worse, is here to stay as long as the Supreme Court – which started this business — is deciding the issue. The apocalypse has been postponed.
The Harvard Corporate Governance blog has a client memo from Wilson Sonsini Goodrich & Rosati, which draws this lesson from the case:
Defense hopes that the presumption of reliance would be overruled have been dashed, and the world we live in still includes securities class actions. Nevertheless, the fact that the Supreme Court made clear that defendants can attempt to rebut the presumption of reliance at the class certification stage is a victory for defendants. How significant that victory ultimately will be may depend on the particular facts of each case, as well as how the courts address defense challenges to the applicability of the presumption of reliance. In the typical case—a positive announcement is followed by rise in the stock price, and a bad news announcement is followed by a sharp drop—Halliburton is not likely to change much. In other cases, in which the stock price movement is less clear, the decision may give rise to opportunities to narrow the class period or even defeat class certification entirely.
Charles Korsmo guest blogs at Volokh:
In the vast majority of securities fraud cases, there is a “price impact.” Indeed, the classic “strike suit” scenario is when a company’s stock takes a sharp dive when negative information comes out, and plaintiffs’ attorneys stumble over each other to file claims alleging securities fraud. The dispute is almost never over whether there actually was a stock drop; it is over whether the company fraudulently concealed the negative information. As such, the opportunity to rebut the fraud on the market presumption by showing lack of price impact is likely to be of little avail in most cases.
Thom Lambert asks:
How is a court to know whether the market in which a security is traded is “efficient” (or, given that market efficiency is not a binary matter, “efficient enough”)? Chief Justice Roberts’ majority opinion suggested this is a simple inquiry, but it’s not. Courts typically consider a number of factors to assess market efficiency. According to one famous district court decision (Cammer), the relevant factors are: “(1) the stock’s average weekly trading volume; (2) the number of securities analysts that followed and reported on the stock; (3) the presence of market makers and arbitrageurs; (4) the company’s eligibility to file a Form S-3 Registration Statement; and (5) a cause-and-effect relationship, over time, between unexpected corporate events or financial releases and an immediate response in stock price.” In re Xcelera.com Securities Litig., 430 F.3d 503 (2005). Other courts have supplemented these Cammer factors with a few others: market capitalization, the bid/ask spread, float, and analyses of autocorrelation. No one can say, though, how each factor should be assessed (e.g., How many securities analysts must follow the stock? How much autocorrelation is permissible? How large may the bid-ask spread be?). Nor is there guidance on how to balance factors when some weigh in favor of efficiency and others don’t. It’s a crapshoot.
Thom also explains at some length why it's a mistake to assume that "there is a “market” for a single company’s stock," efficient or not.
Alden Abbott says that in Halliburton "the Supreme Court regrettably declined the chance to stem the abuses of private fraud-based class action securities litigation."
Given the costs and difficulties inherent in rebutting the presumption of reliance at the class action stage, Halliburton at best appears likely to impose only a minor constraint on securities fraud class actions. ...
Congress should eliminate the eligibility of private securities fraud suits for class action certification. Moreover, Congress should require a showing of specific reliance on fraudulent information as a prerequisite to any finding of liability in a private individual action. What’s more, Congress ideally should require that the SEC define with greater specificity what categories of conduct it will deem actionable fraud, based on economic analysis, as a prerequisite for bringing enforcement actions in this area.
Kevin LaCroix has a typically excellent and detailed analysis of today's Supreme Court decision in Halliburton Co. v. Erica P. John Fund. I highly recommend it to my corporate and securities law readers.
Last month, I blogged about how the Delaware legislature was barreling towards passing legislation to reverse the impact of the ATP Tour v. Deutscher Tennis Bund decision. In the wake of this Delaware Senate resolution, here’s comes news from this WSJ blog:
Score this round for the U.S. Chamber of Commerce. The group representing business interests has won, at least for now, a fight in the Delaware legislature over whether companies can foist their legal bills onto shareholders who sue them and lose.
The Delaware legislature has postponed until early 2015 discussion of a proposed bill that had drawn heat from the Chamber, among others, the bill’s sponsor confirmed Wednesday. The bill would have banned companies from shifting the costs of losing cases onto the stockholders who bring them. “I certainly believe that we should not permit companies carte blanche to adopt these kinds of bylaws,” Sen. Bryan Townsend, who sponsored the bill, said in an interview. “But we have heard from a broad group of stakeholders and thought it best to take the coming months to continue our examination of the issue.”
The fight bubbled up after Delaware Supreme Court ruling last month that upheld a fee-shifting bylaw adopted by a private company, ATP Tour Inc. Some corporate lawyers said the ruling might open the door to public companies adopting similar “loser pays” provisions in an effort to deter shareholder litigation, which has skyrocketed in recent years. Such cases are now nearly automatic after the announcement of a merger, and rarely result in substantial gains for shareholders.
A section of the state bar quickly crafted legislation to ban companies from adopting such bylaws, and presented the measure to the legislature, which had been set to vote last week. But the Chamber opposed the bill, which it said “takes away a new tool … [that] businesses could use to reduce the amount of unnecessary litigation that accompanies corporate mergers,” according to a letter sent to Mr. Townsend June 5 and reviewed by The Wall Street Journal.
Others joined the fray. Dole Foods Co. also sent a letter to Mr. Townsend, the News Journal has reported. And more quietly, E. I. du Pont Nemours & Co., one of Delaware’s biggest and most influential companies, has quietly lobbied against the legislation, according to people familiar with its efforts. A DuPont spokesman confirmed that the company opposes the bill, but declined to comment further. DuPont’s intervention likely carried considerable weight in Delaware, where it was founded in 1802 as a gunpowder maker along the banks of the Brandywine Creek. It is the only Fortune 250 company based in the state, despite the dozens that claim it as their legal home, and its name is plastered around Wilmington, where its headquarters take up an entire city block.
Kevin LaCroix has more here:
For the time being, it is unclear whether or not fee-shifting bylaws will be permitted in Delaware. The Skadden law firm’s memo urges caution for companies considering the adoption of fee-shifting bylaws. As the memo notes, “there is a significant risk that adoption of fee-shifting bylaws could generate a meaningful adverse reaction from, among others, governance advocates, proxy advisory firms, and some stockholders.”
Even though the Delaware legislature will not be acting until 2015 at the earliest, there are good reasons for companies to proceed cautiously in considering the adoption of a fee-shifting bylaw. The law firm memo outlines a number of specific items for companies to consider in that regards, including, for example, the company’s stockholder profile and its relationship with its shareholder base.
While the memo urges caution on fee-shifting by laws, the law firm continues to believe that companies should consider the adoption of forum selection by laws. As I discussed in a recent post (here), even though questions continue to surround the possibility that companies might be able to try to control abusive shareholder litigation through the use of fee-shifting bylaws, the adoption of forum selection bylaws has become increasingly common as a possible way to try to “reduce the cost and risk of multi-jurisdictional stockholder litigation.”
The opinion is here. Based on a quick read, a majority of the court held that:
1. The court declined to overrule Basic Inc. v. Levinson
2. The court left the plaintiff's burden in Basic unchanged. From the syllabus:
The Basic presumption incorporates two constituent presumptions: First, if a plaintiff shows that the defendant’s misrepresentation was public and material and that the stock traded in a generally efficient market, he is entitled to a presumption that the misrepresentation affected the stock price. Second, if the plaintiff also shows that he purchased the stock at the market price during the relevant period, he is entitled to a further presumption that he purchased the stock in reliance on the defendant’s misrepresentation. Requiring plaintiffs to prove price impact directly would take away the first constituent presumption. Halliburton’s argument for doing so is the same as its argument for overruling the Basic presumption altogether, and it meets the same fate. Pp. 16–18.
3. Defendants get a small win with respect to their ability to rebut class certification by showing a lack of price impact. Again, from the syllabus:
The Court agrees with Halliburton, however, that defendants must be afforded an opportunity to rebut the presumption of reliance before class certification with evidence of a lack of price impact. Defendants may already introduce such evidence at the merits stage to rebut the Basic presumption, as well as at the class certification stage to counter a plaintiff’s showing of market efficiency. Forbidding defendants to rely on the same evidence prior to class certification for the particular purpose of rebutting the presumption altogether makes no sense, and can readily lead to results that are inconsistent with Basic’s own logic. Basic allows plaintiffs to establish price impact indirectly, by showing that a stock traded in an efficient market and that a defendant’s misrepresentations were public and material. But an indirect proxy should not preclude consideration of a defendant’s direct, more salient evidence showing that an alleged misrepresentation did not actually affect the stock’s price and, consequently, that the Basic presumption does not apply.
I'm giving a talk today at the 2014 National Business Law Scholars Conference on the pending Supreme Court decision in Halliburton Co. v. Erica P. John Fund, Inc. It would have been easier, of course, if the Supreme Court had decided the case by now, but ....
Anyway, here's a link to my notes and the slides are below:
Former SEC Commissioner Christoper Cox on the prospects of the US buying into International Financial Reporting Systems:
For those of you who remember Monty Python, I think Michael Palin, in speaking about John Cleese’s parrot, said it best: This parrot is no more. It’s not simply resting, or momentarily stunned. The prospect of full scale IFRS in our lifetimes has ceased to be. It is bereft of life. It rests in peace.
His explanation for why that's the case strikes this observer as plausible and persuasive.
I wish I found this statistic shocking:
Only 2 percent of lawsuits filed in response to M&A deals that settled in 2013 produced monetary returns for shareholders.
Meanwhile, I guess we're all supposed to be dancing in the streets because Delaware courts are not quite as liberal as they used to be in approving legal fees for plaintiffs lawyers:
The report also finds that plaintiff attorney fees awarded in disclosure-only settlements of M&A cases continued to drop in 2013. In addition, over the last four years, the Delaware Court of Chancery approved 80 percent of the fee amounts requested in such cases, compared with 90 percent in other courts.'
BFD. If plaintiff lawyers get fees in 80% of cases and plaintiffs get a monetary recovery in only 2%, well you do that math. The point is that the Delaware courts are still basically rubber stamping a system that amounts to a massive wealth transfer from investors to lawyers.
Some will ask: If derivative litigation cannot be justified on compensatory grounds, can it still be justified as a useful deterrent against managerial shirking and self-dealing? In short, no. There is no compelling evidence that derivative litigation deters a substantial amount of managerial shirking and self-dealing. Certainly there is no evidence that litigation does a better job of deterring such misconduct than do markets. There is evidence that derivative suits do not have significant effects on the stock price of the subject corporations, however, which suggests that investors do not believe derivative suits deter misconduct. There is also substantial evidence that adoption of a charter amendment limiting director liability has no significant effect on the price of the adopting corporation’s stock, which suggests that investors do not believe that duty of care liability has beneficial deterrent effects.
 See, e.g., Michael Bradley & Cindy A. Schipani, The Relevance of the Duty of Care Standard in Corporate Governance, 75 Iowa L. Rev. 1 (1989); Roberta Romano, Corporate Governance in the Aftermath of the Insurance Crisis, 39 Emory L.J. 1155 (1990).
 See Daniel R. Fischel & Michael Bradley, The Role of Liability Rules and the Derivative Suit in Corporate Law: A Theoretical and Empirical Analysis, 71 Cornell L. Rev. 261 (1986).