The LA Times is reporting that:
A $10-million gift to UCLA's law school from alumnus Lowell Milken is stirring debate on the campus about the decision to name a business law institute for the former financier, who was linked to Wall Street's junk bond scandal two decades ago.
A prominent business law professor has raised objections to the Milken gift and to UCLA's announcement this month that it will establish the institute in his name. But other law school faculty, along with top UCLA administrators, say they welcome the donation, noting that Milken was not convicted of any wrongdoing. ...Concerns about the latest donation were raised by UCLA business law professor Lynn A. Stout, an expert on corporate and securities law, in a letter last month to UC President Mark G. Yudof and UCLA Chancellor Gene Block. Stout said the gift posed "serious ethical problems and reputational risks for UCLA" and could damage her own reputation as well.
In an interview Tuesday, Stout said she also worried that Milken's name on the new institute would imply that the law school endorsed him as a role model for its students. "I don't think someone who has been banned from the security industry and barred from the New York Stock Exchange is an appropriate model for UCLA alumni and students," she said. ...Law Professor Kenneth Klee said Stout appeared to be alone among the law school faculty in criticizing the donation. "Everybody else here is thrilled with this gift," said Klee, who like Stout is an expert on business law. He noted that the 1989 indictment against Lowell Milken was dropped the following year.
As for Milken being a role model, Klee said: "I think we would want more of our alumni to become leading philanthropists." ...UCLA Law School Dean Rachel F. Moran said she was "mystified" by Stout's criticism of the gift. Moran noted that Stout had sought and received funds from an earlier Milken donation to offset the costs of a law school conference next month that the professor is helping to organize.
UCLA spokeswoman Carol Stogsdill said up to $49,000 from that previous, unrestricted Milken grant to the law school could be spent on the September conference.
Stout said that meeting, which she said is being organized by UCLA and the Aspen Institute, would receive some Milken funds but she said she would not benefit personally from her association with it.
In the blogosphere, Above the Law has their typical tabloid-level perspective (hitting Prof Stout with an unfair guilt by association smear and asking "What’s wrong with milkin’ a Milken?"). Meanwhile, Larry Ribstein weighs in by observing that:
I have more perspective [on the Mlken's role in the 1980s takeover wars] in my paper, Imagining Wall Street. There I note that Oliver Stone’s film Wall Street
may have helped create an environment that became increasingly unfriendly to takeovers. In the year following the film’s release, Drexel and Milken were prosecuted, eventually culminating in the fining and jailing of Milken along with many others in the takeover game, and the demise of Drexel Burnham. Milken pleaded guilty and was sentenced to ten years in jail.68 [United States v. Milken, No. (S) 89Cr.41(KMW), 1990 WL 264699 (S.D.N.Y. Nov. 21, 1990)] * * * It is hard to say how much of that attitude was based on actual events reported in the media, and how much on the fiction Wall Street helped create. Milken was prosecuted not for insider trading, but rather for technical violations of the Williams Act—that is, using Boesky to accumulate non-disclosed positions in target shares.69 [Id. at 4]
In short, there is a big question whether Lowell’s history is such as to taint UCLA by his gift.
But I am not unsympathetic with the idea that law schools are supposed to be teaching their students that ethics trumps money, and so should be careful about whom they take money from, and more generally the company they keep. Indeed, for that reason I wrote critically last year about Bill Lerach’s foray into law teaching.
The real question here is where you draw the line and who decides. Is the decision to turn down a gift based on ethics or politics? More to the point, would the same people who oppose the Milken gift also object to an association with Lerach?
And how do you balance those considerations against the institution’s needs? Interestingly, Professor Stout has written extensively about the need to take the interests of all constituencies into account in corporate decision-making. Where would UCLA’s students stand in the decision Professor Stout favors to reject the Milken gift?
