ProfessorBainbridge.com

Senate Democrats Press SEC on Companies’ Political Donations

Sigh:

Nearly every Senate Democrat on Monday called on the Securities and Exchange Commission to require corporations to disclose their political spending.

Forty-four Senate Democrats made the push in a letter to SEC Chairman Mary Jo White, the latest in a series of appeals to the agency to craft such rules. The requests have all been met with little public comment from Ms. White.

As that might suggest, this is more of a partisan issue than a securities regulation matter, even though the Democrat's academic enablers (you know who you are) insist it's just about good policy. As I have often complained:

Do shareholders benefit from corporate political contributions ...   Jan 16, 2013 ... In the paper, Corporate campaign contributions and abnormal stock returns after presidential elections, forthcoming in Public Choice, we ... www.professorbainbridge.com/.../do-shareholders-benefit-from-corporate- political-contributions.html

Evidence for political targeting of Republicans by shareholder activists   May 18, 2015 ... We examine whether firms targeted by shareholder proposals show different campaign contributions and lobbying activities compared to ... www.professorbainbridge.com/.../evidence-for-political-targeting-of- republicans-by-shareholder-activists.html

Mandated disclosure of corporate political spending is a political ...   Sep 30, 2014 ... ... disclosure of political contributions. The op-ed is based on a paper Primo coauthored with Saumya Prabhat of the Indian School of Business. www.professorbainbridge.com/.../mandated-disclosure-of-corporate-political- spending-is-a-political-attack-by-anti-corporate-activist.html

Is the SEC Really Independent from Political Influence ...   Jan 30, 2012 ... An analysis of the effect of campaign contributions on an index that accounts for the severity of the SEC enforcement outcome suggests that ... www.professorbainbridge.com/.../is-the-sec-really-independent-from-political -influence.html Wall Street Journal Smashes Arguments for Corporate Political ...   Apr 29, 2013 ... In a brilliant editorial, the WSJ exposes the political agenda behind those who would mandate corporate disclosure of campaign contributions ... www.professorbainbridge.com/.../wall-street-journal-smashes-arguments-for- corporate-political-spending-disclosure.html       Bebchuk's latest argument for corporate political disclosure ...   Jun 24, 2013 ... They want to defund the Right by deterring corporate campaign contributions. (I freely admit I want to keep that spigot open. I have a dog in the ... www.professorbainbridge.com/.../bebchuks-latest-argument-for-corporate- political-disclosure.html

Speaking of Bebchuk, his post praising the 44 Senators claims:

The letter of the forty-four Senators highlights the remarkable level of support that the rulemaking petition has received. The SEC should proceed with rulemaking in this area without further delay.

What Bebchuk fails to tell his readers is that all 44 are Democrats. He thus continues to studiously ignore the blatantly partisan nature of his campaign in favor of the rule making petition. As I took the liberty of mentioning on his site (assuming it survives moderation).

Todd Zywicki on Dodd-Frank at Age 5: Are We More Stable?

Todd J. Zywicki (George Mason University School of Law) has posted The Dodd-Frank Act Five Years Later: Are We More Stable?:

Abstract: This congressional testimony summarizes the effects on consumers and the economy of Dodd-Frank, the Durbin Amendment the Consumer Financial Protection Bureau, and other government regulations (such as the CARD Act of 2009) enacted in the wake of the recent financial crisis. The testimony notes that the combined effect of these laws and regulations has resulted in higher bank fees, a dramatic reduction in access to free checking, an increase in the number of unbanked consumers, a dramatic reduction in access to credit cards for low-income consumers, and continued low access to mortgages, especially among lower-income and higher-risk borrowers. In addition, because of the crushing and disproportionate burden of Dodd-Frank’s regulations on smaller banks, the law has promoted consolidation of the banking industry and forced many smaller banks to exit certain product markets, especially mortgages. This combined effect has reduced choice and competition for consumers. Finally, the lack of democratic accountability over the CFPB has resulted in an agency defined by bureaucratic overreach, resulting in an invasive and reckless data-mining project and assertion over many industries and products that stand outside of the agency’s authorized jurisdiction.

Lisa Fairfax for SEC Commissioner

My friend Lisa Fairfax apparently is Elizabeth Warren's first choice to be an SEC Commissioner:

The Obama administration is considering a law professor favored by Sen. Elizabeth Warren (D., Mass.) for an open spot on the Securities and Exchange Commission, according to people familiar with the process.

Lisa Fairfax, a professor at George Washington University Law School, was floated by Ms. Warren earlier this summer as part of a list of potential candidates that she and others who back tighter Wall Street oversight offered to fill the Democratic seat on the U.S.’s top securities regulator, these people said. ...

In her academic work, she has focused on how investors choose company directors and boardroom diversity, and she has written a primer on shareholder activism. Earlier this week, she was tapped by SEC Chairman Mary Jo White to fill a vacancy on an advisory panel that makes policy recommendations to the commission on investor concerns.

I've met and corresponded with Lisa many times and am a great admirer of her as a scholar and person. She's super smart and super nice. I think she'd make a great SEC Commissioner, especially because (despite being a Democrat) she's got a solid base of knowledge and common sense.

Some of my friends on the right likely will be inclined to oppose Lisa just because Liz Warren is backing her. If so, however, they'd be making a sense. Lisa's got more common sense and basic decency in her little finger than Warren does in her whole body.

I cannot imagine a Democrat candidate for the SEC I'd feel better about. I hope she makes it.

Kudos to Bill Klein

I received an email today from the AALS stating:

The Section on Business Associations at the 2016 Annual Meeting will honor 13 professors for their exemplary mentorship: Lynne L. Dallas (San Diego); Claire Moore Dickerson (Tulane); Christopher Drahozal (Kansas); Egon Guttman (American); William A. “Bill” Klein (UCLA); Donald C. Langevoort (Georgetown); Juliet Moringiello (Widener Commonwealth); Marleen O’Connor (Stetson); Terry O’Neill (Emerita, Tulane); Charles “Chuck” O’Kelley (Seattle); Alysa L. Rolack (formerly of Indiana-Bloomington); Roberta Romano (Yale); and Gordon Smith (BYU).

Thank you to all these honorees for your service to legal education through thoughtful, caring, and inspiring mentorship.  You have helped others in our field in countless ways. 

 The criteria for nominations included:

• Is eager to discuss others’ early ideas and contributes to the development and improvement of others’ work;

• Promotes and encourages the success of junior scholars by reading and providing meaningful and useful feedback on drafts;

• Promotes a supportive but challenging environment for conference presentations;

• Speaks frankly, provides useful professional and personal advice when asked;

• Actively participates in a network of scholars;

• Facilitates professional opportunities for junior scholars such as providing introductions to others in the field, and encouraging participation in the scholarly community through writing and speaking; 

• Mentors those from underrepresented communities in academics and the study of law;

• Actively/willingly participates in the promotion process for others by advising as to tenure reviewers, writing review letters, and providing useful guidance on career advancement.

I was delighted to be among those who nominated my friend, colleague, and coauthor Bill Klein. Bill has been a wonderful mentor to me for two decades. He is a supportive colleague, but also one of those rare people who can--without hurting your feelings--tell it to you straight. He once told me, to cite but a single example, that my first draft of an article was "crap" and "would ruin my career." He was right. So I fixed it and it went on to become one of my most frequently cited works. He taught me everything I know about editing casebooks and has been a constant source of encouragement. I'm proud to know him and to have been one of his proteges.

Orts' Business Persons: Recommended Reading

My friend Eric Orts has just had a new edition of his excellent book Business Persons:  A Legal Theory of the Firm  been published in a paperback edition.  Eric took advantage of the occasion to write a new preface that discusses the controversial Hobby Lobby decision as well as other related developments. As the blurb says:

Business firms are ubiquitous in modern society, but an appreciation of how they are formed and for what purposes requires an understanding of their legal foundations. This book provides a scholarly and yet accessible introduction to the legal framework of modern business enterprises.

This article would have not made my old friend Henry Manne happy

These findings seem consistent with the argument that we need to regulate insider trading so as to protect corporate property rights in information:

This paper assesses whether the enforcement of insider trading laws increases or decreases patent-based measures of technological innovation. Based on about 75,000 industry-country-year observations across 94 economies from 1976 to 2006, we find evidence consistent with the view that enforcing insider trading laws spurs innovation — as measured by patent intensity, scope, impact, generality, and originality — after controlling for country-year and industry-year fixed effects. Consistent with theories that insider trading slows innovation by impeding the valuation of innovative activities, the relationship between enforcing insider trading laws and innovation is much larger in industries that are naturally innovative and opaque, where we use the U.S. to benchmark industries.

Levine, Ross and Lin, Chen and Wei, Lai, Insider Trading and Innovation (August 22, 2015). Available at SSRN: http://ssrn.com/abstract=2649295