Editor’s Note: Harvey L. Pitt
is Chief Executive Officer and Managing Director at Kalorama Partners, LLC and former Chairman of the U. S. Securities and Exchange Commission. This post is a reply to a post by Professor Tamar Frankel, titled Did Commissioner Gallagher Violate SEC Rules?
, and available on the Forum here
. This post and the post by Professor Frankel relate to a paper
by Commissioner Daniel Gallagher and Professor Joseph A. Grundfest, described on the Forum here
. The Forum featured last week (here
) a joint statement by thirty-four senior corporate and securities law professors from seventeen leading law schools, including at Boston University, Chicago, Columbia, Cornell, Duke, George Washington, Georgetown, Harvard, Michigan, New York University, Northwestern, Stanford, Texas, UCLA, Vanderbilt, Virginia and Yale, opining that the paper’s allegations against Harvard and the SRP are meritless and urging the paper’s co-authors to withdraw these allegations. The Forum also published earlier posts about the paper by Professor Grundfest (most recently here
) and by Professor Jonathan Macey (most recently here
Editor’s Update: A statement that Mr. Pitt issued jointly with Mr. Brian Cartwright and Mr. Simon Lorne, expressing substantial agreement with the paper’s analysis and disagreeing with suggestions that Commissioner Gallagher’s co-authorship of the paper is inappropriate, is available on Business Wire here.
One of the many positive attributes of the Harvard Law School Forum on Corporate Governance and Financial Regulation (“Forum”) is that it is democratic. It accepts and posts submissions on its website reflecting a valuable diversity of opinion, philosophy and perspective. Nowhere is this better borne out than in the ongoing back-and-forth discussion regarding a recent, substantively valuable, paper (here) co-authored by SEC Commissioner Dan Gallagher and Stanford Law Professor (and former SEC Commissioner) Joseph Grundfest (summarized on the Forum here). The Paper was critiqued with valuable substantive observations by Professor Jonathan Macey (here, here, and here), some of which were, in turn, responded to by Professor Grundfest (here and here). I foolishly entered this debate on the Forum, acknowledging the valuable insights Professors Grundfest and Macey both were offering, recommending that their continuing debate, and any other contributors to it, focus on the important substance of the Gallagher/Grundfest Paper (here). I had hoped thereby that we all might be spared from certain forms of future commentary (especially of a personal nature) that strayed from the Paper’s and Professor Macey’s scholarly substantive analysis.
In my Forum post, I confirmed the correctness of the Gallagher/Grundfest Paper’s unassailable core observation—irrespective of whether any particular proposal (or the proponent of that proposal) espousing the elimination of staggered boards in fact violated the SEC’s proxy fraud rules—those antifraud rules, by their terms, undoubtedly apply to proponents of shareholder proposals as well as to public companies’ proxy solicitation materials. In submitting my post, I suppose I anticipated that—no matter how balanced a presentation I might endeavor to offer—if emotion were to become a substitute for analysis—I might soon be swept up in any subsequent cross-fire. What I did not expect, however, was that a new voice—belonging to Boston University School of Law’s Professor Tamar Frankel, one of the Country’s pre-eminent legal experts on the application of the federal securities laws to mutual funds and other investment companies (as well as those who advise and manage collective portfolios), would enter the fray, and question the accuracy of my response to a newspaper reporter about prior precedent for a sitting SEC Commissioner to express his views on whether current/recent activities might violate of the law (here).
…continue reading: On Ethics, Rhetoric and Civility: A Response to Professor Frankel