Executive Trade Secrets

The law discriminates among a corporation's secrets. In the eyes of the law, commercial secrets of corporations are legitimate secrets that deserve legal protection and nondisclosure, but personal secrets of executives are not as deserving of legal protection and nondisclosure. This divergent treatment of secrets has resulted in a legal landscape of perplexing, paradoxical paths for corporations and executives concerning executive disclosures--a precarious landscape that has left corporations and investors dangerously susceptible to revelations of private facts that shock market valuation and institutional stability. This Article explores this divergent treatment of secrets in the context of public corporations and the private individuals who manage them, and offers a new way of thinking about corporate and personal secrets. This Article conceives the concept of Executive Trade Secrets as a pragmatic theoretical framework for unlocking this paradox of secrets and addressing the challenges surrounding executive disclosures. This Article is the first to use trade secrets law to address the interdisciplinary legal issues surrounding executive disclosures. It re-conceptualizes private matters of executives as legally protectable trade secrets by unfolding the hidden symmetry between commercial secrets and personal secrets. It reveals Executive Trade Secrets as faithful to the first principles of the laws of trade secrets, privacy, securities, and corporations, and explains how such fidelity protects the privacy interests of executives and the corporate interests of shareholders. This Article, ultimately, constructs a way to think anew about executive disclosures and the larger issues at the modern nexus of secrecy, privacy, and commerce. INTRODUCTION I. PUBLIC FIRMS AND PRIVATE MANAGERS A. The Disclosure Obligations of Public Firms B. Disclosure Obligations Relating to Executives C. The Rise of Executives/The Fall of Executive Privacy II. LEGAL TENSIONS & INCONSISTENT PRACTICES A. Tensions Under Federal Securities Law B. Tensions Under Corporate Law 1. Duty of Care 2. Duty of Loyalty C. Tensions Under Privacy Laws D. Inconsistent Practices III. INTRODUCTION TO TRADE SECRETS IV. THE EXECUTIVE TRADE SECRETS FRAMEWORK A. An Introduction to Executive Trade Secrets B. Fidelity to Laws Concerning Executive Disclosures C. Executive Disclosures with Executive Trade Secrets D. A Political Analogy: Executive Privilege V. KEY IMPLICATIONS OF EXECUTIVE TRADE SECRETS A. A Shield to Protect or a Shield to Hide? B. Better Executive Pools & More Public Firms C. The (Further) Commoditization of Personal Privacy CONCLUSION INTRODUCTION Secrets pose vexing problems for law and society. (1) The WikiLeaks scandal that unfolded in 2010 illustrates the difficulties concerning secrets in the Information Age. (2) Free societies and free markets generally require openness and transparency. (3) But individuals, states, and firms that inhabit and participate in those free societies and free markets often desire intimacy and secrecy. (4) To satisfy these divergent goals, the law discriminates among secrets--aiding some to hide in the dark, (5) while pushing others into the light. (6) In the context of public corporations, the law facilitates hiding business secrets but helps expose the secrets of business executives. (7) In the eyes of the law, commercial or trade secrets are legitimate secrets that deserve legal protection and nondisclosure (8) while personal secrets concerning private facts of executives are not as deserving of legal protection and nondisclosure. This discriminatory treatment of secrets has resulted in a muddled legal landscape of paradoxical paths concerning executive disclosures of private information--diminishing privacy protections for executives, weakening legal safeguards for investors, and leaving corporations and investors dangerously susceptible to revelations of private facts that shock market valuation and institutional stability. …