August 30, 2007
Lisa Nicholson of University Louisville (and currently visiting at Boston College Law School) has posted The Culture of Under-Enforcement: Buried Treasure, Sarbanes-Oxley and the Corporate Pirate on SSRN. The article, which was recently published in DePaul Business & Commercial Law Journal, argues for the extension of asset forfeiture remedies to apply to criminal violations of the federal securities laws. According to Nicholson, asset forfeiture is a necessary supplement to the available remedies for criminal securities fruad, which can help to ensure that securities laws provide adequate levels of deterrence. Here is the abstract:
In its effort to combat rising lawlessness in decades past, Congress enacted enhanced criminal penalties that included not only increased prison sentences and fines, but also asset forfeiture provisions. Asset forfeiture reaches the spoils of the wrongdoer’s illegal conduct, and strikes at the heart of the criminal’s economic motive for misusing his corporate status. The failure to include this additional penalty in the Sarbanes-Oxley Act’s criminal measures effectively allows the corporate fraudster to escape exposure to a tried and true method of punishment.
This article re-introduces the white-collar criminal and highlights the government’s responses to previous instances of wrongdoing by way of background in Part I. The Act’s resulting criminal measures are analyzed in Parts III and IV of the article. Part V examines the proposed asset forfeiture sanction, while Part VI makes the case for the application of the asset forfeiture sanction to these particular white collar criminals. Finally, in Part VII, I explain how asset forfeiture can be obtained should Congress fail to enact specific forfeiture legislation directed towards the newly-enacted securities fraud crime.
August 29, 2007
Famed securities plaintiffs’ lawyer Bill Lerach has retired from his firm, Lerach Coughlin Stoia Geller Rudman & Robbins, amid a continuing federal criminal investigation into an alleged kickback scheme run by his former firm Milberg Weiss. Here is the WSJ story (subscription required): Milberg Figure Lerach Retires Amid Plea Talks.
August 17, 2007
There’s still some time for catching up on summer reading (at least here at BC Law where a week remains before classes start). To round out your reading list, I recommend The Failure of Corporate Law by my Boston College Law School colleague Kent Greenfield. The book aims to provide “a comprehensive theoretical response to Easterbrook and Fischel from the stakeholder perspective.” Professor Greenfield’s book recently received this highly favorable review in the Law and Policy Book Review: THE FAILURE OF CORPORATE LAW.
Professor Benedict Sheehy of University of New Castle, New South Wales calls The Failure of Corporate Law “refreshing” and “enlightening.” He concludes that Greenfield’s book “merits a place alongside Berle and Means, Easterbrook and Fichel, and indeed, one can but hope that it becomes the touchstone for for further corporate law reform globally.”
Kent will be guest blogging at Corporate Law and Democracy this fall. His book and the book review are a great introduction to his work.
August 10, 2007
The New York Times reports that Roel Campos, a democratic member of the Securities Exchange Commission has resigned. During his term as a Commissioner, Campos has sparred frequently with his Republican counterparts. President Bush will name a new Commissioner to replace Campos. Here is the NYT story: Democratic Commissioner to Leave S.E.C..
A new commissioner could affect the tone and balance of SEC deliberations, as recent 3-2 Commission splits on shareholder voting and other policy issues suggest a level of ideological disagreement that could be reduced significantly if the new Commissioner, who cannot be a Republican, assumes a more deregulatory stance.
August 8, 2007
The New York Times reports today that former Brocade Communications Systems Chief Executive Gregory Reyes was convicted on ten counts of conspiracy and fraud in the first criminal trial connected to the option back-dating scandals. Here is the story: Ex-Brocade Chief Convicted in Backdating Case.
Reyes, who did not personally receive any tainted options, faces up to 20 years in prison. An interesting quote in the New York Times story comes from a human resources employee who testified at trial that Reyes told her the practice was “not illegal if you don’t get caught.” This quote seems to capture the mentality of many corporate employees and executives caught up in misconduct; from market timing to insurance bid-rigging to analyst fraud. A variation of the view is “if everyone is doing it, it can’t be wrong.” Such self-serving rationalizations certainly help the individuals engaged in unethical conduct live with themselves, but they seem not to stand up well as a defense in a criminal trial.
August 3, 2007
The transcript of an intriguing panel discussion among a group of distinguished legal scholars was posted recently on SSRN. The paper entitled Crafting a Scholarly Persona: A Panel Discussion by Ian Ayres, Paul Robinson, Carol Sanger, Kimberly Ferzan reports the proceedings of a American Association of Law Schools panel on crafting a scholarly persona, sponsored by the Section on Scholarship. Each panelist addressed a number of fundamental questions including “why do you write?” “How do you decide what to write about?” “How do you stay productive?”, etc.
One lesson that emerges from the discussion is that there are many different paths, motivations and styles that work for acheiving scholarly success. It helps to learn what works for others, but what seems most important to individual success is to find what works for you. Clearly this involves a lot of trial and error and false starts. The panelists each relate that they made mistakes early in their careers and adjusted their decision-making and work habits until they found an approach to research and scholarship that worked for them.
The reflections of the panelists, although apparently aimed at beginning scholars, seem valuable for scholars at all stages of their careers. If only because the comments of panelists can lead to valuable self-reflection.