Corporate Governance

  • May 6, 2010
    Guest Post

    By Lee Harris, Associate Professor of Law, University of Memphis, where he teaches coporate law. Prof. Harris' most recent article, "Shareholder Campaign Funds: A Campaign Subsidy Scheme for Corporate Elections," can be downloaded here.

    Goldman Sachs has a stellar reputation. Even Warren Buffet, who recently plucked down around $5 billion to purchase a piece of the firm, trusts Goldman.

    But, perhaps the Goldman magic is just that -- smoke, mirrors, a fancy outfit, a distractingly attractive assistant, a show built on illusion.

    Consider the Securities and Exchange Commission's recent lawsuit against Goldman and the impending threat of criminal action against the firm for some of its conduct in allegedly deceiving investors and perhaps even helping instigate the mortgage meltdown and current financial crises.

    With the lawsuit, Goldman joins the long list of other storied financial services companies that have been accused of misconduct recently, including AIG and Stanford Financial, among others.

    According to the SEC, Goldman allegedly helped create, hype, recommend, and ultimately sell investments in housing that was doomed to fail. They charge that Goldman and the employee who allegedly helped size and package the doomed investment, Fabrice Tourre, a French national, committed fraud by failing to disclose details regarding the investment. One e-mail apparently from a Goldman employee, not the Frenchman, described such investments as "sh***y".

    Excuse my French.

  • May 4, 2010
    Guest Post

    By Jessica E. Schumer, 3L, Yale Law School & Member, ACS Yale Chapter. Schumer is also the author of "Making Sense with Democratic Dollars: How Congress Can Use the DISCLOSE Act to Incentive Small Donor Participation After Citizens United," available here.

    Last Thursday the long awaited congressional response to Citizens United was unveiled in the form of The Democracy Is Strengthened by Casting Light On Spending in Elections (DISCLOSE) Act. While the pressure to fast-track this legislation and enact it before the midterm elections is understandable, the DISLCOSE Act presents an opportunity to do more than just play defense; with slight modifications, the DISCLOSE Act could be a powerful offensive tool. One minor change in the bill would encourage greater small-donor participation by incentivizing all non-profit groups, from the Chamber of Commerce to the Sierra Club, to voluntarily accept contribution limits for independent political expenditures.

    One million dollars of political ads paid for with contributions raised in $100 amounts from 10,000 contributors is and should be perceived differently than one million dollars raised in $50,000 amounts from 20 contributors. Distinguishing ads based on their funding as opposed to their content, which is and should be protected by the First Amendment, makes political, legal and practical sense.

  • April 30, 2010

    The operator of the Upper Big Branch mine in West Virginia, where 29 miners died earlier this month, is coming under increasing scrutiny from law enforcement officials. News broke today that the FBI is interviewing dozens of current and former employees of Massey Energy, the mine operator, as part of a criminal investigation into the deadliest American mining disaster in 40 years. Massey denied any wrongdoing, and offered full cooperation with federal law enforcement officials.

    In the wake of the Upper Big Branch disaster, as well as two other deadly mining accidents this month, some legislators are seeking ways to strengthen mine safety. Despite the Mine Safety and Health Administration having notoriously weak enforcement tools, coal-state "lawmakers remain reluctant to enter the emerging debate over what's gone wrong, and whether Congress should step in with new laws to protect the nation's miners," reports Mike Lillis at The Washington Independent.

    Though some families have already filed wrongful death suits against the mine operator, Massey is reportedly offering each family $3 million. In exchange, the families are being asked to dismiss pending suits or forgo their right to sue, one family said. According to Mark Moreland, an attorney involved in one of the suits, these settlement offers so soon after the deaths come at a tough time for families and help Massey "avoid answering hard questions raised publicly in litigation." Massey spokespeople refused to comment about the reported settlement offers.

  • April 27, 2010

    More than a year after oral argument, a narrowly divided federal appeals court affirmed certification of the largest class action in American history. In Dukes v. Wal-Mart, more than one million potential plaintiffs are suing the retailer for gender discrimination. 

    "The lawsuit, brought in 2001, accuses the retailer of systematically paying women less than men, giving them smaller raises and offering women fewer opportunities for promotion," The New York Times reports. "The plaintiffs stressed that while 65 percent of Wal-Mart's hourly employees were women, only 33 percent of the company's managers were." 

    Considering the case en banc, the U.S. Court of Appeals for the Ninth Circuit sided with the plaintiffs by a vote of 6-5. Casting the deciding vote was Clinton appointee Judge Susan Graber, who wrote in concurrence, "If the employer had 500 female employees, I doubt that any of my colleagues would question the certification of such a class. Certification does not become an abuse of discretion merely because the class has 500,000 members."

    The Recorder reports

    Judge Michael Daly Hawkins wrote Monday's majority 9th Circuit opinion, joined by Graber and Judges Stephen Reinhardt, Raymond Fisher, Richard Paez and Marsha Berzon. All were appointed by Democrats.

  • April 8, 2010

    A recent symposium at the Brennan Center for Justice at New York University School of Law featured several frequent ACS participants as part of what legal expert Stanley Fish called "a group of A-list first amendment scholars." The Brennan Center convened the cadre of scholars "to rethink the relationship of money, politics and the Constitution" in the wake of the Supreme Court's 5-4 decision in Citizens United v. FEC, which loosened regulations of corporate electioneering.

    Af the event, Fish writes

    [I]t is the spirit of the occasion rather than any one thing said during it that impressed. This crowd thinks that it is going to win, thinks, as one participant put it, that Citizens United was "a huge reach" and "sits on a bubble," ready to be toppled. At most of the conferences I attend, talk like that would be little more than blowing smoke. But in this one the speakers and respondents were high-profile law professors, deans of prestigious law schools, lawyers who have argued before the Court and interacted, formally and informally, with its members. It occurred to me as I left at the end of the day that as a result of what had been said and proposed something in the world might actually change. The very thought made me nervous.