John Coates

This summer, a bipartisan group of about a hundred academics, journalists, pollsters, former government officials and former campaign staff members convened for an initiative called the Transition Integrity Project. By video conference, they met to game out hypothetical threats to the November election and a peaceful transfer of power if the Democratic candidate, former Vice President Joe Biden, were to win...The idea was to test the machinery of American democracy...Along with disinformation campaigns, there is the separate problem of “troll armies” — a flood of commenters, often propelled by bots — that “aim to discredit or to destroy the reputation of disfavored speakers and to discourage them from speaking again,” Jack Goldsmith, a conservative law professor at Harvard, writes in an essay in “The Perilous Public Square,” a book edited by David E. Pozen that was published this year. This tactic, too, may be directed by those in power...Concerns about the harm of unfettered speech have flared on the left in the United States since the 1970s. In that decade, some feminists, led by the legal scholar Catharine A. MacKinnon and the activist Andrea Dworkin, fought to limit access to pornography, which they viewed as a form of subordination and a violation of women’s civil rights. In the 1980s and ’90s, scholars developing critical race theory, which examines the role of law in maintaining race-based divisions of power, called for a reading of the First Amendment that recognized racist hate speech as an injury that courts could redress...The Supreme Court has also taken the First Amendment in another direction that had nothing to do with individual rights, moving from preserving a person’s freedom to dissent to entrenching the power of wealthy interests. In the 1970s, the court started protecting corporate campaign spending alongside individual donations. Legally speaking, corporate spending on speech that was related to elections was akin to the shouting of protesters. This was a “radical break with the history and traditions of U.S. law,” the Harvard law professor John Coates wrote in a 2015 article published by the University of Minnesota Law School. Over time, the shift helped to fundamentally alter the world of politics.

Two primary drivers for deal activity, company market valuations and overall economic conditions, are diverging more than ever. That’s creating opportunities for both law firms and their corporate clients—and challenges for others. M+A lawyers are increasingly talking about “the winner and the losers” in the market. That’s reinforcing the need for law firms to have a diversified range of clients, including clients that are more resilient and buoyant in today’s economy, some observers say. Brian Richards, chair of Paul Hastings’ global private equity practice, said deal flow in his practice has seen an increase in August, which he said is normally a down time for deals...During the initial phases of the pandemic, the U.S. economy and the markets took a unified downturn, effectively halting large deals and providing a level of uncertainty that put even smaller deals on hold. But the stock market has rebounded, and with authority...The economy, on the other hand, has not fared near as well...John Coates, a professor of law and economics at Harvard Law School, said most law firms are probably not in a terrible spot. “As a general matter, compared to say most professional services industries, the legal services for M+A work is very fragmented,” Coates said. “Individual firms don’t tend to have a significant share of overall M+A work, so one firm isn’t necessarily being hit harder than another.” Firms that have specialized their M+A work around industries hit hard by the pandemic, like real estate or hospitality, he said, could end up in that loser bin for the time being, but most firms are geared to handle that impact as well. “Well-run firms pay attention to not letting any one client generate a large percentage of their revenues, and there aren’t too many firms that are too dependent on that,” he said. “Regardless of how the market and the economy affect companies, law firms are normally sufficiently diversified.”

President Donald Trump’s attempt to force Chinese company ByteDance to divest the U.S. version of its popular TikTok social-media app has some precedent. But the rest of the bizarre corporate drama that has recently played out in two Washingtons is not based in reality, especially the president’s demand for a cut of any deal in which Microsoft Corp. acquires TikTok. Trump said Monday he was ready to approve a deal for Microsoft MSFT, -0.01% to purchase TikTok — a change in his stance since Friday’s opposition — but only if the U.S. government receives a lot of money in exchange. On Sunday, Trump had a phone conversation with Microsoft Chief Executive Satya Nadella, in which he told the CEO that a “very substantial portion of the price [for TikTok] is going to have to come into the Treasury of the United States, because we’re making it possible for this deal to happen,” Trump said Monday...The fact that Trump seems to think that the U.S. government is acting as an investment banker in this possible match-up is a new level of delusion. Finder’s fees may be a core component of how real estate works, but not the federal government. “There is zero legal authority for the president to extort money from a company seeking to clear a deal under the laws creating CFIUS,” John Coates, a professor of law at Harvard University, said in an email. “Congress has never authorized an executive branch official, or any agency, to condition regulatory approval or clearance on the payment of the ‘cut’ of a deal, a ‘finder’s fee,’ or a bribe. The fact that the money might in theory go into the U.S. Treasury does not make it legal. Congress, and only Congress, can authorize taxes, through legislation.”

Seven weeks after Congress unleashed more than $2 trillion to deal with the coronavirus crisis, an oversight commission intended to keep track of how the money is spent remains without a leader. Four of the five members of the Congressional Oversight Commission have been appointed, but House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Mitch McConnell, R-Ky., have not agreed on a chair, leaving the commission rudderless as the federal government pumps unprecedented sums into the economy. Without a leader, the panel’s remaining members can still do some oversight work, but cannot hire staff or set up office space. The four members have not met as a group since the economic rescue law was passed by Congress and signed by President Donald Trump in late March. “If the commission is not functioning — which it is not — then there is no oversight” on a huge part of the economic rescue law, said John Coates, a professor of law and economics at Harvard Law School. So far, “it’s a non-oversight, oversight commission,″ added Kimberly Wehle, a visiting professor at American University Law School. Lawmakers trying to oversee the spending law “are surging down the rapids without a raft,″ she said. Congress created the panel to watch over $500 billion in lending to distressed industries backed by the Treasury Department and Federal Reserve. The Fed has said the money can be leveraged to offer more than $2 trillion in loans to U.S. companies.

Seven weeks after Congress unleashed more than $2 trillion to deal with the coronavirus crisis, an oversight commission intended to keep track of how the money is spent remains without a leader. Four of the five members of the Congressional Oversight Commission have been appointed, but House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Mitch McConnell, R-Ky., have not agreed on a chair, leaving the commission rudderless as the federal government pumps unprecedented sums into the economy. Without a leader, the panel's remaining members can still do some oversight work, but cannot hire staff or set up office space. The four members have not met as a group since the economic rescue law was passed by Congress and signed by President Donald Trump in late March. “If the commission is not functioning — which it is not — then there is no oversight” on a huge part of the economic rescue law, said John Coates, a professor of law and economics at Harvard Law School.

The SEC should rethink proposed rules that impose new requirements on proxy advisory firms and raise thresholds for submitting shareholder proposals, members of the agency's investor advisory committee said Friday. A divided committee voted 10-to-5 to support a recommendation of the group's investor-as-owner subcommittee that SEC officials rework the two proposals and in the meantime address more pressing issues such as "proxy-plumbing" reforms, including ways to correctly count votes and universal proxies...Committee members supporting the recommendation also would like to see the SEC consider "reasonable alternatives" to address the issues raised, including ways to correct errors made by proxy advisers and adjustments to shareholder proposal thresholds. "We do believe the commission could improve conflict of interest disclosure for proxy advisers. Right now, they simply haven't laid out (the case)," said John Coates, John F. Cogan Jr., professor of law and economics at Harvard Law School and research director of the Center on the Legal Profession. In addition to making proxy plumbing a higher priority, the committee recommended that SEC officials "do a better job of analyzing the issues" that led to the two proposed rule- makings, including following SEC guidance on cost-benefit analysis. "The current draft proposals lack what we would like to see added as basic components, such as a statement of the market failure that is creating a need for regulation," Mr. Coates said during a committee telephone conference call.

Malvern, Pennsylvania is the quintessential small-town America: verdant, quiet and lined with 19th-century streetlamps. But just outside the town lies the sprawling campus of Vanguard, a $6tn asset manager that is reshaping the sleepy town and the surrounding area. ... Yet concerns of increasingly concentrated corporate power are unlikely to go away. John Coates, a professor at Harvard Law School, points out that despite being a Vanguard fan there is a “governance risk” inherent in one company that may eventually control a big chunk of every major US company. “Then they become the focal point for everyone that is unhappy about how any of these companies are run. There’s a real political risk there,” he says. “It’s a dilemma: What do you do with immense success?”

The potential impact of common ownership reaches beyond antitrust matters to questions about how companies are run. Index fund managers may follow passive investment strategies, but they don’t blindly choose stocks and sit back, says John Coates, a Harvard law professor. Fund companies have multiple tools to influence corporate behavior, such as developing preferred policies on executive compensation, carbon footprints, gender diversity, and other governance matters. They often do this in coordination with other industry leaders, Coates says. “A small number of unelected agents, operating largely behind closed doors, are increasingly important to the lives of millions who barely know of the existence much less the identity or inclinations of those agents,” Coates wrote in a widely cited 2018 paper. The agents, in this case, are the managers of fund companies—and the most important of those are the index giants...Lucian Bebchuk, a Harvard law professor, says index fund managers don’t have incentives to invest the time into actively supervising companies. That’s because any effort to increase the value of a company would also increase the value of the index, which in turn benefits every fund that tracks the index. As a result, the fund that pushes management can’t stand out from its peers and attract more money—yet it incurs higher stewardship costs. The concern is that such deference will “result in insufficient checks on corporate managers,” Bebchuk says. In a 2019 paper, he writes that the Big Three spent minuscule amounts on stewardship. According to Morningstar, Vanguard employed 21 people to do the work of corporate oversight at a cost, by Bebchuk’s estimate, of about $6.3 million—a drop in the bucket considering Vanguard’s trillions of dollars under management.

To the Republican members of the Securities and Exchange Commission, new rules for the shareholder proposal process and proxy advisers are simply a matter of achieving needed updates and ensuring efficient markets. Institutional investors see it quite differently, as a capitulation to corporate pressure in Washington at the expense of shareholder rights. ... The SEC should expect legal challenges, said John Coates, vice dean for finance and strategic initiatives at Harvard Law School. There is "almost no material evidence of errors (by proxy advisers) … there are differences of opinion. I really do think these rules are vulnerable to legal challenge. It's very likely they will not be sustained."

Fox News senior judicial analyst Andrew Napolitano slammed Donald Trump's "allusions to violence" and reference to a "civil war," arguing that the president's actions toward Ukraine constituted "impeachable behavior." "The president's allusions to violence are palpably dangerous. They will give cover to crazies who crave violence, as other intemperate words of his have done," Napolitano warned in an op-ed published by Fox News on Thursday. He pointed out that "bounties" have already been offered for information that could lead to identifying the anonymous whistleblower at the center of the Ukraine scandal. ... Harvard Law professor John Coates argued that Trump's tweet was grounds for impeachment on its own. "This tweet is itself an independent basis for impeachment - a sitting president threatening civil war if Congress exercises its constitutionally authorized power," he posted to Twitter.

As the Ukraine controversy continues to unfold, one constitutional law professor has asserted that President Donald Trump is a "threat to national security" and puts the country at risk every day he is in the Oval Office .... The president has slammed the impeachment inquiry as a "Democratic witch hunt." In one tweet, Trump quoted an evangelical pastor who compared removing the president to initiate a "civil war." Harvard Law professor John Coates argued that Trump's tweet itself was actually grounds for impeachment.

It could also be grounds for impeachment, according to Harvard Law professor John Coates, who responded to the president’s tweet with a little bit of constitutional law. "This tweet is itself an independent basis for impeachment - a sitting president threatening civil war if Congress exercises its constitutionally authorized power." So far, no congressional lawmakers have commented publicly over whether Coates’ legal opinion is a path worth pursuing. But fellow Harvard Law faculty member Laurence Tribe did support the idea in theory ― though he suggested it may not be practical. I agree with @jciv here, though this is far from the strongest ground for impeachment because it’s much too easy to dismiss as typical Trumpian bloviating, not to be taken seriously OR literally.

President Donald Trump's recent tweet quoting a longtime evangelical pastor who warned of a "Civil War" if Democrats seriously pursue removing him from office could actually be grounds for impeachment, one Harvard Law professor said. "If the Democrats are successful in removing the President from office (which they will never be), it will cause a Civil War like fracture in this Nation from which our Country will never heal," Trump tweeted on Sunday night. ... The president's tweet was immediately met with backlash, and Harvard Law professor John Coates argued that the social media post itself is an "independent basis" for lawmakers to remove him from the White House. "This tweet is itself an independent basis for impeachment - a sitting president threatening civil war if Congress exercises its constitutionally authorized power," Coates wrote on Twitter on Monday.

1L January Experiential Term courses focus on skills-building, collaboration and self-reflection

Global M&A deal volume reached nearly $4 trillion in 2018—a hot year for the most lucrative practice at elite law firms. For two of those firms, Wachtell, Lipton, Rosen & Katz and Cravath, Swaine & Moore, the boom pushed profits per equity partner to new heights—$6.53 million at Wachtell and $4.62 million at Cravath. ... Wachtell has previously considered other locations, including London. It had a small office in Chicago, but closed it about two decades ago, according to John Coates, a former Wachtell partner who teaches corporate law and M&A at Harvard Law School. ... Coates, at Harvard, says he sometimes poses a question to law firm partners who attend his seminars: If their own firm had a conflict on a client matter and had to refer it to a global firm or Wachtell, which would they choose? “They always pick Wachtell,” he says, because they believe the firm won’t try to take the whole client relationship.

The 2019 proxy season is well underway, and it will be a memorable one for many reasons. Initially, the government shutdown stalled the staff’s review process by closing the Division of Corporation Finance for most of January, thereby putting some issuers at risk of acting on proxy matters without definitive guidance. Issuers must also deal with a new staff legal bulletin that adds complexity, requiring board input on two common exclusionary bases. ... Roundtable participants from both the issuer and investment communities agreed that the proxy system faces several structural problems. As Professor John Coates of Harvard Law School said at the roundtable, “there’s room for improvement; no one, I think, has ever said publicly that they would create the system that we have today if they were doing it from scratch.”

Vanguard’s John Bogle didn’t know it at the time, but when he created the first index fund in 1975 he unleashed a monster. Stock index funds have grown so popular that they now command $4.6 trillion in assets. That might seem like a good thing. After all, index funds have “democratized” investing and simplified the process for the average person. But the truth is that index funds have gotten so big that they now pose a major risk to our economy — and even to capitalism itself. Here are three reasons why. ... Harvard Law School professor John Coates likes to say that index funds create “social benefits” in the form of lower expenses. That’s true, but it is only captures a piece of the picture.

Sounding the alarm on index funds. How their runaway success has reshaped power and accountability in boardrooms and on Wall Street. Guests: John Coates, professor of law and economics at Harvard Law School where he teaches corporate governance, mergers and acquisitions and finance. Member of the Investor Advisory Committee of the Securities and Exchanges Commission.