BU Now » BU Law School

SCOTUS on the “honest services” law

Dick Taffe — Thu, 24 Jun 2010 19:41:40 +0000

The Supreme Court restricted a favorite tool for pursuing corrupt politicians and self-dealing corporate chiefs, ruling that the law that makes it a crime to deprive the public or one’s employer of the “intangible right of honest services” can only be used where they could prove defendants accepted bribes or kickbacks. It means, for instance, that Enron ex-CEO Jeff Skilling’s conviction on the “honest services” law is thrown out – but not the other charges he was convicted of. Law Professor Elizabeth Nowicki, both a former SEC attorney and Wall Street lawyer, says the opinion finally gives some insight into newly appointed Justice Sonia Sotomayor’s view on business fraud.

“Surprisingly, she sided with the justices who struck down the ‘honest services’ doctrine for vindicating cases of overt fraud. This is a troubling blow for those who care about protecting investors and business integrity.”

Contact Elizabeth Nowicki, 518-867-5355, enowicki@bu.edu

Nebraska town targets illegals

Dick Taffe — Wed, 23 Jun 2010 20:02:48 +0000

With about 57 percent of residents voting for it, the town of Fremont, Neb., has passed an ordinance aimed at cracking down on illegal immigration by banning hiring or renting property to illegals. The town now faces a long legal fight similar to that embroiling the state of Arizona after it recently enacted a law targeting undocumented immigrants. Law Professor Susan Akram, an authority on immigration law, says that in both cases voters and officials are pushing such measures to force the federal government to clamp down harder on illegal immigration in various ways.

“Unfortunately, it does not appear that public opinion has been influenced by the actual facts involved in passing such measures: that they are unlikely to be enforceable because they conflict with an area in which federal law pre-empts most state action; that they are going to be subject to serious and lengthy litigation; and that they are going to cost the states and localities significant resources without achieving the benefits they seek.”

Contact Susan Akaram, 617-358-3060, smakram@bu.edu

The FDIC’s deposit-insurance limit

Dick Taffe — Wed, 16 Jun 2010 20:24:08 +0000

Congressional negotiators working out difference between the House and Senate financial reform bills are hammering out compromises right and left. One would permanently (and retroactively to January 2008) move from $100,000 to $250,000 the deposit insurance on individual bank accounts. Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law and a former counsel to the Fed Board of Governors, doesn’t think the raised limit is a good idea.

“Permanently raising the federal deposit insurance ceiling from $100,000 to $250,000 when the Federal Deposit Insurance Fund is over $20 billion in the red is irresponsible. By raising taxpayer-funded deposit insurance coverage … it seems the [banking] lobbyists’ messages are getting through loud and clear.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

FDA and outsourced drug making

Dick Taffe — Tue, 15 Jun 2010 22:15:03 +0000

The Food and Drug Administration reportedly will propose tougher regulations for pharmaceutical companies that outsource manufacturing of drugs, making them more responsible for the safety and purity of the products made by contractors. Law Professor Kevin Outterson, an authority on food and drug law and director of the Healthy Law Program, says the changes likely will have little effect because branded drug manufacturers put their reputations on the line every day with their drugs already.

“I’d be surprised if the FDA requirements are a great improvement over what Pfizer and Merck already do to protect the integrity of their supply chain.”

Contact Kevin Outterson, 617-353-3103, mko@bu.edu

BP faces Congress

Dick Taffe — Tue, 15 Jun 2010 16:16:56 +0000

It’s all BP all the time in Washington this week. After President Obama addresses the nation Wednesday on the BP oil spill situation, company executives on Thursday face a Congressional hearing on the matter. Visiting law Professor Elizabeth Nowicki, both a former SEC and Wall Street attorney, says BP CEO Tony Hayward would be well-served to remember what empirical research shows about the economic value of apologies.

“My advice to Hayward is to remember what behavioral research has shown: Corporations with senior management who willing and sincerely apologize are (a) less likely to get sued and (b) more likely to settle inevitable lawsuits more cheaply.”

Meantime, political science Prof. Graham Wilson, author of “Business and Politics,” wonders when other companies involved in the Deepwater Horizon disaster and its aftermath will be put in the spotlight that thus far has swamped BP.

“It will be interesting to see if the American companies involved, such as Transocean and Haliburton, are also asked to set aside funds [for clean-up]. Only eight of the people on the rig when the well failed were employed by BP.”

Contact Elizabeth Nowicki, 518-867-5355, enowicki@bu.edu; or Graham Wilson, 617-353-2540, gkwilson@bu.edu

Dell settling Intel claims

Dick Taffe — Fri, 11 Jun 2010 21:03:14 +0000

Dell is in settlement talks with the Securities and Exchange Commission to resolve allegations that its founder/CEO Michael Dell engaged in financial irregularities related to Dell’s dealings with chip-maker Intel — with no admission of guilt or bar of Dell from service as an officer or a public company. Visiting law Professor Elizabeth Nowicki, a former SEC and Wall Street attorney, says it indicates the SEC is focused on bigger issues and might be willing to defer in the Dell matter to a similar lawsuit filed by New York’s attorney general.

“The SEC can only vigorously fight so many battles at a given time.”

Contact Elizabeth Nowicki, 518-867-5355, enowicki@bu.edu

J.P. Morgan hit with record U.K. fine

Dick Taffe — Thu, 03 Jun 2010 16:26:33 +0000

British regulators fined investment bank J.P. Morgan Chase a record $48 million for failing to keep client money separate from the firm’s money — from 2002 when Morgan merged with Chase until mid-2009 — which put client money at risk had the company gone insolvent. Law Professor Tamar Frankel, an authority on securities law and author of “Trust and Honesty: America’s business Culture at a Crossroad,” reminds that client money cannot be viewed as the bank’s own.

“The money that clients deposit with a bank to trade on behalf of clients as brokers or any other form of a fiduciary relationship continues to belong to the client — therefore, it cannot be mixed with the bank’s money.”

Contact Tamar Frankel, 617-353-3773, tfrankel@bu.edu

Israeli flotilla raid condemned

Dick Taffe — Tue, 01 Jun 2010 22:49:11 +0000

After the UN Security Council condemned Israel’s open-seas raid on a flotilla headed with humanitarian aid to Gaza, Israel says the 600-plus activists it arrested are being freed and expelled from the country. Law Professor Robert Sloane, an authority on international law, says Israel violated a very basic customary norm of international law: the freedom of the high seas.

“Had Israel waited for the vessels to enter Israeli waters, or at least what’s known as the ‘contiguous zone,’ then it arguably could have seized the vessels to enforce its blockade and prevent what it might characterize as smuggling in violation of Israeli law.”

Contact Robert Sloane, 617-358-4633, rdsloane@bu.edu

Kagan nominated to SCOTUS

Dick Taffe — Mon, 10 May 2010 15:37:19 +0000

U.S. Solicitor General Elena Kagan, a former Harvard Law School dean, was nominated by President Obama to be the 112th justice of the Supreme Court. BU Law Professor Jack Beermann, an authority on the high court who knows the nominee well, says he see it as a strong plus that Kagan is not a sitting judge and that the idea that she lacks experience is completely off base.

“Her service in the Clinton and Obama administrations, her judicial clerkships with Thurgood Marshall and Abner Mikva, her years practicing law, and her academic background — including her great success as the dean of the Harvard Law School — make her just as well-prepared for the Supreme Court as someone who has had some years as a Court of Appeals judge.”

Contact Jack Beermann, 617-353-2577, beermann@bu.edu