A paper co-written by Professor Joseph Grundfest is cited in this Securities Law Daily – BNA article on Harvard’s Shareholder Rights’ Project and whether it may be violating SEC rules. 

A Dec. 10 paper by SEC Commissioner Daniel M. Gallagher and former Commissioner Joseph A. Grundfest suggests that Harvard University may be liable for violating SEC Rule 14a-9, for including false and misleading statements in proxy soliciting materials.

The paper, “Did Harvard Violate Federal Securities Law? The Campaign Against Classified Board of Directors,” claims that the Harvard Shareholder Rights Project has played a “central role” in the campaign to de-stagger corporate boards of directors. Accordingly, Harvard SRP has used the shareholder proposal mechanism on more than 120 occasions to pressure boards to declassify.

The paper found that the Harvard proposals have relied heavily on empirical research that portrays staggering boards as categorically detrimental to shareholder interests, but make no mention of recent empirical research that directly contradicts that position. According to Gallagher and Grundfest, who now teaches at Stanford Law’s Rock Center for Corporate Governance, this could be considered a material omission that violates Securities and Exchange Commission Rule 14a-9.

…

Gallagher and Grundfest cite two distinct reasons why the description of this literature could be viewed as materially false and misleading.

First, the empirical research is “severely incomplete” and can be criticized “as cherry picking the literature in order to generate the false and misleading impression that the data supporting its position are far stronger than is in fact the case.”

And second, “[t]he Harvard Proposal’s categorical nature is … a further and independent cause for concern that it is materially false and misleading.”