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I am Justice Samuel Alito

At least, according to this flowchart. (HT: Olson)

The Non-Expert Agency: Using the SEC to Regulate Partisan Politics

Given these important First Amendment concerns, and wary of creating the actuality or appearance of partisan advantage, Congress has entrusted interpretation and enforcement of the campaign finance laws to the Federal Election Commission (FEC). This agency is unique in a number of ways. Perhaps most fundamentally, it includes six commissioners evenly divided between the two major parties. Furthermore, having been the defendant in many of the most important First Amendment lawsuits of the past 40 years, it has considerable expertise in dealing with the intricate intersection of campaign finance regulation and constitutional liberties.

Nevertheless, believing that the FEC’s bipartisan composition has frustrated a drive toward more intrusive regulation of political speech, many prominent voices on the political left have attempted to bypass the FEC in the area of campaign finance regulation. This has included calls for rulemaking or enforcement by the Internal Revenue Service (IRS) and the Federal Communications Commission (FCC). Most recently, the Securities and Exchange Commission (SEC) has been asked to require disclosure of corporate political spending, including payments to nonprofits and industry organizations, even where those payments would not be considered material under current and traditional securities laws.

While unaffiliated with the partisan debates surrounding campaign finance regulation, Professors Lucian Bebchuk and Robert Jackson have been at the fore of intellectual arguments urging the SEC to engage in regulation of this kind. This has included a petition for rulemaking submitted to the SEC on behalf of a number of prominent academics in August 2011, and a forthcoming defense of that petition, Shining Light on Corporate Political Spending, 101 Geo. L.J. 923 (2013).

In The Non-Expert Agency: Using the SEC to Regulate Partisan Politics, 3 Harv. Bus. L. Rev. __ (forthcoming 2013), we respond to a number of particular arguments advanced by Professors Bebchuk and Jackson. Equally important, we argue that whatever the theoretical merits of the position put forth by Professors Bebchuk and Jackson, the reality is that the current pressure on the SEC to adopt new compulsory disclosure laws is a direct result of a desire to use the SEC to regulate not just corporate governance or the world of investment and trading, but also campaign finance. As a result, we suggest that any rules adopted are likely to be ill-advised and co-opted for partisan purposes in the enforcement process.

via blogs.law.harvard.edu

It's a must read.

Jamie Dimon Crushes Challenge from Politicized Shareholder Activists

JP Morgan shareholders decisively rejected an effort by a highly politicized group of shareholder activists to divest CEO/Chairman of the Board Jamie Dimon of the latter title:

Jamie Dimon won more investor support this year than in 2012 to remain chairman, surviving a push to divide the roles after the biggest U.S. bank suffered a record trading loss.

The proposal to divide Dimon’s duties drew 32 percent of votes, down from 40 percent last year, the lender said today at its annual meeting in Tampa, Florida.

Matthew Yglesias pompously proclaims his ability to read the minds of thousands of shareholders, opining that:

Dimon was able to push back by deploying a highly effective tactic that just happens to illustrate precisely why he shouldn't hold both jobs: He threatened to quit.

He said that if he was forced to step down as chairman he would step down as CEO as well. And shareholders thought, not implausibly, that doing so would throw the firm into disarray and hurt its share price. So they stuck with Dimon.

In contrast, I have way of knowing for sure why thousands of disparate and anonymous shareholders voted the way they did. Lacking Yglesias' ESP, I'm limited to throwing out theories. For example, the shareholder activists who supported this effort to strip Dimon of his Chairman title likely were not interested in good governance. After all, who were the leaders of the effort? They were outfits like the American Federation of State, County & Municipal Employees (AFSCME) pension fund and the NY City pension funds. AFSCME, of course, is a major Democrat supporter and NYC Comptroller John Liu--who controls those funds--is himself a Democrat with aspirations for higher office. Jamie Dimon, of course, has famously earned liberal ire. As the WSJ opined recently:

For the sin of steering the bank through the disaster intact, the JP Morgan Chase chairman and CEO now finds himself the target of a political campaign to weaken his authority and shut him up. ...

Though a longtime Democrat, Mr. Dimon became a Beltway-union-media target by speaking out against Washington's regulatory frenzy in the wake of the 2010Dodd-Frank law. He has highlighted the costs of the myriad new rules emanating from the capital, such as the Volcker Rule, which is still unfinished three years on. As a rare CEO of a big bank who avoided the worst of the mortgage crisis, Mr. Dimon carries an influential voice, and one that many politicians would rather not hear.

Charles Gasparino likewise noted that the dump Dimon "effort is being pushed by union and public pension funds run by liberal politicians" and speculated that:

Despite some recent mishaps, including an errant trade that led to a $6 billion “London Whale” trading loss, investors still regard Dimon as America’s most capable banker. He famously steered Morgan clear of the excess that led to the 2008 banking collapses — and even with the Whale loss, it cranked out a record $21 billion in profits last year.

Yet not a day seems to go by without a strategically leaked story that JPMorgan is being investigated by some federal agency. In one account, a regulator told Dimon he’s losing credibility with people in Washington. Yes, the political dolts whose policies caused the 2008 crash are losing confidence in the one banker who steered clear of it.

But the bull’s-eye on Dimon is real. As a lifelong Democrat, his disdain for President Obama’s high taxes, massive government growth and over-regulation of businesses (particularly the big banks) was all the more powerful. ...

So maybe JP Morgan's shareholders figured there was no reason to toss Jamie Dimon under the bus just to make a bunch of Democrats and their union allies happy.

Just a theory.

Tweets re Jamie Dimon's Win

Shareholder activists took one on the chin today with Jamie Dimon's crushing victory. Some tweets on the subject I liked:

BREAKING: JPMorgan shareholders vote to keep Jamie Dimon as Chairman/CEO

— Bloomberg News (@BloombergNews) May 21, 2013

Barry Diller on Jamie Dimon: "This isn’t about good governance; it’s about busybodies without a clue” nyti.ms/10TZQH1

— Andrew Ross Sorkin (@andrewrsorkin) May 14, 2013

JPMorgan's Jamie Dimon gets backing from more shareholders this year than last on chairman/CEO voteon.wsj.com/10LL9KD

— David Wessel (@davidmwessel) May 21, 2013

Wham! Pow! Bang! Jamie Dimon Crushes Critics soa.li/IYCAZ7G

— John Carney (@carney) May 21, 2013

If Obama was CEO of a public corporation and I was the company's general counsel, would I have told him about an audit of misbehaving employees?

I think the answer is pretty clearly "yes." As I explain in The Complete Guide to Sarbanes-Oxley: Understanding How Sarbanes-Oxley Affects Your Business, a lawyer who “becomes aware of evidence of a material violation by the issuer or by any officer, director, employee, or agent of the issuer” is to report such evidence to the issuer’s chief executive officer for remedial action. In addition, as I also explain therein, Sarbanes-Oxley Act § 906 amended the federal criminal code to add a new provision requiring that each “periodic report” filed with the SEC be accompanied by a written certification from the CEO and CFO that the “periodic report . . . fully complies with” the relevant statutes and that the “information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the issuer.” In order to make that certification, a CEO would want to know whether his/her employees were being investigated for potentially serious misconduct. By analogy, Obama thus should have been told about the IRS scandal by his aides as soon as they were aware of it.

So why didn't Obama's staff tell him about the IRS' problems earlier? The WSJ is reporting that:

The IRS consulted Treasury in late April about its plans to pre-emptively apologize for its actions, and a flurry of conversations transpired that included White House Chief of Staff Denis McDonough and senior Treasury officials, Obama administration officials said Monday.

Two people kept out of the loop, according to administration officials, were President Barack Obama and Treasury Secretary Jacob Lew. Neither was consulted, administration officials said, because their staff wanted to ensure that it didn't appear they had interfered in any way in the process.

I find that argument utterly implausible. First, telling the POTUS about an investigation governmental misconduct in now way suggests that the President interfered with said investigation. Second, the President is not the only one who can interfere with an investigation. To the contrary, if you buy the logic of the "administration officials," it appears that they interfered with the process.

If Ken Lay had told Congress that his Enron subordinates had kept him out of the loop so that it wouldn't appear as though he had interfered with an investigation of the fraud, the Congressmen who adopted Sarbanes-Oxley--an act Obama has often praised--would have howled in derision. And rightly so. Obama should be held to no less a standard.

In short, the guy at whose desk the buck stops should not want to be kept out of the loop.

Do Bitcoin and other virtual currencies violate corporate law?

Keith Paul Bishop raises that interesting question:

The California General Corporation Law doesn’t define the word “money” but it does include a prohibition on its issuance.  Section 107 prohibits any corporation, flexible purpose corporation, association or individual from issuing or putting in circulation, as money, anything but the lawful money of the United States.  This prohibition apparently traces its roots to Article XII, Section 5 of the 1879 California Constitution.  (Article XII of the 1879 Constitution contained numerous provisions with respect to corporations.  In 1930, the voters approved the removal of several of these detailed provisions from the constitution and the following year they were included in California’s first general corporation law.)  I’d be very surprised if the draftsmen of this prohibition had dipt so far into the future so as to see the advent of virtual currencies.

Delaware General Corporation Law sec 126(a) contains a similar proscription: "No corporation organized under this chapter shall possess the power of issuing bills, notes, or other evidences of debt for circulation as money ...." Yet more legal problems for Bitcoin and its ilk.

Drip by drip, the IRS scandal gets worse

Even the MSM can't look away anymore:

There were new questions Saturday night concerning if anyone in the White House was aware of the IRS' targeting of conservative groups.

Inspector General Russell George said he informed a deputy at the Treasury Department in June of 2012 about the probe into the IRS.

The Treasury Department confirmed the timeline but said they did not know the details of the investigation until last week.

It's the first evidence that someone within the Obama administration knew about the practice during the presidential campaign.

via www.cbsnews.com

How much does a law professor make?

Above the Law continues its relentless march through the top state schools in the US News' ranking of law schools. It's previously reported on:

How Much Does Your Law Professor Make? Michigan Law Edition
How Much Does Your Law Professor Make? UVA Law Edition
How Much Does Your Law Professor Make? Berkeley Law Edition

Now it's the turn of the University of Texas, in a post that concludes:

Law professors at top schools like Texas certainly get plenty of love. How does professorial pay change as one goes down the law school hierarchy? We’ll find out in future installments of our law professor pay watch.

Considering that Texas was ranked # 15 in the US News latest rankings and UCLA was ranked 17th (with private law school Vanderbilt in the middle), I have the sinking feeling that we're next. Which prompts two thoughts: (1) It seems more than a tad unfair (at least from my perspective) that professors at private schools are exempt from this exercise and (2) the good folks at ATL ought to get directly to the issue of "How does professorial pay change as one goes down the law school hierarchy?" by skipping directly down to, say, #50 or so.

Commencement: Conservatives need not apply

Sadly, I missed this year's commencement at UCLA law school, due to a bad summer cold that had me sidelined for several days. If I had been able to attend, I would have had to sit through a commencement address by former Congresswoman Hilda Solis, who has been characterized by the On the Issues site as a " a Hard-Core Liberal."

Apparently, I would not have been alone in such a predicament. When I rose from my sick bed today, the Sunday LA Times included an oped by Kevin Hassett reporting that:

It's becoming increasingly apparent that conservative speakers aren't welcome on college and university campuses.

Last month, in the span of a few days, student protests disrupted a presentation by Karl Rove at the University of Massachusetts and one by Rand Paul at Howard University. That same week, formerBush administration official Robert Zoellick withdrew as a commencement speaker at Swarthmore College, while Obama critic Ben Carson did the same at Johns Hopkins.

Zoellick, a Swarthmore alumnus like me, pulled out after being attacked by students who said he'd helped instigate the Iraq war — a preposterous claim considering he was the U.S. trade representative at the time the conflict began.  ...

If Zoellick, a moderate gentleman with an impressive record promoting women's rights as president of the World Bank, can't speak on a college campus, no Republican can. Indeed, a look at the data suggests that is how things are trending. ...

To gauge how rare it is for a conservative to be invited to speak at a college graduation, I looked at commencement and other announced graduation event speakers for 2012 and 2013 from the top 100 universities and top 50 liberal arts colleges (according to the U.S. News & World Report rankings). ...

... All told, and including the data on political contributions, there were only three identifiably conservative speakers at the top 50 colleges and 12 at the top 100 universities, compared with a total of 69 identifiably liberal speakers.

I suspect the results would be no better if one looked at law school commencement speakers.

The false attribution fallacy, the Left, and Judge Richard Posner

From his review of Miarcia Coyle's new biography of SCOTUS CJ John Roberts, The Roberts Court: The Struggle for the Constitution, LA Times editor at large John Newton makes a classic liberal commentator's move; to wit, invoking statements by Judge Richard Posner as evidence of what conservatives think:

No area belies Roberts' assertions of judicial modesty more clearly than the court's new approach to guns. Under the leadership of Justice Antonin Scalia, the court in District of Columbia vs. Heller for the first time held that the 2nd Amendment protects an individual's right to bear a weapon rather than hinging that right on its relationship to a militia.

That may have been right as a matter of law — and the ruling has been broadly misinterpreted as prohibiting regulation of guns when, in fact, it specifically countenances restrictions on gun ownership — but it certainly was not an act of restraint. It overturned the District of Columbia government, relied on a shaky reading of history and ignored decades of prior court rulings.

Because of that, Heller has been roundly criticized — by conservatives. As federal judge Richard Posner said, "it is evidence that the Supreme Court, in deciding constitutional cases, exercises a freewheeling discretion strongly flavored with ideology." Posner compared the Heller decision to Roe vs. Wade.

So much for Roberts as umpire.

The great difficulty with this argument, of course, is that it is an example of the false attribution informal fallacy; to wit, an appeal "to an irrelevant, unqualified, unidentified, biased or fabricated source in support of an argument."

Judge Richard Posner has never been a conservative. I therefore once remarked that "Posner never was a conservative, so how can he become less of one?" Having said that, however, it does seem to me that Posner has shifted from his long held stance as a pragmatic classical liberal to a mushier mix that includes a substantial dose of East Coast elite modern liberal thinking.

So much for Posner as an authority on what it means to be a conservative.

Also, did you note the sleight of hand Newton makes elsewhere in the passage?

That may have been right as a matter of law ... but it ... relied on a shaky reading of history and ignored decades of prior court rulings.

I'm no fan of guns, but Heller was clearly correct. It rested on the now widely accepted view that the Second Amendment creates an individual right, a view that is attributable in part "to the work over the last 20 years of several leading liberal law professors." So how can something that was right on the law relt on shaky history?

Finally, it ill becomes Newton, the author of Justice for All: Earl Warren and the Nation He Made, to complain about judicial ruling that ignore "decades of prior court rulings." The Warren Court used to reverse long-settled precedent twice a morning before breakfast. "Under Chief Justice Earl Warren, the Court took an 'activist' role, deviating from precedent ...." 90 Cornell L. Rev. 419, 430. Indeed, even CJ Warren himself acknowledged that "Of course the rule of stare decisis is not and should not be an inexorable one. This is particularly true with reference to constitutional decisions involving determinations beyond the power of Congress to change...." James v. U.S., 366 U.S. 213, 233 (1961). 

So much for Newton as objective journalist.

Star Trek FB quip of the day

A FB friend quipped:

Repeal the Prime Directive! It's dumb, it continuously gets violated by captains who want to show they're renegades, and it's more nannyish than anything @MikeBloomberg came up with.

True that.

Western New England University School of Law's Got a VERY Interesting Commencement Speaker

The College Fix:

The woman in charge of the IRS division responsible for reviewing tax-exempt status applications and who is at the heart of an ongoing scandal over revelations the agency targeted conservative groups is set to receive an honorary tribute from Western New England University School of Law on Saturday.

Lois Lerner – director for the IRS Exempt Organization Division – isslated to deliver the school’s commencement address and be given the university’s “President’s Medallion.” ...

In the wake of revelations that her division zeroed in on and gave extra scrutiny to groups with “tea party” or “patriot” in their names, Lerner, 62, has been thrust into the national spotlight, dubbed by some as the “face of the IRS scandal.”

Lerner knew of the inappropriate focus in her division on conservative groups since June 2011. She recently apologized publicly, but won’t comment on whether IRS employees will be disciplined, and denied any political bias was involved in the effort. ...

More recently, she has become the butt of jokes on social media and news websites after she revealed during a conference call with reporters Friday that “I’m not good at math.”

I kept looking for evidence this was a hoax or satire, but apparently not. Yikes.