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John Coates

  • GC Cheat Sheet: The Hottest Corporate News Of The Week

    March 21, 2022

    Investors so far this year have filed a record 529 environmental, social and governance resolutions, and well-known companies including Goldman Sachs, Disney and Walmart received an "F" grade on pay gaps in a new report. These are some of the stories in corporate legal news you may have missed in the past week. John Coates, who last year spent time as general counsel for the SEC and acting director of its Division of Corporation Finance, discussed a range of topics during his appearance on the first day of the Tulane University Law School's 34th annual Corporate Law Institute. Although the conference was held in person this year following an entirely virtual event in 2021, Coates — a former partner at Wachtell Lipton Rosen & Katz — was one of a few speakers who attended virtually. Coates warned during his speech that Russia's invasion of Ukraine could be a harbinger for further deterioration of business relationships across borders, especially with adversaries like China. "Globalization has been so powerful and basic for most of our practicing lives that it's taken for granted," he said. "We're at a point right now where there is real danger of that reversing to a significant extent."

  • Harvard, Stanford, Yale Law project monitors law firms’ Russia pledges

    March 18, 2022

    The top three U.S. law schools have joined forces to track law firms' policies on working for Russian clients in the wake of that country’s invasion of neighboring Ukraine, accusing some of "splitting hairs about which clients they will avoid." Law professors at Stanford, Yale, and Harvard categorized statements by major U.S. and U.K. law firms regarding their Moscow offices and Russia-related work, calling on them to fully cut ties with the Kremlin, state-owned or controlled firms, and sanctioned entities and people. ... Harvard law professor John Coates said Thursday that researchers hope to expand the scope of the list and to monitor whether firms are living up to their commitments. Such a policing effort would be extremely difficult, however, since many law firm-client relationships are not public.

  • Ex-SEC Official Urges Regulators To Counter SPAC ‘Myths’

    March 14, 2022

    Harvard Law School professor and former U.S. Securities and Exchange Commission official John Coates wants regulators to be more forthright in debunking legal myths that he argues contributed to the boom in special purpose acquisition companies. Coates told Law360 in an interview that regulators should be "more aggressive" in countering myths that he believes SPAC industry promoters and their advisers have circulated that make SPACs appear more legally advantageous than is justified.

  • Investors warned against taking ‘lottery ticket’ approach to SPACs

    February 22, 2022

    CFOs aiming to take their companies public by merging with a SPAC have more choices of partners than ever before. As of today, 602 SPACs are searching for companies to combine with in an initial public offering, according to SPACInsider. “Investors should be aware that competition is fierce,” the CFA Institute said. SPACs in 2021 brought to market a record 613 offerings and raised more than $162 billion, a total exceeding all previous years combined, SPACInsider data show. The pace has recently slowed, with just 41 SPAC IPOs so far this year. ... SPACs pose several hazards to investors, according to John Coates, acting director of the SEC’s Corporation Finance Division from February until October 2021.

  • SPAC industry promotes myths in a ‘deep fraud,’ former SEC official says

    February 3, 2022

    Several ‘myths’ about the legal underpinnings for special purpose acquisition companies (SPACs) have influenced the perceived costs, benefits and risks of the so-called blank-check companies and distorted capital markets, according to John Coates, acting director of the Securities and Exchange Commission’s Corporation Finance Division from February until October 2021.

  • Proxy Voting: What Fund Investors Should Know About It—and How It Is Changing

    January 10, 2022

    For the most part, public companies are controlled by the votes of common shareholders and the corporate directors they elect. But asset managers have significant sway. Harvard Law School’s John C. Coates extrapolates this concentration of ownership to “The Problem of Twelve.” In a working paper, he argued that “in the near future roughly twelve individuals will have practical power over the majority of U.S. public companies.” He meant that asset managers like BlackRock Inc., BLK -2.64% Vanguard Group and Fidelity Investments—primarily investing on behalf of retirement investors and savers—would essentially serve as a 12-headed corporate board, lording over all public companies.

  • The $US10 trillion man – how Larry Fink became king of Wall Street

    October 15, 2021

    BlackRock’s co-founder and CEO has created a business with unprecedented power. So what, exactly, did it take for him to get this far? A new book explains all. ... Lucian Bebchuk of Harvard Law School and Scott Hirst of Boston University estimated in a 2019 paper titled The Spectre of the Giant Three that the trio’s combined average stakes in the 500 biggest listed US companies had vaulted from about 5 per cent in 1998 to over 20 per cent. Their real power is even greater – and growing. Given that many shareholders don’t actually bother to vote at annual meetings, BlackRock, Vanguard and State Street now account for about a quarter of all votes cast on average, which will rise to 41 per cent over the next two decades, the academics estimated. John Coates, a Harvard Law professor, has called this rising concentration of economic power “a legitimacy and accountability issue of the first order”.

  • BlackRock Gives Big Investors Ability to Vote on Shareholder Proposals

    October 8, 2021

    Investment giant BlackRock Inc. is giving institutional investors such as pensions and endowments the option to cast shareholder votes tied to their investments. When investors buy a fund from an asset manager, the money manager typically votes on shareholder proposals on behalf of the investors. Starting in 2022, BlackRock says its large investors can vote themselves on everything from who sits on boards to executive pay to what companies should disclose on greenhouse gas emissions. The change allows those BlackRock clients to lay claim to voting power on some $2 trillion in investments tied to index-tracking assets BlackRock manages in institutional accounts. This is about 40% of roughly $4.8 trillion of indexed equities managed by BlackRock. ... In 2018, in response to the index fund boom, Harvard Law School professor John Coates warned that voting power would be controlled by a small group of people with “practical power over the majority of U.S. public companies.”

  • The Autopilot Economy

    April 5, 2021

    The stock market has had quite a year. Plenty of cash is sloshing around, the pandemic recession notwithstanding, thanks to loose monetary policy, rampant inequality, crypto-speculation, and helicopter drops of cash...Indexing has also gone small, very small. Although many financial institutions offer index funds to their clients, the Big Three control 80 or 90 percent of the market. The Harvard Law professor John Coates has argued that in the near future, just 12 management professionals—meaning a dozen people, not a dozen management committees or firms, mind you—will likely have “practical power over the majority of U.S. public companies.” ... As John Coates, the Harvard professor, notes: “For the most valuable public company in the world, three individuals can in principle swing the vote of 17 percent of its shares. Generally, a significant fraction of shareholders do not vote, even if in contested battles. As a result, the 17 percent actually represents more like 25 percent or more of the likely votes in contested votes. That share of the vote will generally be pivotal.” In fact, the Big Three cast roughly 25 percent of the votes in S+P 500 companies.

  • The White House after a heavy snowfall

    More Harvard Law faculty and alumni tapped to serve in the Biden administration

    February 19, 2021

    Since President Joe Biden took office in January, dozens of Harvard Law community members, including faculty and alumni, have been tapped to serve in high-profile positions in his administration

  • Facebook’s Supreme Court Takes a Case

    January 25, 2021

    We talk occasionally about the theory that BlackRock Inc. rules the world. Not BlackRock per se, exactly, but there is a small group of gigantic investment managers who are the biggest shareholders in most public companies, and who, at some level, get to tell those companies what to do. The people who run those investment managers—people like Larry Fink of BlackRock—have disproportionate power over the world. If they decide that corporations should not have staggered boards, corporations will not have staggered boards. If they decided that climate change is a pressing problem and companies need to address it, companies have to at least consider addressing it...Back in 2018, John Coates of Harvard Law School wrote a paper about this stuff called “The Future of Corporate Governance Part I: The Problem of Twelve.” One thing I like about this paper is the name: The issue, to Coates, is not something narrow like “do industries with more common ownership raise prices,” but the much broader “what should we think about the fact that a dozen people will soon control all the companies?” Another thing I like is Coates’s brief suggestion that these big funds could look to administrative law as a way to legitimate and regulate their power. (“One inspiration may be administrative law, which has to grapple with similar problems of legitimacy and accountability for agents of the state,” he writes.)

  • A Sign the ESG Movement Is Too Big to Ignore: There’s Backlash

    January 4, 2021

    The legal principle that corporate boards must focus exclusively on maximizing value for shareholders wasn’t always taken for granted. It was enshrined in a 1919 court decision involving Henry Ford and two of his car company’s shareholders, the Dodge brothers. As chairman and majority owner of Ford Motor Co., he had repeatedly raised his workers’ pay, cut the price of the Model T, and reinvested profits in expansion. If Ford were around today his stance might be applauded by the environmental, social, and governance (ESG) movement on Wall Street...For a century there’s been a struggle between advocates of shareholder primacy and those who say corporations should take into account other priorities, particularly environmental, social, and governance issues. As ESG has gained prominence it’s generated a quiet backlash...But the power of big holders and the proxy advisory firms that help them decide how to vote their shares rubs some people the wrong way. “A small number of unelected agents, operating largely behind closed doors, are increasingly important to the lives of millions who barely know of the existence much less the identity or inclinations of those agents,” Harvard Law School professor John Coates wrote in a 2018 paper.

  • The Asset Manager Arms Race Has Only Just Begun

    January 4, 2021

    For years, the asset-management industry has braced itself for shocks. In 2018, $369 billion poured out of long-term mutual funds in favor of exchange-traded funds, a record at the time. In 2019, the case for traditional actively managed mutual funds became even harder to make when Charles Schwab Corp. jump-started a race to the bottom among online brokerages by eliminating commissions for ETFs along with U.S. stocks and options. If those were tremors, 2020 will go down in history as an earthquake. Even before Covid-19 roiled global markets and brought the Robinhood crowd and Dave Portnoy of Barstool Sports into the Wall Street zeitgeist, there were already signs of seismic change...If the same dozen people control every public company — Harvard professor John Coates calls it “The Problem of Twelve” — what does it mean? Should someone do something? Should those people be required to … explain their votes? Not vote their shares? Vote in a specific way? Ask their ultimate investors how to vote? Have some other formalized rules for how they vote? They have accrued all this power, sort of by accident; should there be rules for how they exercise it? Or is this just how the market works and everything is fine? There aren’t any clear answers.

  • New SEC chair needs to tackle these 5 big issues so the government can do a better job for investors

    December 17, 2020

    An op-ed by John Coates and Robert Pozen: While the commissioners agreed unanimously on many technical and enforcement issues, policy votes divided on party lines. In 2020, more than half of final rule-makings were partisan affairs with dissents from Democratic commissioners. Partisan politics is part of Washington, D.C. Yet now a window is open for a restart if Joe Biden appoints a diplomatically minded SEC chair who can build a strong consensus among the four other commissioners. Balanced rulemaking can deepen the SEC’s legitimacy, improve staff morale and enhance its ability to resolve difficult problems. Here are five issues for a consensus agenda set by the new Chair: 1. Open private securities markets intelligently: The SEC has long allowed only sophisticated investors to buy private securities, because these securities have minimal liquidity and private issuers provide investors with little information about the risks involved. In the past few years, the Commission seems to have bought the argument that the average Joe should be able to invest in the next Google before it went public. But most startups fail, and successes go through multiple rounds of complicated funding that are difficult to evaluate. The main guards against the dangers of alluring speculation in private securities have been quantitative requirements for “accredited” investors — $200,000 in annual income or $1 million in net worth.

  • The First Amendment in the age of disinformation.

    October 20, 2020

    This summer, a bipartisan group of about a hundred academics, journalists, pollsters, former government officials and former campaign staff members convened for an initiative called the Transition Integrity Project. By video conference, they met to game out hypothetical threats to the November election and a peaceful transfer of power if the Democratic candidate, former Vice President Joe Biden, were to win...The idea was to test the machinery of American democracy...Along with disinformation campaigns, there is the separate problem of “troll armies” — a flood of commenters, often propelled by bots — that “aim to discredit or to destroy the reputation of disfavored speakers and to discourage them from speaking again,” Jack Goldsmith, a conservative law professor at Harvard, writes in an essay in “The Perilous Public Square,” a book edited by David E. Pozen that was published this year. This tactic, too, may be directed by those in power...Concerns about the harm of unfettered speech have flared on the left in the United States since the 1970s. In that decade, some feminists, led by the legal scholar Catharine A. MacKinnon and the activist Andrea Dworkin, fought to limit access to pornography, which they viewed as a form of subordination and a violation of women’s civil rights. In the 1980s and ’90s, scholars developing critical race theory, which examines the role of law in maintaining race-based divisions of power, called for a reading of the First Amendment that recognized racist hate speech as an injury that courts could redress...The Supreme Court has also taken the First Amendment in another direction that had nothing to do with individual rights, moving from preserving a person’s freedom to dissent to entrenching the power of wealthy interests. In the 1970s, the court started protecting corporate campaign spending alongside individual donations. Legally speaking, corporate spending on speech that was related to elections was akin to the shouting of protesters. This was a “radical break with the history and traditions of U.S. law,” the Harvard law professor John Coates wrote in a 2015 article published by the University of Minnesota Law School. Over time, the shift helped to fundamentally alter the world of politics.

  • Is M&A Work Steady When Markets Are Up and the Economy Is Down?

    August 28, 2020

    Two primary drivers for deal activity, company market valuations and overall economic conditions, are diverging more than ever. That’s creating opportunities for both law firms and their corporate clients—and challenges for others. M+A lawyers are increasingly talking about “the winner and the losers” in the market. That’s reinforcing the need for law firms to have a diversified range of clients, including clients that are more resilient and buoyant in today’s economy, some observers say. Brian Richards, chair of Paul Hastings’ global private equity practice, said deal flow in his practice has seen an increase in August, which he said is normally a down time for deals...During the initial phases of the pandemic, the U.S. economy and the markets took a unified downturn, effectively halting large deals and providing a level of uncertainty that put even smaller deals on hold. But the stock market has rebounded, and with authority...The economy, on the other hand, has not fared near as well...John Coates, a professor of law and economics at Harvard Law School, said most law firms are probably not in a terrible spot. “As a general matter, compared to say most professional services industries, the legal services for M+A work is very fragmented,” Coates said. “Individual firms don’t tend to have a significant share of overall M+A work, so one firm isn’t necessarily being hit harder than another.” Firms that have specialized their M+A work around industries hit hard by the pandemic, like real estate or hospitality, he said, could end up in that loser bin for the time being, but most firms are geared to handle that impact as well. “Well-run firms pay attention to not letting any one client generate a large percentage of their revenues, and there aren’t too many firms that are too dependent on that,” he said. “Regardless of how the market and the economy affect companies, law firms are normally sufficiently diversified.”

  • Trump has no right to demand money from Microsoft-TikTok deal

    August 5, 2020

    President Donald Trump’s attempt to force Chinese company ByteDance to divest the U.S. version of its popular TikTok social-media app has some precedent. But the rest of the bizarre corporate drama that has recently played out in two Washingtons is not based in reality, especially the president’s demand for a cut of any deal in which Microsoft Corp. acquires TikTok. Trump said Monday he was ready to approve a deal for Microsoft MSFT, -0.01% to purchase TikTok — a change in his stance since Friday’s opposition — but only if the U.S. government receives a lot of money in exchange. On Sunday, Trump had a phone conversation with Microsoft Chief Executive Satya Nadella, in which he told the CEO that a “very substantial portion of the price [for TikTok] is going to have to come into the Treasury of the United States, because we’re making it possible for this deal to happen,” Trump said Monday...The fact that Trump seems to think that the U.S. government is acting as an investment banker in this possible match-up is a new level of delusion. Finder’s fees may be a core component of how real estate works, but not the federal government. “There is zero legal authority for the president to extort money from a company seeking to clear a deal under the laws creating CFIUS,” John Coates, a professor of law at Harvard University, said in an email. “Congress has never authorized an executive branch official, or any agency, to condition regulatory approval or clearance on the payment of the ‘cut’ of a deal, a ‘finder’s fee,’ or a bribe. The fact that the money might in theory go into the U.S. Treasury does not make it legal. Congress, and only Congress, can authorize taxes, through legislation.”

  • With no leader, commission overseeing virus relief struggles

    May 20, 2020

    Seven weeks after Congress unleashed more than $2 trillion to deal with the coronavirus crisis, an oversight commission intended to keep track of how the money is spent remains without a leader. Four of the five members of the Congressional Oversight Commission have been appointed, but House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Mitch McConnell, R-Ky., have not agreed on a chair, leaving the commission rudderless as the federal government pumps unprecedented sums into the economy. Without a leader, the panel’s remaining members can still do some oversight work, but cannot hire staff or set up office space. The four members have not met as a group since the economic rescue law was passed by Congress and signed by President Donald Trump in late March. “If the commission is not functioning — which it is not — then there is no oversight” on a huge part of the economic rescue law, said John Coates, a professor of law and economics at Harvard Law School. So far, “it’s a non-oversight, oversight commission,″ added Kimberly Wehle, a visiting professor at American University Law School. Lawmakers trying to oversee the spending law “are surging down the rapids without a raft,″ she said. Congress created the panel to watch over $500 billion in lending to distressed industries backed by the Treasury Department and Federal Reserve. The Fed has said the money can be leveraged to offer more than $2 trillion in loans to U.S. companies.

  • With No Leader, Commission Overseeing Virus Relief Struggles

    May 18, 2020

    Seven weeks after Congress unleashed more than $2 trillion to deal with the coronavirus crisis, an oversight commission intended to keep track of how the money is spent remains without a leader. Four of the five members of the Congressional Oversight Commission have been appointed, but House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Mitch McConnell, R-Ky., have not agreed on a chair, leaving the commission rudderless as the federal government pumps unprecedented sums into the economy. Without a leader, the panel's remaining members can still do some oversight work, but cannot hire staff or set up office space. The four members have not met as a group since the economic rescue law was passed by Congress and signed by President Donald Trump in late March. “If the commission is not functioning — which it is not — then there is no oversight” on a huge part of the economic rescue law, said John Coates, a professor of law and economics at Harvard Law School.

  • Cartoon of a hand holding up a white flag

    Easing the economic aftermath of a global pandemic

    April 28, 2020

    Mark Roe and John Coates recently spoke with Harvard Law Today about what could be done to lower the chances of a U.S. bankruptcy backlog and how other corporate governance challenges posed by the pandemic should be handled.

  • John ‘Jack’ Cogan Jr. ’52 (1926-2020)

    January 29, 2020

    John F. Cogan, Jr. ’52, a legal leader, civic activist and dedicated supporter of Harvard Law School, has died. He was 93.

  • SEC investor group seeks rework on 2 proposals

    January 27, 2020

    The SEC should rethink proposed rules that impose new requirements on proxy advisory firms and raise thresholds for submitting shareholder proposals, members of the agency's investor advisory committee said Friday. A divided committee voted 10-to-5 to support a recommendation of the group's investor-as-owner subcommittee that SEC officials rework the two proposals and in the meantime address more pressing issues such as "proxy-plumbing" reforms, including ways to correctly count votes and universal proxies...Committee members supporting the recommendation also would like to see the SEC consider "reasonable alternatives" to address the issues raised, including ways to correct errors made by proxy advisers and adjustments to shareholder proposal thresholds. "We do believe the commission could improve conflict of interest disclosure for proxy advisers. Right now, they simply haven't laid out (the case)," said John Coates, John F. Cogan Jr., professor of law and economics at Harvard Law School and research director of the Center on the Legal Profession. In addition to making proxy plumbing a higher priority, the committee recommended that SEC officials "do a better job of analyzing the issues" that led to the two proposed rule- makings, including following SEC guidance on cost-benefit analysis. "The current draft proposals lack what we would like to see added as basic components, such as a statement of the market failure that is creating a need for regulation," Mr. Coates said during a committee telephone conference call.

  • Vanguard and the US financial system: too big to be healthy?

    January 13, 2020

    Malvern, Pennsylvania is the quintessential small-town America: verdant, quiet and lined with 19th-century streetlamps. But just outside the town lies the sprawling campus of Vanguard, a $6tn asset manager that is reshaping the sleepy town and the surrounding area. ... Yet concerns of increasingly concentrated corporate power are unlikely to go away. John Coates, a professor at Harvard Law School, points out that despite being a Vanguard fan there is a “governance risk” inherent in one company that may eventually control a big chunk of every major US company. “Then they become the focal point for everyone that is unhappy about how any of these companies are run. There’s a real political risk there,” he says. “It’s a dilemma: What do you do with immense success?”

  • The Hidden Dangers of the Great Index Fund Takeover

    January 10, 2020

    The potential impact of common ownership reaches beyond antitrust matters to questions about how companies are run. Index fund managers may follow passive investment strategies, but they don’t blindly choose stocks and sit back, says John Coates, a Harvard law professor. Fund companies have multiple tools to influence corporate behavior, such as developing preferred policies on executive compensation, carbon footprints, gender diversity, and other governance matters. They often do this in coordination with other industry leaders, Coates says. “A small number of unelected agents, operating largely behind closed doors, are increasingly important to the lives of millions who barely know of the existence much less the identity or inclinations of those agents,” Coates wrote in a widely cited 2018 paper. The agents, in this case, are the managers of fund companies—and the most important of those are the index giants...Lucian Bebchuk, a Harvard law professor, says index fund managers don’t have incentives to invest the time into actively supervising companies. That’s because any effort to increase the value of a company would also increase the value of the index, which in turn benefits every fund that tracks the index. As a result, the fund that pushes management can’t stand out from its peers and attract more money—yet it incurs higher stewardship costs. The concern is that such deference will “result in insufficient checks on corporate managers,” Bebchuk says. In a 2019 paper, he writes that the Big Three spent minuscule amounts on stewardship. According to Morningstar, Vanguard employed 21 people to do the work of corporate oversight at a cost, by Bebchuk’s estimate, of about $6.3 million—a drop in the bucket considering Vanguard’s trillions of dollars under management.

  • Shareholders, proxy advisers roiled by SEC

    November 11, 2019

    To the Republican members of the Securities and Exchange Commission, new rules for the shareholder proposal process and proxy advisers are simply a matter of achieving needed updates and ensuring efficient markets. Institutional investors see it quite differently, as a capitulation to corporate pressure in Washington at the expense of shareholder rights. ... The SEC should expect legal challenges, said John Coates, vice dean for finance and strategic initiatives at Harvard Law School. There is "almost no material evidence of errors (by proxy advisers) … there are differences of opinion. I really do think these rules are vulnerable to legal challenge. It's very likely they will not be sustained."

  • Fox News legal expert says Constitution’s impeachment process ‘intended to stop Trump’s reckless’ behavior

    October 3, 2019

    Fox News senior judicial analyst Andrew Napolitano slammed Donald Trump's "allusions to violence" and reference to a "civil war," arguing that the president's actions toward Ukraine constituted "impeachable behavior." "The president's allusions to violence are palpably dangerous. They will give cover to crazies who crave violence, as other intemperate words of his have done," Napolitano warned in an op-ed published by Fox News on Thursday. He pointed out that "bounties" have already been offered for information that could lead to identifying the anonymous whistleblower at the center of the Ukraine scandal. ... Harvard Law professor John Coates argued that Trump's tweet was grounds for impeachment on its own. "This tweet is itself an independent basis for impeachment - a sitting president threatening civil war if Congress exercises its constitutionally authorized power," he posted to Twitter.

  • Donald Trump is ‘threat to national security’ and ‘integrity of our elections,’ says constitutional law professor

    October 2, 2019

    As the Ukraine controversy continues to unfold, one constitutional law professor has asserted that President Donald Trump is a "threat to national security" and puts the country at risk every day he is in the Oval Office .... The president has slammed the impeachment inquiry as a "Democratic witch hunt." In one tweet, Trump quoted an evangelical pastor who compared removing the president to initiate a "civil war." Harvard Law professor John Coates argued that Trump's tweet itself was actually grounds for impeachment.

  • Trump’s ‘Civil War’ Tweet May Be Grounds For Impeachment: Harvard Law Professor

    October 1, 2019

    It could also be grounds for impeachment, according to Harvard Law professor John Coates, who responded to the president’s tweet with a little bit of constitutional law. "This tweet is itself an independent basis for impeachment - a sitting president threatening civil war if Congress exercises its constitutionally authorized power." So far, no congressional lawmakers have commented publicly over whether Coates’ legal opinion is a path worth pursuing. But fellow Harvard Law faculty member Laurence Tribe did support the idea in theory ― though he suggested it may not be practical. I agree with @jciv here, though this is far from the strongest ground for impeachment because it’s much too easy to dismiss as typical Trumpian bloviating, not to be taken seriously OR literally.

  • Trump’s ‘Civil War’ quote tweet is actually grounds for impeachment, says Harvard Law Professor

    September 30, 2019

    President Donald Trump's recent tweet quoting a longtime evangelical pastor who warned of a "Civil War" if Democrats seriously pursue removing him from office could actually be grounds for impeachment, one Harvard Law professor said. "If the Democrats are successful in removing the President from office (which they will never be), it will cause a Civil War like fracture in this Nation from which our Country will never heal," Trump tweeted on Sunday night. ... The president's tweet was immediately met with backlash, and Harvard Law professor John Coates argued that the social media post itself is an "independent basis" for lawmakers to remove him from the White House. "This tweet is itself an independent basis for impeachment - a sitting president threatening civil war if Congress exercises its constitutionally authorized power," Coates wrote on Twitter on Monday.

  • Classroom of students

    JET-Powered Learning

    August 21, 2019

    1L January Experiential Term courses focus on skills-building, collaboration and self-reflection

  • Can Cravath and Wachtell’s Lean Lockstep Approach Keep Them on Top?

    April 23, 2019

    Global M&A deal volume reached nearly $4 trillion in 2018—a hot year for the most lucrative practice at elite law firms. For two of those firms, Wachtell, Lipton, Rosen & Katz and Cravath, Swaine & Moore, the boom pushed profits per equity partner to new heights—$6.53 million at Wachtell and $4.62 million at Cravath. ... Wachtell has previously considered other locations, including London. It had a small office in Chicago, but closed it about two decades ago, according to John Coates, a former Wachtell partner who teaches corporate law and M&A at Harvard Law School. ... Coates, at Harvard, says he sometimes poses a question to law firm partners who attend his seminars: If their own firm had a conflict on a client matter and had to refer it to a global firm or Wachtell, which would they choose? “They always pick Wachtell,” he says, because they believe the firm won’t try to take the whole client relationship.

  • Analysis: Shutdown & New Legal Bulletin Shape 2019 Proxy Season

    April 18, 2019

    The 2019 proxy season is well underway, and it will be a memorable one for many reasons. Initially, the government shutdown stalled the staff’s review process by closing the Division of Corporation Finance for most of January, thereby putting some issuers at risk of acting on proxy matters without definitive guidance. Issuers must also deal with a new staff legal bulletin that adds complexity, requiring board input on two common exclusionary bases. ... Roundtable participants from both the issuer and investment communities agreed that the proxy system faces several structural problems. As Professor John Coates of Harvard Law School said at the roundtable, “there’s room for improvement; no one, I think, has ever said publicly that they would create the system that we have today if they were doing it from scratch.”

  • HLS faculty maintain top position in SSRN citation rankings 2

    HLS faculty maintain top position in SSRN citation rankings

    January 18, 2019

    Statistics released by the Social Science Research Network (SSRN) indicate that, as of the end of 2018, Harvard Law School faculty members have continued to feature prominently on SSRN’s list of the 100 most-cited law professors.

  • Your love of index funds is terrible for our economy

    December 12, 2018

    Vanguard’s John Bogle didn’t know it at the time, but when he created the first index fund in 1975 he unleashed a monster. Stock index funds have grown so popular that they now command $4.6 trillion in assets. That might seem like a good thing. After all, index funds have “democratized” investing and simplified the process for the average person. But the truth is that index funds have gotten so big that they now pose a major risk to our economy — and even to capitalism itself. Here are three reasons why. ... Harvard Law School professor John Coates likes to say that index funds create “social benefits” in the form of lower expenses. That’s true, but it is only captures a piece of the picture.

  • Stock Market Distress Signal: How Low-Cost Index Funds Are Taking Over

    December 12, 2018

    Sounding the alarm on index funds. How their runaway success has reshaped power and accountability in boardrooms and on Wall Street. Guests: John Coates, professor of law and economics at Harvard Law School where he teaches corporate governance, mergers and acquisitions and finance. Member of the Investor Advisory Committee of the Securities and Exchanges Commission.

  • Your love of index funds is terrible for our economy

    December 11, 2018

    Stock index funds have grown so popular that they now command $4.6 trillion in assets. That might seem like a good thing. After all, index funds have “democratized” investing and simplified the process for the average person. But the truth is that index funds have gotten so big that they now pose a major risk to our economy — and even to capitalism itself. ... Harvard Law School professor John Coates likes to say that index funds create “social benefits” in the form of lower expenses. That’s true, but it is only captures a piece of the picture.Because even when active managers underperform as they charge higher fees than index funds, they are still adding lots of value in our economic system.

  • Bogle Sounds a Warning on Index Funds

    November 29, 2018

    ...My concerns are shared by many academic observers. In a draft paper released in September, Prof. John C. Coates of Harvard Law School wrote that indexing is reshaping corporate governance, and warned that we are tipping toward a point where the voting power will be “controlled by a small number of individuals” who can exercise “practical power over the majority of U.S. public companies.” Professor Coates does not like what he sees, and offers tentative policy options—some necessary, often painful to contemplate. His conclusion—“The issue is not likely to go away”—is unarguable.

  • Does Delaware law preclude mandatory arbitration of federal securities claims?

    November 29, 2018

    The debate over corporations imposing arbitration on shareholders through corporate charters and bylaws is still mostly in the realm of theory and academic furor. The Securities and Exchange Commission, as you know, is contemplating the issue, though SEC Chair Jay Clayton has said he’s in no rush to decide whether the commission will end its longtime policy of squelching proposed mandatory arbitration provisions for companies going public...In the new paper, the securities law professors – including, among other luminaries, John Coffee of Columbia, Lucian Bebchuk and John Coates of Harvard, Ann Lipton of Tulane, James Cox of Duke and Donald Langevoort of Georgetown - contend that federal securities claims are outside the scope of corporate charters and bylaws governed by Delaware law. Corporations can’t impose mandatory arbitration of federal securities claims through charters and bylaws, according to the profs’ argument, because compacts between corporations and shareholders are limited to state law governance issues, not disputes under federal securities law.

  • How passive fund managers can shape the corporate landscape

    October 23, 2018

    ...In a recent draft paper from which I have taken these numbers, John C Coates of Harvard Law School points out that the big three’s share of any contested vote now tends to be pivotal and that on current trends, even if growth starts to taper off, a majority of the 1,000 largest US companies will be controlled, in effect, by a dozen or fewer people over the next 10 to 20 years. This leads to what he calls the Problem of Twelve, his paper’s title, whereby ownership rights, including the critical right to elect directors, will be in the hands of this tiny group. Even if the growth in passive investing fails to follow the trajectory outlined by Mr Coates, it is clear that there is already a striking concentration of power.

  • The MAC wall has been breached! Should deal lawyers worry?

    October 3, 2018

    In a landmark 247-page opinion issued Monday, Vice Chancellor Travis Laster of Delaware Chancery Court concluded that the German healthcare company Fresenius can walk away from its $4.75 billion deal to acquire the U.S. generic drugmaker Akorn because Akorn’s business experienced a material adverse effect after the agreement was signed...I asked three law profs – Brian Quinn of Boston College, John Coates of Harvard and Albert Choi of the University of Virginia - for their early thoughts on the implications of Vice Chancellor Laster’s decision.

  • Indexed Investments and “The Problem of Twelve”

    September 17, 2018

    John Coates has a thoughtful paper on the legal and economic challenges of “the problem of twelve,” the prospect of a majority of shares in public companies being managed by just twelve entities, in effect twelve people. "[T]he rise of indexing presents a sharp, general, political challenge to corporate law. The prospect of twelve people even potentially controlling most of the economy poses a legitimacy and accountability issue of the first order – one might even call it a small “c” constitutional challenge."

  • The Crisis Was in the System

    September 17, 2018

    ...Here is a recent paper by John Coates of Harvard Law School with the imposing title “The Future of Corporate Governance Part I: The Problem of Twelve.” The “problem of twelve” is his name for “the likelihood that in the near future roughly twelve individuals will have practical power over the majority of U.S. public companies”: We are rapidly moving into a world in which the bulk of equity capital of large companies with dispersed ownership will be owned by a small number of institutions.

  • First Crack at Musk Could Give Top Tesla Funds an Edge

    August 21, 2018

    Information about Elon Musk's efforts to take Tesla Inc private is scarce. But some small investors wonder if top funds have an edge...Harvard Law School professor John Coates said U.S. Securities and Exchange Commission rules on fair disclosure allow the selective sharing of some details if recipients agree not to trade until what they are told becomes public. But it is hard to know how those limits might play out for Musk's outreach. "With Tesla however nothing normal is normal. So who knows," Coates said via email.

  • Musk’s plan to take Tesla private and allow outside shareholders is not an easy path

    August 13, 2018

    Going private is not as easy as it looks, especially if you go down a path proposed by the mercurial Elon Musk, founder and largest shareholder of Tesla Inc...John Coates, a professor of law and economics at Harvard Law School, told MarketWatch in an email, “I know of no legal way to offer public shareholders of a listed company an equity security while also going private. I also know of no legal way to offer $X billion worth securities of any kind to more than 35 unaccredited investors without registering with the SEC.”

  • A Promise Elon Musk And Tesla Can’t Break

    August 13, 2018

    It's no secret Elon Musk and Tesla have been afforded considerable leeway by their loyal following of shareholders...Generally, it is 'qualified' or 'accredited' investors who have the ability to own stock in private companies, or buyouts. "I know of no legal way to offer public shareholders of a listed company an equity security while also going private," says John Coates, an expert in mergers and transactions at Harvard Law School. He adds by email to Forbes, "I also know of no legal way to offer $X billion worth securities of any kind to more than 35 unaccredited investors, without registering the offering with the SEC."

  • Did Elon Musk Violate Securities Laws With Tweet About Taking Tesla Private?

    August 8, 2018

    ...It is illegal for a director or officer of a public company “to knowingly or recklessly make material misstatements about that company,” said John Coates, a professor at Harvard Law School who teaches mergers and acquisitions. Mr. Musk’s “tweets seem cryptic at best, and it is hard to see how he has complied with his duty to not be misleadingly incomplete.”

  • The Purpose of the Corporation Isn’t Lobbying

    June 13, 2018

    ...But since the late 1970s, despite a “Reagan revolution” inspired in part by Friedman, the scope of the U.S. government has arguably increased, while business’s influence over it has surely grown. The academic study of this influence has over the years focused largely on campaign donations and lobbying expenditures, and it has not come to particularly strong conclusions. But some of the most dramatic examples of increased corporate sway aren’t directly linked to such spending. The U.S. Supreme Court, for example, has since the 1970s used a novel interpretation of the First Amendment to assert ever-stronger protections for business, as John Coates of Harvard Law School described in an impassioned 2015 essay.