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The Untenable Case for Perpetual Dual-Class Stock

The desirability of a dual-class structure, which enables founders of public companies to retain a lock on control while holding a minority of the company’s equity capital, has long been the subject of a heated debate. This debate has focused on whether dual-class stock is an efficient capital structure that should be permitted at the time of initial public offering (“IPO”). By contrast, we focus on how the passage of time since the IPO can be expected to affect the efficiency of such a structure.

Our analysis demonstrates that the potential advantages of dual-class structures (such as those resulting from founders’ superior leadership skills) tend to recede, and the potential costs tend to rise, as time passes from the IPO. Furthermore, we show that controllers have perverse incentives to retain dual-class structures even when those structures become inefficient over time. Accordingly, even those who believe that dual-class structures are in many cases efficient at the time of the IPO should recognize the substantial risk that their efficiency may decline and disappear over time. Going forward, the debate should focus on the permissibility of finite-term dual-class structures¾that is, structures that sunset after a fixed period of time (such as ten or fifteen years) unless their extension is approved by shareholders unaffiliated with the controller.

We provide a framework for designing dual-class sunsets and address potential objections to their use. We also discuss the significant implications of our analysis for public officials, institutional investors, and researchers.

Targeting Detached Corporate Intermediaries in the Terrorist Supply Chain: Dial 2339/13224 for Assistance?

The United States has for decades faced persistent and evolving threats from highly agile and adaptable terrorist organizations. Recognizing the need for more robust domestic counterterrorism efforts in the early 1990s, the U.S. government has since made significant use of the legal system to disrupt inchoate plots and degrade terrorists’ support structures. Among the tools most heavily used on this front have been the material support statutes and the International Emergency Economic Powers Act (“IEEPA”), which aim to deprive terrorists of necessary resources by targeting those who support or do business with them. Though used against hundreds of individuals to date, there has been a dearth of organizational prosecutions in this realm. Recognizing the crucial facilitating role corporate actors often play, the Department of Justice (“DOJ”) has long targeted neutral intermediaries to get at underlying crime, from tax evasion to drug trafficking. Recent cases suggest the DOJ is increasingly comfortable pursuing entities that do business with bad actors, including through novel applications of existing laws.

This Note argues that the material support statutes and IEEPA can and should be applied against corporate actors that do business with terrorists, as a means of both disrupting the terrorist “supply chain” and incentivizing greater private sector cooperation. Examining in particular the potential for prosecution of social media and content-hosting companies, encrypted messaging providers, and nontraditional financial intermediaries exploited by terrorists, this Note argues that a credible and carefully wielded threat of terrorism-related charges would be an important addition to prosecutors’ toolkits where appeals to good corporate citizenship fall flat. An effective all-tools counterterrorism strategy requires imagination and adaptation. This Note argues the material support statutes and IEEPA are tools that can be brought to bear against those that play the role of willing supporter or are otherwise indifferent to the harm they facilitate.

Religion Is Special Enough

In ways almost beyond counting, our legal system treats religion differently, subjecting it both to certain protections and certain disabilities. Developing the specifics of those protections and disabilities, along with more general theories tying the specifics together and justifying them collectively, has long been the usual stuff of debate among courts and commentators.

Those debates still continue. But in recent years, increasingly people have asked a slightly different question—whether religion should be singled out for special treatment at all, in any context, for any purpose. Across the board, but especially in the context of religious exemptions from generally applicable laws, many have come to doubt religion’s distinctiveness. And traditional defenses of religion’s distinctiveness have been rejected as unpersuasive or religiously partisan.

This Article offers a defense of our legal tradition and its special treatment of religion. Religious freedom can be justified on religion-neutral grounds; it serves the same kinds of values as other rights (like freedom of speech). And while religion as a category may not perfectly correspond to the underlying values that religious freedom serves, that kind of mismatch happens commonly with other rights and is probably inevitable. Ultimately, religious liberty makes sense as one important liberty within the pantheon of human freedoms. Religion may not be uniquely special, but it is special enough.

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