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Posted at 08:24 PM in SCOTUS and Con Law | Permalink | Comments (0)
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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.
It's a must read.
Posted at 08:07 PM | Permalink | Comments (0)
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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.
Posted at 07:59 PM in Business, Shareholder Activism | Permalink | Comments (0)
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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
Posted at 05:36 PM in Shareholder Activism | Permalink | Comments (0)
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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.
Posted at 07:19 PM in Corporate Law, Web/Tech | Permalink | Comments (0)
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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.
Posted at 10:27 PM in Law School | Permalink | Comments (0)
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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.
Posted at 01:10 PM in Books, SCOTUS and Con Law | Permalink | Comments (0)
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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.
Posted at 09:47 PM in Law School | Permalink | Comments (0)
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Posted at 01:29 PM in Corporate Law | Permalink | Comments (0)
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Edward McNally notes an interesting new Delaware Chancery Court decision:
In re Plains Exploration & Production Company Stockholder Litigation, C.A. 8090-VCN (May 9, 2013)
As this decision points out again, when a board of directors is disinterested in the transaction, its decision to accept the first offer for its company does not run afoul of the Revlon doctrine just because there was no pre-agreement market check. Instead, their decision is subject to the business judgment rule.
Francis Pileggi elaborates:
Brief Overview
This case addressed the claims that the duties of the directors in connection with the sale of the company, based on the seminal Delaware Supreme Court decision in Revlon, were breached. TheRevlon duties of a board, in essence, are fiduciary duties that require the directors to get the best price for the company when it is determined to be for sale, and the procedures employed by the board in connection with the sale or merger will be scrutinized to determine if they were consistent with the board’s obligations. This case recited the contours and parameters of those obligations, but reiterates that there is no formal script or procedures that the directors need to follow. Certain types of procedures and processes have been addressed over the many years that Revlon has been applied, however, and this opinion builds on that extensive jurisprudence.
Select Highlights of Legal Rulings
This decision provides additional guidance on two points in particular: Neither: (i) absence of a special committee, nor (ii) the absence of a pre-market check, will, per se, amount to a violation ofRevlon duties. Of course, this finding needs to be tethered to the facts of this case which include a board that: (i) was experienced in the oil and gas industry, (ii) was adequately involved in the negotiations, and (iii) had 7 out of 8 directors who were independent and disinterested.
This strikes me as half right. On the one hand,the holding that there is "no formal script or procedures that the directors need to follow" is clearly correct.
On the other hand, I am disappointed to once again see the Chancery Court apply Revlon simply because part of the consideration was paid in cash:
The Defendants do not dispute that Revlon applies to the Plaintiffs’ claim. See In re Smurfit- Stone Container Corp. S’holder Litig., 2011 WL 2028076, at *11-16 (Del. Ch. May 20, 2011) (applying the Revlon standard to a 50 percent stock and 50 percent cash merger). (p. 10 n.32)
As I explained at great length in The Geography of Revlon-Land, a transaction does not trigger Revlon simply because a substantial part of the consideration is in the form of cash:
The most directly relevant Delaware Supreme Court precedent is In re Santa Fe Pac. Corp. S’holders Litig.[1] Santa Fe and Burlington were both publicly held Delaware corporations.[2] After negotiations, they agreed to a complicated deal in which the two companies would make a joint tender offer for up to 33% of Santa Fe’s shares at $20 per share in cash.[3] If successful, the offer would give Burlington 16% of Santa Fe’s remaining outstanding shares.[4] If the offer succeeded, a freeze-out merger in which remaining Santa Fe shareholders would get Burlington shares in exchange for their Santa Fe stock would follow it.[5] All the while, Santa Fe’s board of directors was fending off an unsolicited takeover bid by Union Pacific.[6]
The Supreme Court rejected the plaintiffs’ argument that the deal triggered Revlon duties for Santa Fe’s directors, on grounds that plaintiffs “failed to allege that control of Burlington and Santa Fe after the merger would not remain ‘in a large, fluid, changeable and changing market.’”[7] The clear implication is that the form of consideration was not the relevant issue. Instead, the issue was whether the Burlington shareholders would remain dispersed “in a large, fluid, changeable and changing market.”
Yet, in NYMEX, the Chancery Court characterized Santa Fe as simply setting a floor—33% cash—below which one did not enter Revlon-land.[8] As for higher ratios, the Chancery Court relied on Lukens for the proposition that the Delaware “Supreme Court has not set out a black line rule explaining what percentage of the consideration can be cash without triggering Revlon.”[9]
This characterization of Santa Fe is hard to square with the Supreme Court’s analysis in the case, which makes no reference to floors or ceilings, but rather to the post-deal “stock ownership structure of Burlington.”[10] It is even more difficult to square with the three checkpoints established by Arnold v. Soc’y for Sav. Bancorp, Inc.[11]
The Smurfit court finessed Arnold in the first instance by selective quotation of the key passage setting out the three checkpoints. The Smurfit court quoted it as follows:
The[SB1] Delaware Supreme Court has determined that a board might find itself faced with such a duty in at least three scenarios: “(1) when a corporation initiates an active bidding process seeking to sell itself or to effect a business reorganization involving a clear break-up of the company[ ]; (2) where, in response to a bidder’s offer, a target abandons its long-term strategy and seeks an alternative transaction involving the break-up of the company; or (3) when approval of a transaction results in a sale or change of control [.]”[12]
The observant reader will note that the Chancery Court thereby omitted the critical qualifier Arnold adds to checkpoint # 3. To emphasize the point, let us quote the pertinent part of Arnold again in full: “(3) when approval of a transaction results in a sale or change of control. In the latter situation, there is no sale or change in control when [c]ontrol of both [companies] remain[s] in a large, fluid, changeable and changing market.”[13]
Arnold’s clear implication is that an acquisition by a publicly held corporation with no controlling shareholder that results in the combined corporate entity being owned by dispersed shareholders in the proverbial “large, fluid, changeable and changing market” does not trigger Revlon whether the deal is structured as all stock, all cash, or somewhere in the middle. The form of consideration is simply irrelevant.
The Delaware Supreme Court’s more recent opinion in Lyondell confirms this reading of both Santa Fe and Arnold. In addition to the substantive errors made by the Chancery Court in Lyondell,[14] the Chancery Court also took too expansive an approach to when Revlon-duties are triggered by holding that the target board enters Revlon-land when it “undertakes a sale of the company for cash.”[15]
Checkpoint # 1 was inapplicable on Lyondell’s facts, because the target board had not initiated “an active bidding process,” let alone one that would involve a break up of the company. Checkpoint # 2 was inapplicable because the transaction did not involve a hostile offer or an abandonment of the target’s long-term strategy or a break up of the company.
Checkpoint # 3, however, was triggered once the target board decided to sell the company to Access, because Access was a privately held corporation. The transaction therefore would have involved a change of control from disperse public shareholders in “a large, fluid, changeable and changing market” to a single controlling shareholder. Although the Supreme Court did not quote that now proverbial standard, it did hold that one does not enter Revlon-land simply because a prospective target company is “in play.”[16] Instead, one does so “ only when a company embarks on a transaction—on its own initiative or in response to an unsolicited offer—that will result in a change of control.”[17]
Fairly read, this confirms that in the phrase “sale or change of control,” as used in checkpoint # 3, control must be understood to modify both the words sale and change. Accordingly, Lyondell confirms that the interpretation of Arnold and Santa Fe set out above is the correct one rather than that offered by the Chancery Court.
The logic of the Chancery Court decisions rests on the policy that target shareholders who get cash have no opportunity to participate in the potential post-acquisition gains that may accrue to shareholders of the combined company:
Defendants[SB2] emphasize that no Smurfit–Stone stockholder involuntarily or voluntarily can be cashed out completely and, after consummation of the Proposed Transaction, the stockholders will own slightly less than half of Rock–Tenn. … Defendants lose sight of the fact that while no Smurfit–Stone stockholder will be cashed out 100%, 100% of its stockholders who elect to participate in the merger will see approximately 50% of their Smurfit–Stone investment cashed out. As such, like Vice Chancellor Lamb’s concern that potentially there was no “tomorrow” for a substantial majority of Lukens stockholders, the concern here is that there is no “tomorrow” for approximately 50% of each stockholder’s investment in Smurfit–Stone. That each stockholder may retain a portion of her investment after the merger is insufficient to distinguish the reasoning of Lukens, which concerns the need for the Court to scrutinize under Revlon a transaction that constitutes an end-game for all or a substantial part of a stockholder’s investment in a Delaware corporation.[18]
As we have seen, however, this concern makes no sense.[19] As long as the acquirer is publicly held, shareholders who get cash could simply turn around and buy stock in the post-acquisition company. They would then participate in any post-transaction gains, including any future takeover premium. Only if there has been a change of control is that option foreclosed.
In any event, as the discussion in Part III.C makes clear, the relevant policy concern is not whether there is a tomorrow. To be sure, QVC spoke of “an asset belonging to public shareholders”; i.e., “a control premium.”[20] As we saw above, although he did not cite QVC, Vice Chancellor Laster implicated this concern by holding that Revlon was triggered because the transaction at issue was the “only chance [the target shareholders would] have to have their fiduciaries bargain for a premium for their shares.”[21]
If QVC is properly understood, however, the Supreme Court was not showing concern for whether there will be a tomorrow for the shareholders. Instead, as discussed above, the court was concerned in QVC with the division of gains between target and acquirer shareholders because the post-transaction company would have a dominating controlling shareholder.[22]
As the analysis of QVC in Part III.C.2 explained, the relevant concern thus is the potential that conflicted interests will affect the target’s board of directors’ decisions.[23] Indeed, as we have seen, even Vice Chancellor Lamb’s opinion in Lukens recognized that the motivating concern underlying Revlon is “the omnipresent specter that a board may be acting primarily in its own interest, rather than those of the corporation and its shareholders.”[24] Curiously, however, Vice Chancellor Lamb brought that policy concern into play only with respect to whether the directors had satisfied their Revlon duties, while ignoring it when deciding whether those duties have triggered. But nothing in Revlon or QVC suggests that that policy is limited to the former issue rather than both inquiries.
Because the conflict of interest policy concern is the underlying driver of both aspects of Revlon, the Chancery Court in Lukens and its progeny should have considered whether the all- or partial-cash transactions necessarily implicate conflicts of interest akin to those at issue in Revlon and QVC. If the various Vice Chancellors had done so, they would have recognized that, so long as acquisitions of publicly held corporations are conducted by other publicly held corporations, diversified shareholders will be indifferent as to the allocations of gains between the parties.[25] In turn, those shareholders also will be indifferent as to the form of consideration.
In contrast, if the transaction results in a privately held entity, a diversified shareholder cannot be on both sides of the transaction. If the post-transaction entity remains publicly held, but will be dominated by a controlling shareholder, there is a substantial risk that the control shareholder will be able to extract non-pro rata benefits in the future and get a sweetheart deal from target directors in the initial acquisition. In either situation, the division of gain matters a lot. As such, investors would prefer to see gains in such transactions allocated to the target.[26] It is in these situations that Revlon therefore should come into play.
Posted at 01:15 PM in Corporate Law, Mergers and Takeovers | Permalink | Comments (0)
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IRS employees decided that groups that advocated for smaller government were somehow specially untrustworthy, and acted on this opinion by singling them out for extra bureaucratic hassles. This is hugely disturbing, and right now our focus should be on making sure it doesn’t happen again, not reforming the laws governing tax-exempt organizations.
Posted at 07:45 PM | Permalink | Comments (0)
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In today's WSJ, former NY Governors Mario Cuomo and George Pataki make a bipartisan call for NY's current AG Eric Schneiderman to drop his suit against ex-AIG boss Hank Greenberg:
For the past eight years, Maurice "Hank" Greenberg, the former chairman and chief executive officer of the insurer AIG, has been futilely pursued by the New York attorney general's office under the 1921 Martin Act, which gave the state's attorney general extraordinary powers to investigate and litigate financial fraud.
The Greenberg civil litigation, however, concerns the accounting for two entirely proper transactions that took place well over a decade ago—neither of which had any impact on the net income or shareholder equity of AIG. Yet as Charles Dickens wrote of the fictional case Jarndyce v. Jarndyce in "Bleak House," this interminable "scarecrow of a suit," which should never have been brought in the first place, "drones on."
Recently, the New York attorney general's office recognized that under both state and federal law, the resolution of federal class actions brought by AIG shareholders had mooted the attorney general's stated purpose in the civil litigation against Mr. Greenberg: the recovery of damages on behalf of AIG shareholders. As a result, the attorney general's office informed the New York Court of Appeals on April 25 that it had decided to "withdraw our claims for damages in this case."
This acknowledgment was long overdue and should have marked the end of this case. So we were surprised to learn that instead of dropping the litigation, the attorney general's office has decided to deplete its resources and consume more of the court's time by raising claims for injunctive relief against Mr. Greenberg that were long ago abandoned and that, in any event, are without merit and serve no conceivable purpose. ...
Mr. Greenberg has never worked in the securities industry, and he hasn't been an officer or director of a public company for eight years. There is also no reason to suppose he intends to do so in the future. Simply stated, the attorney general office's pursuit of injunctive relief against Mr. Greenberg is a waste of time and money.
The continued pursuit of Mr. Greenberg is also morally wrong. From landing on Omaha Beach on D-Day to building one of New York's largest companies, Hank Greenberg has been a patriot who has played a vital role in advancing U.S. interests in global trade and national security. He is one of the country's most generous philanthropists. Even today, he continues those efforts for New York's benefit.
Go read the whole thing and then read Alison Frankel's take on their op-ed. She puts the issues in context by highlighting how they relate to an ongoing struggle between the NY AG and the plainitff class action bar:
The battle to recover damages on behalf of misled investors (and the right to claim credit for the recovery) is part of that interplay: In New York, whoever makes a deal first wins. ...
You can see why, as a policy matter, this kind of scenario is of concern: It permits a defendant to pick whom it wants to settle with. (Of course, that’s been a long-running argument by private plaintiffs’ lawyers when their class actions are co-opted by regulators.)
I don't share Frankel's concern. The issue is not unique to NY AG actions. Whenever you have multiple suits filed over the same conduct, the first case to settle inevitably creates a res judicata effect.That's why defendants settle cases and why courts will allow out of state litigants to intervene and be heard in the hearing(s) the court holds before approving any settlement.
Instead, my concern remains with the Martin Act. As Walter Olson aptly observed back in 2004:
Why is New York Attorney General Eliot Spitzer so feared by the state’s financial community? A major reason is a little-known piece of 1921 New York legislation called the Martin Act, aimed at financial fraud. “It empowers him to subpoena any document he wants from anyone doing business in the state; to keep an investigation totally secret or to make it totally public; and to choose between filing civil or criminal charges whenever he wants. People called in for questioning during Martin Act investigations do not have a right to counsel or a right against self-incrimination. Combined, the act’s powers exceed those given any regulator in any other state.
“Now for the scary part: To win a case, the AG doesn’t have to prove that the defendant intended to defraud anyone, that a transaction took place, or that anyone actually was defrauded. Plus, when the prosecution is over, trial lawyers can gain access to the hoards of documents that the act has churned up and use them as the basis for civil suits.”
Lovely.
Posted at 07:42 PM in Eliot Spitzer | Permalink | Comments (0)
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The Harvard Crimson is currently running “a three-part series on gender disparity issues at [Harvard] Law School.” Part I reports that there are 17 tenured or tenure-track women out of 92 total on the Harvard Law School faculty. It goes on to report:
Since she took the helm of the school four years ago, [Dean] Minow has worked to change these numbers. Her first step: hiring equal numbers of men and women for entry-level faculty positions since 2009. This year, the Law School has made two hiring offers, one to a man and one to a woman.
Annually, the entry-level hiring committee conducts about 40 interviews, which are balanced in terms of gender breakdown. From these initial interviews, the hiring committee whittles down the pool of potential candidates, who must present to a faculty workshop, secure the recommendation of the hiring committee, and finally secure the approval of the faculty as a whole before they are hired. All the while, the hiring committee is careful to retain an equal number of male and female candidates, according to Law School professor David J. Barron ’89, chair of the entry-level committee.
The goal of having more female faculty members is “very much part of the consciousness, and consciousness matters,” said Barron.
At least as described, this sounds rather like a strict 50/50 gender quota, doesn’t it?
via www.volokh.com
Posted at 06:09 PM | Permalink | Comments (0)
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The Internal Revenue Service's scrutiny of conservative groups went beyond those that had "tea party" or "patriot" in their names—as the agency admitted Friday—to also include ones that raised concerns over government spending, debt or taxes, and even ones that lobbied to "make America a better place to live," according to new details of a government probe.
The investigation also revealed that a high-ranking IRS official knew as early as mid-2011 that conservative groups were being inappropriately targeted—nearly a year before then-IRS Commissioner Douglas Shulman told a congressional committee the agency wasn't targeting conservative groups.
via online.wsj.com
Posted at 05:29 PM | Permalink | Comments (0)
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This is getting real.
Yesterday it was just some “low level” employees involved. Now AP is reporting that senior IRS officials were aware of the targeting, via AP, IRS watchdog: Senior IRS officials knew in 2011 tea parties’ tax-exempt status being targeted (h/t @GabrielMalor):
WASHINGTON (AP) — IRS watchdog: Senior IRS officials knew in 2011 tea parties’ tax-exempt status being targeted.
(added) AP has expanded its report now (h/t reader):
A federal watchdog’s upcoming report says senior Internal Revenue Service officials knew agents were targeting tea party groups in 2011.
The disclosure contradicts public statements by former IRS Commissioner Douglas Shulman, who repeatedly assured Congress that conservative groups were not targeted.
Real, indeed. One might almost say Nixonian.
Posted at 04:47 PM | Permalink | Comments (0)
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