Why It is Unconstitutional for State Bars, When Doling out Bar-Exam Seats, to Favor In-State Law Schools

VIKRAM DAVID AMAR

Illinois law dean Vikram David Amar explains why it is unconstitutional for state bars to favor in-state law schools when deciding who may sit for the state bar exam while complying with social distancing requirements, based on the Supreme Court’s precedents on the dormant Commerce Clause.

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Rubenstein v. International Value Advisers, LLC

Docket: 19-560

Opinion Date: May 20, 2020

Judge: Barrington D. Parker

Areas of Law: Securities Law

The Second Circuit affirmed the district court's dismissal of plaintiff's complaint under Section 16(b) of the Securities Exchange Act for failure to state a claim. In this case, plaintiff alleged that John Doe was a member of a group with the IVA defendants and IVA's other clients, and that John Doe's investment management agreement with IVA qualified as an agreement to trade in the securities of an issuer under Section 13(d). Plaintiff further theorized that the IVA defendants’ filing of a Schedule 13D automatically caused John Doe to become a member of a group by "silent acquiescence." The court held that an investment management agreement delegating discretionary investment authority to an investment advisor is not an agreement to trade in the securities of an issuer and, therefore, is not a standalone basis for membership in an insider group. The court also held that such an investment advisor's client does not become an insider group member simply because the advisor has filed a Schedule 13D or deputized a director on an issuer's board. Therefore, the court concluded that clients who have not entered an issuer-specific trading agreement are not liable for disgorgement of short-swing profits solely by virtue of their investment advisor's insider status.