Volume 35, Issue 1

From the Regulatory Abyss: The Weakened Gatekeeping Incentives Under the Uniform Securities Act

Marc I. Steinberg & James Ames

In the last two decades, massive financial scandals have impaired the integrity of the financial markets and cost investors billions of dollars. Even more financial devastation was wrought as the Great Recession struck. These calamities have brought the importance of proper regulatory control in the securities markets into sharp focus. With this backdrop, this Article tackles the task of examining regulation of one of the most integral components of an effective regulatory system for securities: gatekeepers. Gatekeepers, such as accountants, attorneys, bankers, and other professionals involved in the securities disclosure process are uniquely positioned to provide much needed oversight with respect to the effectuation of law compliance.

This Article explores the regulatory incentives provided in the securities laws to gatekeepers and focuses on a critical flaw in the framework: namely, pursuant to the Uniform Securities Act (USA) and as adopted by a majority of states, the private civil liability regimen allows gatekeepers who fail to properly fulfill their role to avoid private civil liability under the securities laws.

Coughing Up Executives or Rolling the Dice?: Individual Accountability for Corporate Corruption

Sharon Oded

“Flesh-and-blood” corporate criminals have long been a major focus of U.S. enforcement authorities in the battle against foreign bribery. Many of the actions taken against individuals were largely enabled due to the cooperation of culpable corporations with investigative authorities. For years, this cooperation was encouraged by the award of “cooperation credit,” which is a mitigated approach toward cooperating corporations. The Yates Memorandum promulgated recently by the Department of Justice, however, has changed the rules of the game. According to the memo, the Department of Justice will no longer provide “cooperation credit” to corporations unless they demonstrate their cooperative approach by “sacrificing” employees involved in bribery. While the newly emerged policy seeks to send a reinforced message of deterrence to corporate executives, a law and economics analysis reveals that the Yates Memo may fall short of reaching its deterrence goals, and in fact may lead to more—rather than fewer—bribery practices.

The Right of Refusal: Immigration Enforcement and the New Cooperative Federalism

Spencer E. Amdur

The federal government relies on the states to help enforce many of its regulatory schemes. State and local governments are often willing—even eager—to oblige. But when a program is controversial or expensive, subfederal officials sometimes resist. When that happens, the federal government uses a variety of means to coax, cajole, hector, threaten, or even force them to participate. I call these methods “inducement strategies.”

Thoughts on the Unification of U.S. Labor and Employment Law: Is the Whole Greater than the Sum of the Parts?

Craig Becker

As the need for fundamental reform of our nation’s labor laws has grown more and more evident since the 1970s, major reform efforts have focused narrowly on adjusting the provisions of the National Labor Relations Act (“NLRA”), but have repeatedly foundered amidst intense polarization over tipping the existing “balance” between labor and management. At the same time, at the federal, state, and, increasingly, municipal levels, U.S. labor laws governing worker organization and collective bargaining have been surrounded by a growing thicket of other laws governing the workplace. These employment laws have established various minimum standards. But the employment law on the books has not been matched by the law in action as violations are endemic, particularly at the bottom of the wage scale.

Old Dog, New Tricks: Title VI and Teacher Equity

Noah B. Lindell

Teacher quality has become a central aspect of education “policy” statutes. Yet federal policymaking has not succeeded in improving America’s teacher quality crisis. Title VI of the Civil Rights Act of 1964—which is over half a century old, and which is primarily understood as an antidiscrimination provision—may offer a solution to this problem. Title VI forbids racial discrimination in the provision of resources in federally funded programs. The U.S. Department of Education has recently made clear that teacher quality is, in fact, a resource covered by Title VI. This Note argues that Title VI complaints, investigations, and lawsuits can encourage (or force) districts to pursue policies that are designed to provide minority students with better teachers. It explains the mechanics of Title VI and illustrates how Title VI investigations might play out in the teaching context. It also discusses and resolves a number of doctrinal and policy concerns that this new use of Title VI could generate.

Law and Inequality: An American Constitution Society Conference at Yale Law School
October 16 and 17, 2015

Editor’s Note

The following pages contain selected essays from the panelists of the American Constitution Society’s Law and Inequality Conference held at the Yale Law School on October 16 and 17, 2015.

The Law and Inequality Conference considered how law shapes, and is shaped by, extreme economic inequality. Today, the richest .1% of Americans holds 22% of the nation’s wealth—the same share held by the bottom 90% of the population.[1] The Conference posited that the law has played a central, yet oft-overlooked role in this phenomenon, presenting an opportunity to understand how law, policy, and jurisprudence have been instruments in generating our current crisis, and to identify ways in which they can be harnessed as tools to redress it.

Needing and Fearing Billionaires in Cities Abandoned by Wealth

Michelle Wilde Anderson

“Heck, we invented the middle class,” wrote journalist Mitch Albom of Detroit in its heyday. Today, the city is inventing something else entirely. A small group of billionaires is leading what surely must be the largest privately financed urban transformation in American history. Detroit’s new model for growth is premised on radical inequality, and it may well perpetuate it too. Is it good news anyway?

In a city where the median household income is about $26,000 per year, three billionaires now own most of the downtown and its riverfront. Another extravagantly wealthy landowner owns nearly 2,000 parcels. All four assembled their land portfolios while the city’s real estate market was flatlining—that is, when Detroit has been littered with so much abandoned property that land ownership brings more costs than value. Since 2005, more than one-third of all properties there have gone into mortgage or tax foreclosure.

Uncivil Procedure: How State Court Proceedings Perpetuate Inequality

Hannah Lieberman

Rules of civil procedure presuppose a level playing field where litigants have structured opportunities to develop and present their claims to a neutral fact-finder. In millions of cases—the vast majority processed by state courts today—the field is neither level nor fair. Instead, enormous numbers of small dollar value cases are disposed of mechanically, without meaningful adjudication. High-volume state court dockets involve serious asymmetries of power and knowledge, where plaintiffs’ lawyers are able to manipulate or short-circuit the rules against unrepresented and generally unsophisticated low-income defendants. As a recent study by the National Center for State Courts (NCSC) concluded, “[t]he idealized picture of an adversarial system in which both parties are represented by competent attorneys who can assert all legitimate claims and defenses is an illusion.”

Constitutional Economic Justice: Structural Power for “We the People”

Martha T. McCluskey

It is time for an ambitious constitutional vision of economic justice. Since the end of the Lochner era, the prevailing constitutional narrative has taught that the Constitution generally should leave economic policy decisions to the legislative and executive branches. That structural theory treats economic justice as discretionary, separate from and subordinate to fundamental constitutional protections for political and civil justice. At most, that narrative supports constitutional protections against economic inequality as narrow exceptions subject to careful scrutiny and constraint.

As economic inequality has increased over recent decades, constitutional doctrine has become more firmly set against economic equality. Not only has the U.S. Supreme Court turned away from constitutional protection of those with modest resources, but it also has increasingly (though often subtly) used the Constitution to limit political branches’ discretion to promote equality.

Law and Economics: Contemporary Approaches

Martha T. McCluskey, Frank Pasquale & Jennifer Taub

With a new project entitled Law and Economics: Contemporary Approaches, we hope to liberate casebook examples of economic analysis of law from their current cramped confines. While law and economics associations increasingly feature empirical work in their annual conferences, casebooks in property, torts, contracts, and other core legal subjects all too often feature simple models of economic activity developed decades ago. While new ways of thinking about finance, health care, and privacy have developed rapidly in the past few decades (and particularly after the global financial crisis of 2008), casebooks all too often rely on simple models of market-driven supply and demand, out of touch with current economic realities.