ProfessorBainbridge.com

Furthering my discussion with Professor Pierluigi Matera about Delaware's dominance and the Wyoming challenge thereto

The other day I posted a comment on Professor Pierluigi Matera's article, Delaware’s Dominance, Wyoming’s Dare. New Challenges, Same Outcome? (March 1, 2021). Professor Matera responded with a very thoughtful email, in which he explains:

I agree with you about Wyoming’s chances to succeed. I do believe that Delaware’s dominance will remain intact. In my paper (I mean, in the extended draft version which is on SSRN https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3763106 ), I argued:

... to the extent that Wyoming’s strategy pays off, it will secure this jurisdiction a leading position only in that segment of the corporate charters market, whilst Delaware will continue to dominate the rest of it. That said, it is currently uncertain whether Wyoming’s policy is a calculated risk or an unreasonable hazard. 

….

However, to the extent that Wyoming’s tactic proves to be effective, it will earn this jurisdiction a leading position only in a segment of the corporate charters market, whilst Delaware will continue to dominate the rest of it. Clearly, the significance of this segment will depend upon the growth of cryptocurrencies.

In light of all this, Wyoming’s approach might look like a dare. In fact, this new challenge is likely to end up with the same result: Delaware’s dominance.

I also contend that Federal legislature is likely to intervene and end Wyoming’s ambition. But I doubt that Delaware would be able to follow Wyoming on the path of relaxing and liberalising laws on blockchain for the same reason which suggested Delaware not to follow Nevada. 

Comparing Nevada’s market segmentation approach and Wyoming’s challenge, I argued:

In this respect, Wyoming is replicating the market segmentation strategy already conceived and put in place by Nevada for small firms. This implies some similarities. As in Nevada’s case, Delaware is unlikely to follow Wyoming in adopting such liberal laws for virtual currencies. Should Delaware introduce laws that are too lax, federal legislature might intervene.

Unlike Nevada, Wyoming is creating a safe harbour by introducing exemptions or custom-made provisions in multiple fields of regulation, including state securities regulation. This is consistent with the aims of the cryptocurrency sector.

My response was premised on the assumption that to the extent the Wyoming statue was a move to the top, Delaware--as the leader in the so-called race to the top (to be sure, as I have said elsewhere, the race is more of a leisurely stroll, but it's still towards the top)--would simply copy the Wyoming statute--as Delaware has done with other developments--and thus trounce Wyoming.

As Professor Matera points out in his email, however, the Wyoming statute can be seen as a move to the bottom. If that proves to be the case, I suspect he is correct that Delaware would opt not to follow Wyoming, just as Delaware has opted not to follow Nevada.

But then the question becomes whether Nevada might not steal Wyoming's thunder by copying the Wyoming rules and coupling them with Nevada's lax corporate governance regime to create create a very attractive package for those who wish to lead an accountability free life?

In any case, strongly urge you to read Professor Matera's article, which captures some very important insights about a very interesting development.

Recommended reading.

The Democrats in Congress want to empower three shareholder gadflies to harass corporate boards to no useful purpose

As I reported last year, the SEC finally made some long overdue reforms that limit who can make proposals but do not change the subject matters to which proposals can be addressed:

• Amend the criteria that a shareholder must satisfy to be eligible to have a proposal included in a company’s proxy statement. A shareholder now must demonstrate continuous ownership of at least:
  
  • $2,000 of the company’s securities entitled to vote on the proposal for at least three years;
  • $15,000 of the company’s securities entitled to vote on the proposal for at least two years; or
  • $25,000 of the company’s securities entitled to vote on the proposal for at least one year.
  • Aggregation of holdings for purposes of meeting the ownership requirements will no longer be permitted.
• Modify the rule limiting the number of proposals that may be submitted for a particular company’s shareholders’ meeting (the “one-proposal rule”) to establish that a single person may not submit multiple proposals at the same shareholders’ meeting, whether the person submits a proposal as a shareholder or as a representative of a shareholder.
  • Under the existing rule, some activists tried to get around the one proposal per company limit by advancing a proposal in their own name while advancing a second proposal purportedly while acting as a representative of another shareholder. The change shuts down that loophole.
• The proponent must state in writing that it is available to meet with company management (at the latter's option) at specified times not less than 10 days or more than 30 days after the proposal is submitted.
  • This is purported to increase the likelihood of shareholder-management engagement.
• Revise the levels of shareholder support a proposal must receive to be eligible resubmit the same proposal at the same company’s future shareholders’ meetings.
  • A shareholder proposal will be excludable from a company’s proxy materials if it addresses substantially the same subject matter as a proposal, or proposals, previously included in the company’s proxy materials within the preceding five calendar years if the most recent vote occurred within the preceding three calendar years and the most recent vote was:
    • Less than 5 percent of the votes cast if previously voted on once;
    • Less than 15 percent of the votes cast if previously voted on twice; or
    • Less than 25 percent of the votes cast if previously voted on three or more times.

Predictably, these rather modest changes produced ferocious complaints from activist shareholders and their allies in both the academy and politics.

Now Bloomberg reports that the new chair of the Senate Banking Committee--far-left Senator Sherrod Brown--wants to repeal those common sense rules. 

This is absurd. As I documented last year:

First, the previous $2,000 limit was adopted in 1998 and has never been adjusted for inflation:

Under the new rule, as long as the shareholder is a long-term investor, you actually need a smaller investment—in real dollars—than you did in 1998.

In addition, the thresholds are set so low that owners of minuscule percentage of a company's stock get to force a vote on their pet proposal:

If Senator Brown did any investigation he would discover--although he probably would never admit it--that the retail investors who do use the shareholder proposal are mainly just three longstanding gadflies who have abused the system for years (charts from Proxy Monitor):

In fact, when you break it down, basically what Senator Brown is doing here is protecting one person:

John Chevedden is an interesting fellow. In any case, however, add in his less vigorous compatriots, Ken Steiner and James McRitchie, and the three of them "sponsored 38% of all shareholder proposals."

Why is Senator Brown so bound and determined to ensure that these three hobbyists get to keep being gadflies with no skin in the game? 

 

If Senator Brown did any investigation he would discover--although he probably would never admit it--that the retail investors who do use the shareholder proposal are mainly just three longstanding gadflies who have abused the system for years (charts from Proxy Monitor):

In fact, when you break it down, basically what Senator Brown is doing here is protecting one person:

John Chevedden is an interesting fellow. In any case, however, add in his less vigorous compatriots, Ken Steiner and James McRitchie, and the three of them "sponsored 38% of all shareholder proposals."

Why is Senator Brown so bound and determined to ensure that these three hobbyists get to keep being gadflies with no skin in the game? 

I'm prepared to make a long bet that Wyoming will not put a dent in Delaware's dominance of the market for corporate charters

Pierluigi Matera discusses challenges to Delaware's dominance of the market for corporate charters.

This dominance has been regularly criticised by scholars but hardly put in serious jeopardy by challengers. Nevada is known as Delaware’s most important competitor, with an aggressive strategy that overrode the effort of any other jurisdiction. In order to attract incorporators, in 2001 Nevada broadened directors’ and officers’ protection from liability and became a truly liability-free jurisdiction. Yet, its success has been limited to a specific market segment: small firms with low institutional shareholding and high insider ownership. ...

In a recent paper I contend that a mounting challenge to Delaware’s dominance is mostly going off the radar. Wyoming is targeting a new segment of the market for corporate charters: cryptocurrency businesses. This jurisdiction is attempting to attract these incorporators by enacting liberal legislation and providing their companies with a safe harbour.

I've pondered challenges to Delaware in various places. In my article, "Why the North Dakota Publicly Traded Corporations Act Will Fail," 84 North Dakota Law Review 1043 (2008), I discussed North Dakota's adoption of "the Publicly Traded Corporations Act, which 'is designed to strengthen corporate democracy and improve the performance of publicly traded corporations.' ... The idea [was] that North Dakota will attract incorporations away from Delaware by being more shareholder-friendly than Delaware."' As I subsequently noted, the North Dakota effort proved to be a massive flop.

On major reason is that Delaware's legislature acts quickly to adopt developments in other states that prove successful. "The Delaware legislature pays close attention to keeping the GCL up-to-date and efficient. It has a longstanding relationship with the Corporate Law Section of the Delaware Bar Association, which frequently recommends, reviews, and drafts revisions to the GCL. William F. Griffin, THE DELAWARE ALTERNATIVE, CLHBU MA-CLE 10-1 (2015). 

As Wilmington attorney Black noted, however, Delaware's system is not easily emulated. “There are elements unique to Delaware that would be very hard to replicate, particularly in big states,” he says. Delaware benefits from having a unique combination of an enabling corporation statute, a legislature that keeps the statute up to date and that has developed a long and trusting relationship with the corporate bar, and judges who come from among the best and brightest attorneys in the state, he says. “

Donald F. Parsons Jr. & Joseph R. Slights III, The History of Delaware's Business Courts: Their Rise to Preeminence, 17 Bus. L. Today 21, 25 (March/April 2008).

In sum, if Wyoming starts to make gains, the Delaware legislature will just copy the Wyoming approach--probably with improvements--and remain dominant by adding to the statute the other advantages identified by Parsons and Slights.

As for Nevada's success, Delaware has opted not to emulate Nevada's approach of drafting a corporate law designed to appeal mainly to crooks seeking immunity from accountability.

Facebook Board Diversity Lawsuit Dismissal Motion Granted

Kevin LaCroix has been keeping track of the recent wave of shareholder suits alleging boards have violated state or federal law by not having diverse boards:

As I have documented on this site, over the last few months plaintiffs’ lawyers have filed a series of lawsuits against the directors of companies that allegedly lack African American representatives on their corporate boards. Many of these lawsuits, particularly at the outset of this litigation filing trend, were filed by the same law firm. Among the first of these lawsuits was a shareholder derivative lawsuit filed in July 2020 against the board of the social media company, Facebook. In an order dated March 19, 2021 (here), Northern District of California Magistrate Judge Laurel Beeler granted the defendants’ motion to dismiss the plaintiff’s complaint. The dismissal was without prejudice with respect to the plaintiff’s proxy misrepresentation claims under Section 14(a). As discussed below, the court’s ruling could have important implications for the other pending (and prospective future) board diversity lawsuits. ...

The complaint assert[ed] claims for breach of fiduciary duty; aiding and abetting breach of fiduciary duty; abuse of control; unjust enrichment; and violation of Section 14(a) of the Securities Exchange Act of 1934. ...

The defendants moved to dismiss the plaintiff’s complaint on several grounds: first, the defendants argued that the plaintiff had neither made the requisite pre-suit demand on the board nor provided sufficient allegations to establish that demand was futile; second, in reliance on the forum selection clause in the company’s restated certificate of incorporation (the text of which is set out below), the defendants argued that the plaintiff has sued in the wrong forum; and third, the defendants argued that the plaintiff had failed to state a Section 14(a) claim due to the failure to sufficiently plead false and misleading statements in the proxy statements at issue.

Mr. LaCroix then goes on to analyze the decision granting the motion to dismiss. He then summarizes the plaintiff's options:

The plaintiff will now need to consider whether to try to re-plead her Section 14(a) allegations or to simply accept that the next step is to try to refile her state law claims in Delaware Chancery Court. An obvious concern will have to be whether the remaining claims, shorn of the supposed board diversity concerns to which the initial complaint attached so much weight, are simply not enough to carry the claim.

Go read the whole thing.

Political Spending Disclosure: The Democratic Congress Might Remove Roadblock to SEC Action so as to Defund the GOP

From Lynn Jokela at TheCorporateCounsel.net:

John blogged last December about a provision in the Consolidated Appropriations Act, 2021 restricting the SEC from finalizing a rule requiring company political spending disclosures. So as much as it could be a while before the SEC could take action relating to company political spending, Congress has shown interest in allowing it to happen.

First, H.R. 1, the For the People Act has not only been introduced in the House, but it also passed. The bill would require additional disclosure of campaign-related fundraising and spending. The Shareholder Protection Act of 2021, which has been introduced in the Senate, takes things a bit further.

The Senate bill, would among other things, require political spending disclosure and prohibit company political spending unless it has been approved by shareholders. Cydney Posner, in this Cooley blog, runs through some of the bill’s other requirements, which include penalties for officers or directors who authorize any political contribution expenditures without shareholder approval.

Members of the Commission have also expressed interest in the topic. Although a lot of commentary about SEC interest in ESG disclosures centers on climate risk, another topic Acting Chair Lee addressed in a speech last week was political spending disclosure. In her speech, Acting Chair Lee said political spending disclosure deserves attention and that it’s “inextricably linked to ESG issues.”

As a potential sign the Commission wants to take action in this area, some may have read commentary that Gary Gensler, the nominee for SEC Chair, and Commissioner Caroline Crenshaw each voiced interest too. Back in early March at his Senate confirmation hearing to serve as SEC Chair, Gary Gensler expressed support for the SEC to consider company political spending disclosures.

It's important to remember that political spending disclosure is NOT about investor protection or informing shareholders. It is pure partisan politics designed by Democrats to defund Republicans and conservatives.

This has been a frequent topic here at PB.com:

Democrats revive effort to force disclosure of corporate political spending

There is no doubt that efforts to force disclosure of corporate political campaign contributions is blatantly partisan. ...

I suggest reading my post Saul Alinsky comes to the annual shareholder meeting: Politicized shareholder activists carrying Democratic water

The politics of political spending disclosure

Why do Senators, particularly Democratic Senators, care so much about this one issue that they would stymie a Democratic President over it? Forget all the bogus arguments about whether corporations are people, or whether money is speech, etc.  The basic fact about political spending is this: incumbent politicians want to control it.

Warren Buffett & Berkshire Hathaway oppose shareholder proposal on political spending disclosures

Contrary to the claims of shareholder activists, political spending disclosure can harm companies in a variety of ways. Or so says the sage of Omaha.

Corporate political spending gets even more partisan

Just to drive the point home: "the evidence does not support requiring public companies to disclose political spending."

Wall Street Journal Smashes Arguments for Corporate Political Spending Disclosure

... the WSJ exposes the political agenda behind those who would mandate corporate disclosure of campaign contributions and other political spending and smashes their arguments. 

If burning the American flag is protected speech, why isn't (at least some) insider trading?

The titular question occurred to me while reading a post by John P. Anderson, in which he explains that:

There is evidence that at least some of the recent social-media-driven “meme” trading in stocks such as GameStop is being driven by motives other than profit seeking. In fact, many of the retail traders involved in the recent short-squeeze frenzy have stated publicly that they are buying and holding their positions as a form of social, political, or aesthetic expression. ...

An expressive trader does not trade for profit but rather to send a political message or produce a social or aesthetic effect. Social media has made expressive trading practicable for retail market participants by allowing a large number of small investors to coordinate their trading in real time to deliver their desired message in the form of a measurable impact on the targeted stock’s price.

One consistent theme for expressive traders in GameStop has been to protest the Wall Street elitism that motivated the Occupy Wall Street movement in 2011. In contrast to that movement, however, expressive trading has had very real economic consequences for the movement’s perceived hedge-fund villains. ...

GameStop retail traders frequently quote Heath Ledger’s Joker character from “The Dark Knight” on their trade-related posts: “It’s not about the money; it’s about sending a message.” ...

Censorship of expressive trading may be justified in some instances, but the broader implications of any such regulatory action should be carefully explored in advance.

How do you rebut the business judgment rule under Nevada law?

Keith Paul Bishop posted on a recent Nevada case holding that the inherent fairness standard cannot be used to rebut the business judgment rule:

In Guzman v. Johnson, ... the Court concluded that the inherent fairness standard cannot be used to rebut the business judgment rule and shift the burden to individual directors.  The Court found that to do so would contravene NRS 78.138(7) which insulates (with certain exceptions) directors and officers from individual liability in their capacities as such unless the plaintiff (i) rebuts the business judgment rule; and (ii) proves that the director’s or officer’s act or failure to act constituted a breach of his or her fiduciary duties as a director or officer and the breach involved intentional misconduct, fraud or a knowing violation of law.  

So how can a plaintiff rebut the business judgment rule?  The Nevada Supreme Court states that a plaintiff may do so by showing that the director or officer had a personal interest in the transaction.  However, the Court found that the plaintiff's complaint failed to plead facts that if true would rebut the business judgment rule.

In a February 2020 post, Bishop explained that:

NRS 78.138(7)(b) provides that, with certain specific statutory exceptions, a director or officer of Nevada corporation is not individually liable to the corporation or its stockholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a director or officer unless it is proven that:

•  The director’s or officer’s act or failure to act constituted a breach of his or her fiduciary duties as a director or officer; and
• The breach involved intentional misconduct, fraud or a knowing violation of law.

While the statute makes no mention of gross negligence, some federal district courts in Nevada have applied a bifurcated analysis, requiring a showing of at least gross negligence to state a duty-of-care claim or "intentional misconduct, fraud or a knowing violation of the law" to state a duty-of-loyalty claim. ...

Yesterday, the Nevada Supreme Court declared this statement to be dicta and expressly disavowed a bifurcated approach to duty-of-care and duty-of-loyalty claims.  Chur v.  Eighth Jud. Dist. Ct., 136 Nev. Adv. Op. 7 (2020).  According to the Court, NRS 78.138(7) provides the sole avenue to hold directors and officers individually liable for damages arising from official misconduct.  

This leaves me somewhat puzzled. Is it the case that under Nevada law that the business judgment rule would not be rebutted by a showing of:

• directors were grossly negligent in failing to inform themselves of all material information reasonably available to them?
• the board failed to make a decision?
• failed to exercise oversight?
• waste?

Caremark, Board Oversight of CEO Personal Conduct, and Elon Musk

Ann Lipton remarks:

Tesla is being sued again, this time by a stockholder who claims that Elon Musk’s … colorful … behavior on Twitter violates his settlement with the SEC, is a threat to corporate value, and that the Board’s failure to rein him in represents a violation of its duty of good faith (and hey, as I was drafting this very post Musk did it again).  While I’m sure there are many things one could say about the lawsuit, the part that struck me was where the plaintiff alleged that the Board is dependent on Musk, in part, because Musk is indemnifying its members for any legal liability.

Check it out. With respect to the merits of the suit, it gets to issues we've discussed here a number of times:

My Pillow, Inc. and the perennial question of whether Caremark claims should lie when boards fail to monitor the CEO's personal life

Tom Lin argued that Caremark oversight duties continue to “present difficult issues concerning the monitoring of executive private behavior.”

CEO Private Lives in the Present Dystopia

"to what extent should a board have Caremark duties to monitor a CEO's private life." 

Venison Medallions Sous Vide in a Tawny Port Sauce

• 4 3-ounce venison medallions (I get mine from Dartagnan’s)
• 4 cloves of garlic, paper removed and lightly smashed
• 4 sprigs of fresh rosemary
• 4 sprigs of fresh thyme
• 1 1.5-ounce package More than Gourmet French Demi-Glace
• ½ cup white wine
• ½ cup tawny port (use the stuff from Portugal not the domestic US imitation)
• ½ tablespoon soy sauce
• ½ tablespoon Worcestershire sauce
• 1 teaspoon balsamic or sherry vinegar
• ¼ cup dried currants
• 1 sprig each of thyme and rosemary
• Butter
• Salt and pepper

Fill a large stock pot or other food safe container with warm water. Insert your Joule sous vide into the container and set to 135°. Pat the venison medallions very dry with paper towels. Season medallions on both sides with salt and pepper. Put each medallion with a sprig of rosemary, a spring of thyme, and a clove of garlic in its own 6”x10” 3mil bag using your Weston vacuum sealer. Cook for 90 minutes.

In a small saucepan combine the demi glace, wine, port, soy sauce, Worcestershire sauce, balsamic or sherry vinegar, and currants. Put 1 sprig each of thyme and rosemary in a spice bag and add to sauce. Bring to a boil and reduce heat to medium-low. Reduce by about half. (Here’s a trick I think I learned watching Alton Brown: sip a chopstick into the simmering liquid. Using a knife, scratch on the chop stick to mark the level of the liquid. Then use the chopstick like a dipstick to see how much of the liquid has evaporated.)

Reduce heat to low and keep sauce warm. Just before serving, remove spice bag, taste and adjust seasoning as needed, add a pat of butter and swirl to melt.

Remove venison from sous vide and bags, discarding garlic and herbs.

Heat a skillet over high heat. Add a drizzle of a high smoke point oil. When the oil is shimmering, add the venison medallions and sear for a minute or two per side.

Serve with some haricot verts and a puree of yams and parsnips.

With this meal I’d typically opt for a pretty young Napa Cabernet-based blend with a lot of fruit that will match the sauce and compliment the gamy flavor of the meat.

We drank a Jayson (Napa Valley) 2017. It’s a blend of 44% Cabernet Sauvignon, 37% Merlot, 15% Petite Sirah, and 4% Cabernet Franc. It’s big but refined. Lots of dark fruit with cherries, blackberries, and currants. A little java and mocha on the long finish.

New Video on the Parable of the Talents

Political Tribal Sorting Comes to the C-Suite

It is commonplace that Americans are sorting by political tribes. A recent study finds that phenomenon is taking place in the C-suite as well:

Executive teams in U.S. firms are becoming increasingly politically polarized. We establish this new fact using political affiliations from voter registration records for top executives of S&P 1500 firms between 2008 and 2018. The rise in political homogeneity is explained by both an increasing share of Republican executives and increased sorting by partisan executives into firms with like-minded individuals. We further document substantial heterogeneity across party lines in executives’ beliefs, as proxied by their trading of company stock around presidential elections, as well as in firms’ investment decisions.

Fos, Vyacheslav and Kempf, Elisabeth and Tsoutsoura, Margarita, The Political Polarization of U.S. Firms (February 20, 2021). Available at SSRN: https://ssrn.com/abstract=3784969 or http://dx.doi.org/10.2139/ssrn.3784969

Recommended Reading: John Paul II's Contribution to Law

Domingo Osle, Rafael, John Paul II's Contribution to Law (January 28, 2021). Available at SSRN: https://ssrn.com/abstract=3774948 or http://dx.doi.org/10.2139/ssrn.3774948

This chapter examines John Paul II’s contribution to law as a statesman, world leader, and universal pastor of the Roman Catholic Church. John Paul II’s approach to the law was shaped by the stark realities of having suffered firsthand the injustice of two totalitarian regimes and the cruelties of the Second World War. An ardent defender of human rights, especially the rights to life and religious liberty, John Paul II saw in human dignity and human solidarity the two great levers for advancing the development of legal systems. Lastly, this chapter explores John Paul II’s invaluable role in updating and reforming the canon law of the Catholic Church. He had a singular role in promulgating the Code of Canon Law of 1983, the Code of Canons of the Eastern Churches of 1990, and the Apostolic Constitution Pastor Bonus of 1988 on reforming the Roman Curia. For these and other relevant legal contributions, John Paul II well deserves the title of jurist.

Yours truly cited by the 11th Circuit

Deal v. Tugalo Gas Co., Inc., 19-14336, 2021 WL 1049813, at *2 (11th Cir. Mar. 19, 2021):

A corporation's directors and officers owe fiduciary duties to the company; if a shareholder believes that they have breached those duties, he can bring a “derivative suit” on behalf of the corporation, for the harm done to it. See Stephen M. Bainbridge, Corporate Law 207 (3d ed. 2002). In a derivative suit, the cause of action belongs to the corporation, rather than to the individual shareholder-plaintiff, and any recovery thus goes to it. Id. Because the cause of action is ultimately the corporation's own, a shareholder can bring suit only in the event that a company's board chooses not to pursue litigation. Id. at 225. Thus, to bring a derivative suit, the shareholder usually must first make “demand” on the corporation—that is, ask the board to bring a suit on the company's behalf. Id. By contrast, if a shareholder believes that he has been harmed in his individual capacity and separately from any injury to the corporation, then he can bring a “direct suit.” Id. at 205. Because in that instance the injury is personal to the shareholder, there is no demand requirement, but there are other hurdles—among them, the shareholder must show that his injury is distinct from any that the corporation or other shareholders have suffered. Id. at 205–06.

Cleary Gottlieb discusses Biden Administration Labor Department's refusal to enforce rules requiring ERISA fiduciaries to put plan beneficiary welfare ahead of woke policy preferences

Although I'm sure Cleary would not approve of my headline:

On Wednesday, March 10, after engaging in conversations with stakeholders, the U.S. Department of Labor’s Employee Benefits Security Administration issued an enforcement policy statement in which it declined to enforce two DOL rules put in place by the Trump administration in 2020.

I.e., stakeholders like Senators Sanders and Warren.

The first of these rules placed limitations on the ability of plans subject to ERISA to invest in environmental, social and governance (“ESG”) funds. In particular, it provided that a fiduciary’s duty of loyalty and prudence under ERISA would only be satisfied if investments were selected solely on the basis of pecuniary factors (defined as factors that have a material effect on the risk and return of an investment), and that ESG factors could only be considered to the extent they created economic risks or opportunities that qualified investment professionals would treat as material economic considerations under generally accepted investment theories. ...

A related second rule provided that ERISA plan fiduciaries could not harness plan assets to vote on policy-related, political or ESG issues in proxy resolutions that are not solely in the economic interests of plan participants and beneficiaries or likely to enhance the economic value of the plan’s investment. 

So if you're a beneficiary of an ERISA regulated retirement plan, for example, you'll no longer be able to rest confidently that the plan managers are putting your interests ahead of woke politics.

California SB 449 is an abysmally badly drafted law whose mandated climate change fiscal risk reports will burden even relatively small businesses

Keith Paul Bishop has the details:

The California legislature will also be mulling the enactment of another bill that would require the filing of climate-related financial risk reports with the Department of Financial Protection & Innovation.  This bill, SB 449 (Stern), would apply to  banks, corporations, credit unions, finance lenders, insurers, investment advisors, real estate investment trusts, and mortgage lenders, in each case as defined. ...

The bill is remarkable for its sloppy drafting. 

Keith then proceeds to detail the awful drafting at length.