Jonathan Macey blogs that:
In their recent paper “Did Harvard Violate Federal Securities Law? The Campaign Against Classified Boards of Directors” posted on December 10, 2014, a sitting Commissioner of the Securities and Exchange Commission and a former SEC Commissioner accuse theShareholder Rights Project at Harvard Law School (SRP) of violating the anti-fraud provisions of the securities laws. The alleged fraud occurred when institutional investors represented by the SRP proposed shareholder resolutions encouraging shareholders in U.S. public companies to vote to de-stagger their companies’ boards.
Macey then offers a lengthy analysis of the paper, which concludes that "the SRP proposals were not fraudulent or misleading," which leads Macey to posit that:
Gallagher and Grundfest's real quarrel is not limited to the SRP proposals: it reflects a general indictment of the way that the SEC staff currently handle 14a-8 proposals. Not enough succor is provided by the SEC to companies who wish to exclude shareholders’ proposals according to Gallagher and Grundfest. Accusing an academic institution and a professor of committing fraud appears to me to be a strange way to criticize the SEC staff or to press for a change in enforcement practices, particularly when the accusation is being made by a sitting government official.
Tyler Cowen piles on, calling the Gallagher/Grundfest paper "a dangerous precedent" that represents a threat to "academic freedom," without exactly explaining why that's the case.
Cowen's complaint strikes me as silly. Academic freedom is not a license to commit fraud. Moreover, Gallagher and Grundfest are not complaining about the SRP's academic work but about their work as advocates of a shareholder proposal. So even if the SRP is chilled in making shareholder proposals (something that seems exceedingly unlikely), the SRP remains free to express its views in countless other ways.
My take is that Gallagher and Grundfest went way over the top on this one. And that's too bad because the long run effect is likely to give succor to the SRP and its ilk in their ongoing effort to remake American corporate governance according to their mistaken and misbegotten views.