American Sōkaiya

In Japan, the Sōkaiya "acquire enough stock from multiple companies in order to gain entrance to a shareholders' meeting. There, they disrupt the meeting (and embarrass the company) until their demands are met." 

I was reminded of that phenomenon by an article in the latest Economist, which observes that:

The Dodd-Frank law of 2010 requires a “say-on-pay” vote for shareholders of American companies. Clever lawyers scent a payday for themselves.

One law firm in particular, Faruqi & Faruqi, has filed a series of class-action suits demanding more information about how companies decide what to pay their senior executives. It seeks to prevent its targets from holding their annual meetings until the extra information turns up. ...

Alas, paying up does not make the problem disappear, as English kings discovered long ago when they bribed Viking marauders to go away. DLA Piper, a law firm defending companies, warns that if a company offers extra disclosure and settles a suit, “every piece of information it discloses may provoke a plaintiff to argue that yet more backup information is required.” Companies fear they will end up paying an “annual meeting tax”.

In my book Corporate Governance after the Financial Crisis, I predicted that greedy plaintiff lawyers would try to find a way to make money out of say on pay even though Congress claimed that say on pay would not create any new duties or liabilities.

What we have there thus is another way in which federal regulation of corporate governance amounts to a tax on corporations for the benefit of trial lawyers (among others). Yet, people like Lucian Bebchuk go on defending the ever-increasing federalization of corporate governance. From now on out, whenever somebody like Bebchuk proposes new federal corporate governance rules, I'm going to ask him how he's going to keep the Faruqi & Faruqi's of the world from using them to get rich.