John Coates

An op-ed by Jeff Clements and John Coates. Why is the attorney general of Massachusetts, Maura Healey, being forced to justify to a Texas judge why and how she is doing her job? In the latest instance of the corporate takeover of the First Amendment — and other constitutional rights — Exxon Mobil, the world’s largest oil and gas corporation, has invented a constitutional right to obstruct state investigations into allegations of fraud. Investigations by the Massachusetts and New York attorneys general began late last year after the Los Angeles Times reported that Exxon scientists and executives have known for decades about the connection between fossil fuel consumption and the likelihood of catastrophic changes in the Earth’s atmosphere and climate.

As M&A transactions have increased in size over the years so have their contracts. The average merger agreement has more than doubled in length over the past 20 years, according to new research from John Coates, a Harvard law professor. Contracts have gone from about 17,000 words in 1994 to nearly 45,000 in 2014. Some of the added heft is a response to new regulations, Mr. Coates found.

A recent federal appeals court ruling that gives the White House more power over the Consumer Financial Protection Bureau doesn't necessarily mean it will now be subject to the same cost-benefit mandates as other federal agencies. ... John Coates, a Harvard Law School professor, said Executive Order 12866 explicitly excludes “independent regulatory agencies,” as listed at 44 U.S.C. 3502(10). And the CFPB was specifically included by Congress when the agency was created. “Nothing in the PHH decision purported to interpret, address or even refer to this clear statement of Congressional intent. Nothing that I saw in the Hensarling letter addresses it, either. It remains law,” he said.

...The Glaxo case, which resulted in record penalties of nearly $500 million and a string of guilty pleas by executives, upended the power dynamic in China, unveiling an increasingly assertive government determined to tighten its grip over multinationals. In the three years since the arrests, the Chinese government, under President Xi Jinping, has unleashed the full force of the country’s authoritarian system, as part of a broader agenda of economic nationalism....“The executive so accused has an obvious conflict of interest in overseeing such an investigation,” said John Coates, a Harvard Law School professor. “Even if the executive were entirely innocent of the whistle-blower’s charge, giving that same executive the role of investigating the whistle-blower smacks of retaliation.”

A high-stakes trial will open on Monday to determine if Dallas billionaire Kelcy Warren's Energy Transfer Equity can back out of a $20 billion agreement to buy rival pipeline operator Williams Cos Inc...John Coates, a professor at Harvard Law School and former M&A lawyer, said Williams needs to prove to the judge, Vice Chancellor Sam Glasscock, that the tax issue was just an excuse. "Does the judge, in the end, see a pattern of bad faith and refusal to move as quickly as reasonably possible? If so, then Williams wins," Coates said.

Congressman Jeb Hensarling, a Republican of Texas, delivered a straightforward message in a speech to the Economic Club of New York, on Tuesday: the Dodd-Frank Act is broken and can’t be fixed. The occasion for his speech was the unveiling of his new financial-reform plan, which would scrap Dodd-Frank entirely and replace it with a new regulatory regime. Its broad thrust would be to reduce regulation and give financial institutions more freedom...From a “small d”-democratic point of view, these changes might sound harmless, even reasonable. Who could be against cost-benefit tests, for example? But cost-benefit requirements are hard to apply coherently to financial regulation, as the Harvard law professor John Coates IV has argued—because it’s rarely possible to get “precise, reliable, quantified” measures there. How, after all, would you count the economic benefits that arise from reducing the risk of a systemic financial crisis by a few per cent, or from limiting the types of mortgages that consumers can take out? And since the costs of regulation are often more easily measured, the result of imposing a cost-benefit test is to make regulations harder to implement.

A decade ago, if a politician had argued before the Supreme Court that he had a First Amendment right to trade political favors for a Rolex watch, his lawyers may have feared for their professional reputations. But that argument is one basis for ex-Virginia Governor Bob McDonnell’s appeal of his eleven-count corruption conviction in McDonnell v. United States, which the Court hears in oral arguments on Wednesday...McDonnell’s free-speech argument shows how thoroughly the First Amendment has been reinterpreted in recent years. In the mid-20th century, the amendment often protected dissidents and religious minorities from government persecution. Now, it’s frequently invoked by business interests to accomplish goals such as establishing the right of corporations to spend unlimited amounts in elections, or preventing the government from requiring graphic warning labels on cigarette packaging. Indeed, a 2015 paper by Harvard Law professor John Coates argued that “corporations have begun to displace individuals as the direct beneficiaries of the First Amendment.”

ExxonMobil is fighting a subpoena seeking its internal documents on climate change, arguing that the order violates the company’s constitutional rights. It’s an argument that legal experts say is unusual but not unprecedented...Exxon’s invocation of the First Amendment is fairly unusual for a business, according to John Coates, a professor of law and economics at Harvard Law School. The Supreme Court has ruled that corporations do have First Amendment rights, but they aren’t necessarily as broad as those afforded to individuals. “Even the most right-wing and pro-business judge would not equate the speech rights of a business to that of individuals,” he said.

It has recently come to light that U.S. Chamber of Commerce President Tom Donohue, along with the presidents of the Business Roundtable and the National Association of Manufacturers, sent a letter last fall to their member corporations urging them to resist efforts aimed at encouraging corporations to make their political, or lobbying and election spending (including donations to trade associations like the Chamber), more transparent. ...But beyond mere rank hypocrisy, there is ample evidence to suggest that the Chamber's opposition to corporate political spending transparency is also bad for its corporate members. Harvard professor John Coates shows that companies that engage in lobbying and campaign spending have less robust corporate governance practices (like shareholder engagement with the board and proxy access) which may impact shareholder value, than do companies that don't play in politics.

As Apple tries to fend off government demands for access to iPhone content, the company is leaning on free speech arguments as a key part of its defense in a California courtroom...About half of the successful First Amendment appeals to the U.S. Supreme Court today focus on corporate rights — a big change from previous decades, according to a survey of a half-century of court decisions by Harvard Law professor John Coates.

Republicans on the campaign trail aren’t exactly shy about their desire to roll back President Obama’s bank regulations. Donald Trump has called Dodd-Frank a "terrible" "disaster," Ted Cruz has introduced legislation to abolish the Consumer Financial Protection Bureau (CFPB), and Marco Rubio has claimed, incorrectly, that more than 40 percent of small and midsize banks were wiped out by the financial reform law. ... To understand why this is a bad idea, it’s helpful to work through an example. This is what Harvard law professor John Coates, a leading critic of extending cost-benefit analysis to financial regulations, does in a recent paper. His case studies show that cost-benefit analysis will result in "guesstimation" at best. As Coates told me, "Back in 2014, I asked proponents of cost-benefit analysis in financial regulation for a nontrivial rule that benefited from a quantified CBA that you could achieve consensus on. To this day, nobody has been able to give me one."

Supreme Court Justice Antonin Scalia's record on securities matters in the Roberts Court matched his overall conservative reputation, and his passing could tip the balance in a pending insider-trading case. Scalia voted for a “restrictive,” pro-management outcome in securities-law cases more than half the time, according to a 2014 study by Harvard professor John C. Coates IV of Chief Justice John Roberts's tenure on securities law matters. Coates's study showed that despite the ideologically divided court, the amount of polarization and dissent on securities-law cases under Roberts decreased from previous chief justices' terms.

As we reach the sixth anniversary of Citizens United two things are clear: (1) there's a dark money problem and (2) the SEC isn't helping to fix it yet. But it's also important to know that the SEC can still work on the issue despite a troubling rider added to the federal "cromnibus" budget...But hasty drafting has left the SEC some wiggle room. Harvard Law Professor John Coates has examined the budget language and believes the SEC can still work on the rule this year as long as the agency does not finalize it. And given that rule making processes can be long affairs (think of all the long delayed Dodd-Frank and Jobs Act rules), it would behoove the SEC to start work on corporate disclosure rules now, especially since 94 members of Congress have urged them to move ahead.

A bit of last-minute skullduggery in Congress blocking efforts to make companies disclose political contributions may fall short of its goal. Buried in the 2,000 pages of the $1.1 trillion spending bill passed into law this month was one of those nasty little riders that has nothing to do with funding the government but are slipped into a must-pass bill at the last minute...The legal opinion written by Harvard Law Professor John Coates argues that this wording does not in the meantime restrict the preparatory tasks of issuing a rule — internal discussion, planning, investigation, analysis, evaluation and development of possible proposals. "These steps often take years and consume significant agency funds and other resources," Coates wrote in his Dec. 17 opinion.

The U.S. Securities and Exchange Commission is free to continue planning rules requiring corporate disclosure of political spending despite passage of Republican-backed budget language prohibiting the agency from using 2016 dollars to finalize, issue or implement such a policy, a Harvard scholar's Tuesday legal opinion says. The opinion, offered by Harvard Law School professor John C. Coates IV, differentiates between planning for such a rule and finalizing, issuing or implementing it.

Scathing commentary about the U.S. Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission has tended to focus on the court’s refusal to restrict corporate political spending. As you know, the justices struck down campaign finance reforms as an unconstitutional violation of corporations’ free speech rights, triggering an avalanche of predictions that corporate donors would wield outsized political influence. The other free speech beneficiaries of Citizens United – labor unions also subject to the invalidated campaign finance restrictions – haven’t been the subject of nearly as much fear and loathing. That’s going to change, at least a little, later this term when the Supreme Court hears Friedrichs v. California Teachers Association...The point of the amicus brief, according to law professor John Coates of Harvard, was to highlight the relative rights of union beneficiaries and shareholders, particularly because in this case, the justices are being asked to give non-union members even more control over political expenditures they don’t support. “It seemed like a good opportunity to intervene – even better than a corporate case,” said Coates, who said he wrote the initial draft of the brief and circulated it to likely co-signers. He said he was pleasantly surprised that so many corporate law professors – 19 in all – ended up joining a brief in a case that nominally has nothing to do with corporate law. (Among the amici are Lucian Bebchuk of Harvard...)