Weidemaier on Lawyers, Self-Government and the London Stock Exchange

W. Mark C. Weidemaier, University of North Carolina at Chapel Hill, has published Law, Lawyers, and Self-Governance During the Heyday of the London Stock Exchange in Law and Contemporary Problems 82 (2019): 195-223.  From the article:

This Article draws on original archival research, including the minutes of [London Stock Exchange (LSE)] committee meetings and correspondence with solicitors, to examine how the LSE managed its relationship with English courts and common law in the late nineteenth and early twentieth centuries. By studying that problem—rather than the problem of enforcing bargains—we can see the artificiality of any neat dichotomy between private and public legal systems. To keep English courts from disrupting its affairs, the LSE used both extralegal tools—for example, expelling members who filed prohibited lawsuits—and legal tools—such as monitoring judicial developments and funding litigation. Regardless of the nature of the tool, lawyers often shaped its response, and their advice was guided by explicitly legal concerns.

–Dan Ernst

Weekend Roundup

• 
   A new Talking Legal History is up on the ASLH website. Host Siobhan Barco talks with Joseph E. David about his book Kinship, Law and Politics: An Anatomy of Belonging (CUP, 2020).
  

•  In Immigration: What We've Done, What We Must Do, Allison Brownell Tirres, DePaul University College of Law, asks, How can we envision a world where migrants are offered justice?”  The essay appears in Public Books, an online magazine of ideas, scholarship, and the arts.
  

• Author’s query: “I am working on a book project intended for general readership on U.S. Attorneys-General in the modern era (from Kennedy to Barr and beyond) and would be interested in speaking to any legal historians doing work on or related to that topic."  Joshua Raff, joshuaraff3@gmail.com.
  

• "In his first official action as the [University of South Carolina’s] 29th president, Bob Caslen established the Presidential Commission on University History and charged the group with researching “the complex history of the university.”  More.
  

• “With the nation locked in debates over Confederate symbols, the very document that laid out the legal framework of a government built to preserve slavery will spend its 160th anniversary where it spends nearly every other day: quietly tucked away in a library at the University of Georgia”  (AJC).
  

• Historians of securities regulation might want to view the SEC Historical Society-sponsored discussion with PCAOB's founding board members.  
  

• Yuvraj Joshi, a doctoral candidate at the Yale Law School, has posted Racial Justice and Peace, which is forthcoming in the Georgetown Law Journal.
  

• ICYMI: Remembering the Pakistani Lawyers' Movement (GVS).  Eric Jager on The History Behind Demands for "Trial by Combat" (HNN)
  

  Weekend Roundup is a weekly feature compiled by all the Legal History bloggers.

Insider Trading: A Symposium on Chiarella v. United States

[We have the following announcement.  DRE.]

Insider Trading: Honoring the Past.  A Program Commemorating the 40th Anniversary of Chiarella v. United States.  Thursday, November 5th, 10:00 am - 12:00 pm Eastern Time

Sponsored by the NYU Pollack Center for Law & Business; Indiana University Maurer School of Law; and Securities and Exchange Commission Historical Society

This virtual program will explore the fascinating backstories of the Chiarella prosecution and the Supreme Court argument as well as the SEC's and DOJ's insider trading enforcement strategies in the wake of the Court's ruling.

Schedule and Panelists

10:00am - Welcome by Stephen Choi, Murray and Kathleen Bring Professor of Law, NYU School of Law, Co-Director Pollack Center for Law and Business
 
10:10-11:10am - Session I: The Chiarella Prosecution and Supreme Court Litigation

John S. Siffert, Co-Founding Partner, Lankler Siffert Wohl; Adjunct Professor—NYU School of Law (Assistant US Attorney in the SDNY 1974-1979, prosecuted the Chiarella case and argued the 2nd Circuit appeal)

John “Rusty” Wing, Partner, Lankler Siffert Wohl (Chief of the Securities and Business Fraud Unit for the SDNY’s U.S. Attorney’s Office 1971-1978)

Hon. Judge Jed S. Rakoff, U.S. District Judge SDNY (Chief of the Securities and Business Fraud Unit for the SDNY’s U.S. Attorney’s Office 1978-1980)

Stanley S. Arkin, founding member of Arkin Solbakken (represented Vincent Chiarella at his criminal trial, 2nd Circuit appeal, and argument before the Supreme Court)

Panel Moderator: Donna M. Nagy, C. Ben Dutton Professor of Law, Indiana University Maurer School of Law

11:10am-12:00pm Session II: The SEC and DOJ’s Response to the Supreme Court’s Chiarella Decision

Donald C. Langevoort, Thomas Aquinas Reynolds Professor of Law, Georgetown University Law Center (SEC Special Counsel, Office of General Counsel, 1978-1981)

Lee S. Richards III, Co-Founding Partner, Richards Kibbe & Orbe, (Assistant US Attorney in the SDNY 1977-1983, prosecuted US v. Newman based on the misappropriation theory advanced in, but left undecided by, the Court’s Chiarella ruling)

Hon. Judge Jed S. Rakoff, U.S. District Judge SDNY (SDNY Fraud Unit Chief during the Newman investigation, later served as defense counsel in Carpenter v. United States)

Panel Moderator: Robert B. Thompson, Peter P. Weidenbruch, Jr. Professor of Business Law Georgetown University Law Center

Conference Organizers:

Stephen Choi, Murray and Kathleen Bring Professor of Law, NYU School of Law, Co-Director Pollack Center for Law and Business

Donna M. Nagy, C. Ben Dutton Professor of Law, Indiana University Maurer School of Law

Jane Cobb, Executive Director, SEC Historical Society

Weekend Roundup

•  The 2021 annual meeting of the Organization of American Historians will be virtual.
  

• Via the New York Times: "Pandemic Imperils Promotions for Women in Academia." The article quotes Northwestern's Susan Pearson, among others. 
  

• A number of history departments appear to be pausing graduate admissions, as they navigate COVID-related budgetary constraints and seek to support current students. The University of Pennsylvania recently announced such a pause -- but then clarified that it does not apply to applicants for the J.D./Ph.D. program in American Legal History. [KMT] 
  

• Paradoxes of Universalism, a hybrid but mostly Zoom con-
  
  ference on the fate of "European conceptions of universalism epitomized by the Enlightenment’s faith in the progress of reason," at the University of Helsinki, November 4–6, 2020.  Abstracts here.

•  More on the history of race, legislation, and ICU-bed shortages: recent interview with George Aumoithe (Stony Brook University) on Amanpour and Co. on his recent WaPo Made by History piece. You can watch the video here.

• The Historical Society of the U.S. District Court for the Southern District of Indiana is hosting Reflections on the Struggle for Woman Suffrage,”  the second of a three sessions in the 13th annual Court History and Continuing Legal Education Symposium, which will take place virtually at 3 p.m. on Oct. 9, with Anita Morgan, senior lecturer in history at IUPUI.  More. 
  

• The Securities and Exchange Commission Historical Society has announced the opening of “its newest gallery, The Enforcement Division: A History. This gallery tells the story of the Enforcement Division since its founding in 1972, as its attorneys were confronted again and again not only with the fraudsters who seem constantly to plague the securities markets, but with new schemes and stratagems made possible by political, economic, and technological change.”
  

• Legal historian Adnan Zulfiqar (Rutgers Law School) is guest blogging over at the Islamic Law Blog this month. 
  

• A biographical sketch of the nineteenth-century lawyer Edwin Willits in the Monroe (Michigan) News.
  

Weekend Roundup is a weekly feature compiled by all the Legal History bloggers.

Annunziata on Defoe on London Stock-Jobbing

Filippo Annunziata, Bocconi University, has posted At the Early Dawn of the Modern Regulation of Financial Markets: The Villainy of Stock-Jobbers (1701) and The Anatomy of Exchange Alley (1719) by Daniel Defoe:

NYPL

In the year Robinson Crusoe (1719) is delivered to the press, Daniel Defoe publishes a magnificent pamphlet (The Anatomy of Exchange Alley: or a System of Stock-Jobbing) where he mercilessly exposes the serious embezzlement he observes on the London exchange market, throwing himself - with tones that are at times sarcastic, at times vehement - against the speculative activities of that time. Just like Robinson Crusoe's cannibals pounce on their poor victims, so the stock-jobbers devastate the market, manipulating it, and, in doing so, damage the stock exchange, the national economy, the Parliament, the Crown, and all the citizens of the Kingdom. The result is an apocalyptic vision of what, in the future, would become the most important financial market in Europe and that, in 1719, was still an infant, albeit a somewhat developed one. The text of 1719 is not a monad in Defoe's production, nor does it represent a one-off case of grievances against the vibrant speculations on the securities market, at the time allegedly perpetrated by the jobbers. In a previous libellus of 1701 - The Villainy of Stock Jobbers Detected and the Causes of the Late Run after the Bank and the Bankers Discovered and Considered - Defoe had already harshly stigmatized the conduct of London jobbers, thus becoming part of a larger literary vein of the time.

Many of the questions that Defoe raises still remain significant today; they underpin many of the policy choices that govern the regulation of stock exchanges, and, generally, of markets for financial instruments, in particular in the area of Market Abuse. Many of the situations that Defoe describes are a true anticipation, 300 years before hand, of the issues with which modern Legislation against Market Abuse is concerned: insider trading, market manipulation, appropriate disclosure of price-sensitive information. Market efficiency appears to have been right at the dawn of modern financial markets, a widely shared concern, that Defoe rightly captures in these writings.

–Dan Ernst

Weekend Roundup

• Over at U.S. Intellectual History Blog, Victoria Saker Woeste, American Bar Foundation, has contributed a post to Roundtable on Antisemitism: Anti-Jewishness and U.S. Historiography, a series in which U.S. historians discuss “how anti-Semitism has been studied and theorized in the American past.” 

• The video of Robert Tsai’s lecture,“What Might Have Been,” delivered last October at the Robert H. Jackson Center is now available online.  Professor Tsai draws upon his research at the National Archives to discuss why Justice Jackson should have resisted Chief Justice Stone’s request that “he delete certain passages from his original draft opinion” in West Virginia v. Barnette.

• A new gallery, Transformation & Regulation: Equities Market Structure, 1934 to 2018, is now available over at the Securities and Exchange Commission Historical Society.

• The law faculty of Tel Aviv University has issued its call for the 5th Annual TAU Workshop for Junior Scholars in Law, entitled Law and Boundaries, to be held on November 17-19, 2019.

• Sports lawyers have published a memorial symposium on the legal historian J. Gordon Hylton in the Marquette Sports Law Review 29 (2018): 1-11.

  Weekend Roundup is a weekly feature compiled by all the Legal History bloggers

Krishnan on the Dubai International Financial Centre Courts

Jayanth K. Krishnan, Indiana University Maurer School of Law, has posted The Dubai International Financial Centre Courts: A Retrospective (Motivate Publishing House, 2018):

Can Western-based, English-speaking, common law commercial courts operate successfully in an environment that are not their own—such as in the Middle East? This question is not a simple thought experiment but rather the reality that has occurred since the mid-2000s in the Emirate of Dubai. This monograph recounts the history of how the ‘Dubai International Financial Centre Courts’ emerged. Drawing on extensive interviews with key stakeholders involved in the process, along with rich original documents as well as all of the Courts’ judgments, this narrative offers important lessons for those seeking to understand more fully the complex interplay of how law, legal institutions and legal and political actors operate in today’s globalised world.

Money as a Democratic Medium

[We have the following conference announcement, schedule and call for breakout panels.  (Update: the schedule for the second day of the conference now appears after the jump.)]

Money as a Democratic Medium.  December 14-15, 2018.  Harvard Law School.  Sponsored by the Harvard Program on the Study of Capitalism, Institute for Global Law and Policy, The Murphy Institute - Tulane University, the Harvard Law Forum,  and Harvard Law School

"Those who create and issue money and credit direct the policies of government and hold in the hollow of their hands the destiny of the people."  The words, attributed to a 20th century British banker, capture an emerging consensus.  Money, governance, and public welfare are intimately connected in the modern world.  More particularly, the way political communities make money and allocate credit is an essential element of governance.  It critically shapes economic processes - channeling liquidity, fueling productivity, and influencing distribution.  At the same time, those decisions about money and credit define key political structures, locating in particular hands the authority to mobilize resources, determining access to funds, and delegating power and privileges to private actors and organizations.

Recognizing money and credit as public projects exposes issues of democratic purpose and possibility.  In a novel focus, this conference makes those issues central.  Scholars, policy makers, and students have often assumed that money and credit emerge from private exchange and entrepreneurial activity.  Recent work, by contrast, emphasizes that modern currencies depend on collective orchestration.  That approach resets the frame.

First, examining money as a public project opens monetary institutions to our view.  Comparative and historical work suggests that societies have experimented constantly with different monetary structures and methods of allocating credit.  Everyday experience reiterates that lesson.  The Financial Crisis, the European Monetary Union, recurring sovereign debt crises among emerging countries - all have catalyzed intense debates over institutional reform.  Expanding our vision enables us to identify and explore more effectively the complex engineering that produces modern money and credit.  Given the broader view, we can better evaluate the way our monetary orders have changed and the capacities at stake when they do.  We can see causal connections previously obscured, including the relationships between governmental structures and market processes.  Likewise, we can ask new questions about the way disciplinary premises, such as the private genesis of money and credit or the classical dichotomy between real and nominal value, have shaped substantive inquiry.  Looking forward, we can consider institutional alternatives, the political and normative premises that shape them, and their impact on shaping the modern political economy.

Second, the new approach directs attention to a different register of claims and responsibilities.  If money is a public resource, if public obligation and enforcement anchor demand for the medium, if the government in essential ways supports the payments system - then we face profound legal and political obligations to evaluate the design of the monetary and financial system and the dynamics it produces, including how money circulates, whether participants in a monetary community have equal access to the medium, and how the current structures engender growth, mobility and opportunity, or dearth and exclusion.  Today's challenge is to revise the monetary architecture we have inherited so that it operates to reinforce democratic aspirations rather than undermine them.

The goal of the conference is to bring individuals working in different areas with diverse methods into a common conversation.  Their projects are likely to inform each other and may suggest unanticipated synergies at the academic and policy-making level.  For example, one trend in recent work reinterprets the monetary system as a public utility.  That insight throws the regulatory regime crafted for banks and analogous institutions into a new light, suggesting that we have miscategorized those entities.  Another strand in scholarship and policy-making focuses on the long-standing failure by commercial banks to reach low-income individuals.  That work explores the motives that drive bankers' decisions and considers efforts to re-align those incentives.  The projects on infrastructure and "banking the unbanked" each revise scholarly approaches to banks as intermediaries and innovate ways to expand access to credit. 

Similar potential synergies abound elsewhere.  Thus scholars from a variety of methodological angles are exploring the way societies anchor money's value.  Their work considers the critical role played by public demand, including the determination by political authorities to take a particular unit in payment for taxes and other communal obligations.  That theoretic claim informs full employment/job guarantee programs, proposals for "complementary currencies" that could circulate as a more flexible local money within monetary unions, and models of sustainable credit that advocate loans tailored to increasing taxpaying capacity.  As the scholarship in these areas proliferates, its authors should vet their approaches to public demand against each other, looking for the differences and shared aspects that could stimulate new insights and stronger work.

The Conference is organized to invite sustained exchange among participants over the course of the two-day conference.  Scheduled sessions are listed below. 

Two sessions on Friday, including one period on the general schedule and a period for break-out panels or more specialized discussion, have been set aside for submitted panels or discussions.  To propose a panel, please submit a packet containing 1) panel participants, 2) confirmed commentator, and 3) paper abstracts by November 1st.   We will receive independent paper submissions, but their chances of acceptance of course depend on the vagaries of other submissions.  Panels and papers in the following areas are particularly encouraged:  Green Finance/Public Purpose Finance; Financialization and Inequality; Central Bank Accountability.  We can accommodate five panels - we hope to see you there.

Submissions should be made to Susan Smith susan.smith.hls@gmail.com Faculty Assistant and conference coordinator with subject: Money Conference Paper.  Please contact her or Christine Desan (desan@law.harvard.edu) for additional information. 

Schedule after the jump.

Peer on the Federal Reserve Act and the Lender of Last Resort

Nadav Orian Peer, Tulane University Law School, has posted Negotiating the Lender-of-Last-Resort: The 1913 Fed Act as a Debate Over Credit Distribution, which is forthcoming in the NYU Journal of Law & Business (2019):

“Lending of last resort” is one of the key powers of central banks. As a lender-of-last-resort, the Federal Reserve famously supports commercial banks facing distressed liquidity conditions, thereby mitigating destabilizing bank runs. Less famously, lender-of-last-resort powers also influence the distribution of credit among different groups in society and therefore have high stakes for economic inequality. The Fed’s role as a lender-of-last-resort witnessed an unprecedented expansion during the 2007-9 Crisis when the Fed invoked emergency powers to lend to a new set of borrowers known as “shadow banks”. The decision proved controversial and spurred legislative reform narrowing the Fed’s authority as well as an ongoing scholarly debate. Participants in this debate, the article argues, limited their focus to financial stability considerations, thereby neglecting those powers’ considerable distributive implications. The article contributes to the current literature by demonstrating the distributive stakes of lender-of-last-resort powers through a concrete historical example: the legislative debate around the 1913 Federal Reserve Act that established the Fed. During that time, three different groups debated the legal definition of “eligible collateral” that the Fed could accept from borrowers to secure emergency loans. The first group was corporate financiers, who were interested in supporting capital markets. The second group was the Democratic framers of the Act, who tried to divert credit away from corporate securities and into small businesses. The third group was farmers that needed credit for developing the agrarian periphery. I argue that each of these groups tried to shape the definition of eligible collateral in ways that would promote that group’s unique credit needs and reduce its borrowing costs. For us today, this history is an invitation to reconsider the distributive implications of the current lender-of-last-resort powers and revise them accordingly.

Weekend Roundup

• Congratulations to Honor Sachs, University of Colorado at Boulder, upon her naming as a National Humanities Center fellow for her project, “Freedom by a Judgment: The Legal History of an Afro-Indian Family.”  H/t: Chronicle of Higher Education. 

• Here are an obituary and another press release on the death of Joseph Gordon Hylton.

• We were intrigued by a report of the publication of “A Guide to Researching Land in Oklahoma at the Oklahoma Historical Society,” by Katie Bush, a research librarian at the Oklahoma History Center.  According to The Oklahoman, the guide “condenses Oklahoma land history to the basics, from the Louisiana Purchase in 1803 to the Free Homes Act of 1900.”

• The SEC Historical Society has archived a podcast of a Roundtable of SEC Enforcement Directors, held on April 3 at Georgetown Law.  “Dr. Harwell Wells, Professor, Temple University Beasley School of Law, discusses key issues and challenges that occurred during the tenures of current Enforcement Division co-directors, Stephanie Avakian and Steven Peikin, and former division directors Andrew J. Ceresney, Stephen Cutler, Robert Khuzami, Gary Lynch, William McLucas, Stanley Sporkin, Linda Thomsen, and Richard Walker.”  Topic include “the origins of the Foreign Corrupt Practices Act, the development of insider trading, and the impact of technology on the markets and the retail investor.”

• Via H-Law, we have the CFP for "A Century of Internationalisms: The Promise and Legacies of the League of Nations."

• The draft program for the Policy History Conference at Arizona State is out.  As in the past, it includes much legal history!  

• The remaining, May 2018, sessions in the “Uma Justiça para o Século XXI” at THD-ULisboa are listed here.

• ICYMI:  Cokie Roberts on the history of EPA.  You hardly need us to follow reviews of the new documentary on RBG, but here's one anyway.

Weekend Roundup is a weekly feature compiled by all the Legal History bloggers.

Pritchard and Thompson on Texas Gulf Sulfur

Adam C. Pritchard, University of Michigan Law School, and Robert B. Thompson, Georgetown University Law Center, have posted Texas Gulf Sulphur and the Genesis of Corporate Liability Under Rule 10b:

This Essay explores the seminal role played by SEC v. Texas Gulf Sulphur in establishing Rule 10b-5’s use to create a remedy against corporations for misstatements made by their officers. The question of the corporation’s liability for private damages loomed large for the Second Circuit judges in Texas Gulf Sulphur, even though that question was not directly at issue in an SEC action for injunctive relief. The judges considered both construing narrowly "in connection with the purchase or sale of any security," and the requisite state of mind required for violating Rule 10b-5. We explore the choices of the Second Circuit judges by analyzing not only material available in the published opinions, but also the internal memos that the judges circulated among themselves prior to issuing the decision. Ultimately, the Second Circuit majority construed "in connection with" broadly, a choice ultimately validated by the Supreme Court. The Second Circuit's choice of negligence for SEC injunctive actions, however, was rejected by the Supreme Court for both private plaintiffs and the SEC.

Donald on Dealers and Securities through the Ages

This one may interest me more than the rest of you, because I’ve just finished John C. Loeser’s Over-the-Counter Securities Market: What It Is and How it Operates ((1940).  But here goes anyway: David C. Donald, Chinese University of Hong Kong Faculty of Law, has posted From Block Lords to Blockchain: How Securities Dealers Make Markets:

Technology is currently bringing a decisive wave of innovation and disruption to the financial industry. There are many promises and predictions of where this will go, but the best source of information for projecting the future’s trajectory is history. History shows us that markets began decentralized, centralized from the 18th century around trading venues, and then gravitated again toward decentralization thanks to data transmission. The “gravity” that has shaped this process is broker-dealer choice. The medium in which the process has occurred is technology. Law has occasionally – but not always – played an important role.

Merchant firms of varying size and specialization have traded securities largely through private networks at least from 1200, and then since about 1800 in clubs and quasi-public organizations called “exchanges”. Around 2000, major broker-dealers began to re-internalize trading into proprietary matching platforms, a return to private networks. The move to decentralization accelerated around 2015 with an intense interest in blockchain or other forms of distributed ledger technology.

Securities trading has thus migrated from private networks to public forums and appears to be returning to private networks again. This evolution has been shaped by law and technology, but is driven by the interests of the broker-dealers that both design and operate the markets. As trading concentrated in exchange venues slips into history, it is important to understand what is happening. The dis-integration of securities trading, commonly understood as stimulating innovation and lowering trading costs through competition among matching platforms, is arguably reducing market quality for all other constituents, such as issuers, investors, regulators and the taxpayers who support them, while increasing control of the largest institutions over access to the market.

Horton on Disclosures before the '33 Securities Act

Brent J. Horton, Fordham University, has posted In Defense of a Federally Mandated Disclosure System: Observing Pre-Securities Act Prospectuses, which appeare din the American Business Law Journal 54 (2017): 743:

Some legal scholars—skeptics—question the conventional wisdom that corporations failed to provide adequate information to prospective investors before the passage of the Securities Act of 1933 (Securities Act). These skeptics argue that the Securities Act’s disclosure requirements were largely unnecessary. For example, Paul G. Mahoney in his 2015 book, Wasting A Crisis: Why Securities Regulation Fails, relied on the fact that the New York Stock Exchange (NYSE) imposed disclosure requirements in the 1920s to conclude that stories about poor pre-Act disclosure are “demonstrably wrong”. (Likewise, Roberta Romano argued in Empowering Investors that “there is little tangible proof” that disclosure was inadequate pre-Securities Act.)

This Article sets out to determine who is correct, those that accept the conventional wisdom that pre-Securities Act disclosure was inadequate, or the skeptics?

The Author examined twenty-five stock prospectuses (the key piece of disclosure provided to prospective investors) that predate the Securities Act. This primary-source documentation strongly suggests that—contrary to the assertions of skeptics—pre-Act prospectuses did fail to provide potential investors with financial statements, as well as information about capitalization and voting rights, and executive compensation.

Pritchard and Thompson on the 2d Circuit and Securities Law in the 60s

Adam C. Pritchard, University of Michigan Law School, and Robert B. Thompson, Georgetown University Law Center, have posted Securities Law in the Sixties: The Supreme Court, the Second Circuit, and the Triumph of Purpose Over Text:

Henry J. Friendly (credit)

This articles analyzes the Supreme Court’s leading securities cases from 1962 to 1972—Capital Gains, J.I. Case v. Borak, Mills v. Electric Auto-Lite Co., Bankers Life, and Affiliated Ute—relying not just on the published opinions, but also the justices’ internal letters, memos, and conference notes. The Sixties Court did not simply apply the text as enacted by Congress, but instead invoked the securities laws’ purposes as a guide to interpretation. The Court became a partner of Congress in shaping the securities laws, rather than a mere agent. The interpretive space opened by the Court’s invocation of purpose allowed a dramatic expansion in the law of securities fraud. Encouraged by the high court’s dynamic statutory interpretation doctrine, the Second Circuit—the “Mother Court” for securities law—developed new causes of action that transformed both public and private enforcement of the securities laws. The insider trading prohibition found a new home in the flexible confines of Rule 10b-5. Implied private rights of action encouraged class actions to flourish. The growth of fiduciary duty in the 1960s created a blueprint for “federal corporation law.” The Supreme Court’s “counter-revolutionary” turn in the 1970s cut back on purposivism and the doctrinal innovations of the Sixties, but the approaches to insider trading and private rights of action survived, remaining pillars of securities regulation today.

Perino on the Lost History of Insider Trading

Michael A. Perino, St. John's University School of Law and the author of The Hellhound of Wall Street: How Ferdinand Pecora’s Investigation of the Great Crash Forever Changed American Finance (Penguin, 2010), has posted The Lost History of Insider Trading:

Common conceptions about the history of insider trading norms in the United States are inaccurate and incomplete. In his landmark 1966 book Insider Trading and the Stock Market, Dean Henry Manne depicted a world in which insider trading was both widespread and universally accepted. It was SEC enforcement efforts in the early 1960s, he contended, that swayed public opinion to condemn what had previously been considered a natural and unobjectionable market feature. For five decades, the legal academy has largely accepted Manne’s historical description and the vigorous debates over whether the federal government should prosecute insider trading have assumed, either explicitly or implicitly, the accuracy of those views. This paper challenges that conventional wisdom and shows that the shift in insider trading norms began earlier than has previously been supposed and substantially preceded governmental enforcement efforts. Insider trading, while generally believed to be ubiquitous in turn-of-the-century stock markets, was not universally condoned. In fact, the propriety of the practice at publicly traded companies was highly contested. Those debates coincided with the growth of public companies and an ongoing shift in views about how the stock market functioned. The early twentieth century debate over insider trading thus featured both modern arguments about property rights in information and the effect that insider trading has on stock market participation and older ideas about manipulation and market inefficiency that would generally not be accepted today.

Vanatta on the Rise of Consumer Finance and the Race to the Bottom

Sean H. Vanatta, who is ABD in Princeton’s history department, has published Citibank, Credit Cards, and the Local Politics of National Consumer Finance, 1968–1991, in the Business History Review 90 (2016): 57-80:

Within the postwar financial regulatory system, state-level regulations—particularly interest rate limits—constrained the profitability of bank credit card plans. But differences in law among the states allowed motivated institutions to circumvent local laws using these mobile financial instruments. Eventually, banks themselves became mobile, placing irresistible pressure on states to eliminate local restrictions on consumer finance. The critical moment came when Citibank relocated its credit card business to Sioux Falls, South Dakota, in 1981. By examining this move in its longer context, this essay provides a new perspective on the rise of consumer finance in the late twentieth century, one that emphasizes strategic manipulation of local law by firms pursuing a national customer base.

Goodspeed, "Legislating Instability Adam Smith, Free Banking, and the Financial Crisis of 1772"

New from Harvard University Press: Legislating Instability: Adam Smith, Free Banking, and the Financial Crisis of 1772 (2016), by Tyler Beck Goodspeed (University of Oxford). A description from the Press:

From 1716 to 1845, Scotland’s banks were among the most dynamic and resilient in Europe, effectively absorbing a series of adverse economic shocks that rocked financial markets in London and on the continent. Legislating Instability explains the seeming paradox that the Scottish banking system achieved this success without the government controls usually considered necessary for economic stability.

Eighteenth-century Scottish banks operated in a regulatory vacuum: no central bank to act as lender of last resort, no monopoly on issuing currency, no legal requirements for maintaining capital reserves, and no formal limits on bank size. These conditions produced a remarkably robust banking system, one that was intensely competitive and served as a prime engine of Scottish economic growth. Despite indicators that might have seemed red flags—large speculative capital flows, a fixed exchange rate, and substantial external debt—Scotland successfully navigated two severe financial crises during the Seven Years’ War.

The exception was a severe financial crisis in 1772, seven years after the imposition of the first regulations on Scottish banking—the result of aggressive lobbying by large banks seeking to weed out competition. While these restrictions did not cause the 1772 crisis, Tyler Beck Goodspeed argues, they critically undermined the flexibility and resilience previously exhibited by Scottish finance, thereby elevating the risk that another adverse economic shock, such as occurred in 1772, might threaten financial stability more broadly. Far from revealing the shortcomings of unregulated banking, as Adam Smith claimed, the 1772 crisis exposed the risks of ill-conceived bank regulation.

A few blurbs:

“Tyler Goodspeed has written a marvelous account of a Scottish bank failure in 1772 that ramified from Edinburgh to London and to American plantations, where it helped to transform threatened Virginia debtors into the rebels of 1776. Goodspeed brilliantly upends the lessons that Adam Smith and subsequent analysts drew from their near-death experience: precisely the unregulated profusion of small banks and the unlimited liability assumed by bankers cushioned against systemic crisis. What a delightfully written challenge to the conventional wisdom after our own near financial shipwreck!”—Charles S. Maier

“This is an original, scholarly, and important contribution to financial history, to the political economy of monetary institutions, and to Adam Smith studies. The prose is vivid, and it is a pleasure to read.”—Lawrence H. White

More information, including the TOC, is available here.

Goldstein on "The Cold War Trials of James Kutcher, 'The Legless Veteran'"

A new release from the "Landmark Law Cases and American Society" series at the University Press of Kansas: Discrediting the Red Scare: The Cold War Trials of James Kutcher, "The Legless Veteran," by Robert Justin Goldstein (Oakland University). A description from the Press:

Credit

During the Allies’ invasion of Italy in the thick of World War II, American soldier James Kutcher was hit by a German mortar shell and lost both of his legs. Back home, rehabilitated and given a job at the Veterans’ Administration, he was soon to learn that his battles were far from over. In 1948, in the throes of the post-war Red Scare, the hysteria over perceived Communist threats that marked the Cold War, the government moved to fire Kutcher because of his membership in a small, left-wing group that had once espoused revolutionary sentiments. Kutcher’s eight-year legal odyssey to clear his name and assert his First Amendment rights, described in full for the first time in this book, is at once a cautionary tale in a new period of patriotic one-upmanship, and a story of tenacious patriotism in its own right.

The son of Russian immigrants, James Kutcher came of age during the Great Depression. Robbed of his hope of attending college or finding work of any kind, he joined the Socialist Workers Party, left-wing and strongly anti-Soviet, in his hometown of Newark. When his membership in the SWP came back to haunt him at the height of the Red Scare, Kutcher took up the fight against efforts to punish people for their thoughts, ideas, speech, and associations. As a man who had fought for his country and paid a great price, had never done anything that could be construed as treasonous, held a low level clerical position utterly unconnected with national security, and was the sole support of his elderly parents, Kutcher cut an especially sympathetic figure in the drama of Cold War witch-hunts. In a series of confrontations, in what were highly publicized as the “case of the legless veteran,” the federal government tried to oust Kutcher from his menial Veterans’ Administration job, take away his World War II disability benefits, and to oust him and his family from their federally subsidized housing. Discrediting the Red Scare tells the story of his long legal struggle in the face of government persecution—that redoubled after every setback until the bitter end.

A few blurbs:

“The case of James Kutcher, the “legless veteran,” is all but forgotten today, but it deserves to be a reminder of the mass hysteria that overtook the country during the Red Scare of the 1940s and 1950s. Robert Goldstein’s prodigious research and careful analysis do not hide the anger that he and we should feel about this case. It is a brilliant indictment of a country that forgot what the Bill of Rights meant, as well as the story of an “ordinary man” who showed extraordinary courage.” —Melvin I. Urofsky

“The celebrated—Arthur Miller, Lillian Hellman, and J. Robert Oppenheimer—as well as ordinary librarians, teachers, and bus drivers—all suffered through the anti-communist hysteria of the Truman-McCarthy-Eisenhower years. Robert Goldstein’s well-researched and lively monograph helps to rescue two of the unsung heroes of this tragic era who stood up against the government witch-hunters: James Kutcher, the legless World War II veteran and outspoken Trotskyite, who triumphed over the loyalty machinery of the Veterans Administration, and his redoubtable lawyer, Joseph L. Rauh, Jr., who made that victory possible. ” —Michael E. Parrish

More information is available here.

CFP: Graduate Student Workshop on the History and Politics of Public Finance

We have the following call for applications:

8th Annual Graduate Student Workshop 

The last decade has witnessed a revival of multidisciplinary research on the social, political, and historical sources and consequences of public finance. We invite interested graduate students from history, law, public policy, and the social sciences to participate in a one-day workshop on this “new fiscal sociology.” In addition to brief lectures introducing students to the comparative history of taxation and public finance, the workshop will consist of discussion of classic and contemporary texts.

The graduate student workshop will be held on Wednesday, November 16th, 2016, in Chicago, Illinois in conjunction with the annual meeting of the Social Science History Association (SSHA). Participants may also have the opportunity to present their own work on Thursday, November 17^th, as part of the Public Finance network at the SSHA conference.

Space is limited. Some funds for reimbursement of housing and travel expenses will be available for a limited number of participants.

Applicants should submit a CV and a paragraph explaining their interest in this workshop, and (if applicable) a draft of a research paper that they would like to present at the SSHA. Preference will be given to students who also submit conference papers, but we encourage applications from all students interested in the workshop, including those at early stages of their graduate careers.

Submit materials via e-mail no later than February 20, 2016 to:

• Isaac Martin, Department of Sociology, University of California – San Diego (iwmartin@ucsd.edu)
• Lucy Barnes, Department of Political Science, University College London  (l.barnes@ucl.ac.uk)
• Molly Michelmore, Department of History, Washington and Lee University  (MichelmoreM@wlu.edu)

Kaal and Oesterle on Regulating Hedge Funds

Wulf A. Kaal, University of St. Thomas, Minnesota, School of Law, and Dale A. Oesterle, Ohio State University Michael E. Moritz College of Law, have posted The History of Hedge Fund Regulation in the United States, which is to appear in the Handbook on Hedge Funds (Oxford University Press, 2016):

The hedge fund industry in the United States evolved from a niche market participant in the early 1950s to a major industry operating in international financial markets. Hedge funds in the United States were originally privately-held, privately-managed investment funds, unregistered and exempt from federal securities regulation. With increasing investor demand and significant growth of the hedge fund industry came a tectonic shift in the regulatory framework applicable to the industry. The book chapter summarizes the regulatory evolution of the hedge fund industry.

As it happens, we've just noticed a related work: Onur Ozgode, “Governing the Economy at the Limits of Neoliberalism: The Genealogy of Systemic Risk Regulation in the United States, 1922–2012” (Ph.D. dissertation, Columbia University, 2015).