Media Mentions

For years, the asset-management industry has braced itself for shocks. In 2018, $369 billion poured out of long-term mutual funds in favor of exchange-traded funds, a record at the time. In 2019, the case for traditional actively managed mutual funds became even harder to make when Charles Schwab Corp. jump-started a race to the bottom among online brokerages by eliminating commissions for ETFs along with U.S. stocks and options. If those were tremors, 2020 will go down in history as an earthquake. Even before Covid-19 roiled global markets and brought the Robinhood crowd and Dave Portnoy of Barstool Sports into the Wall Street zeitgeist, there were already signs of seismic change...If the same dozen people control every public company — Harvard professor John Coates calls it “The Problem of Twelve” — what does it mean? Should someone do something? Should those people be required to … explain their votes? Not vote their shares? Vote in a specific way? Ask their ultimate investors how to vote? Have some other formalized rules for how they vote? They have accrued all this power, sort of by accident; should there be rules for how they exercise it? Or is this just how the market works and everything is fine? There aren’t any clear answers.

Outgoing US President Donald Trump has signed a bill calling for the delisting of foreign companies that don't adhere to the same accounting transparency standards that securities regulators impose on US public companies. The US Congress passed the Holding Foreign Corporation Accountability Act on Dec 2, which prohibits foreign companies, despite being listed in the US, from trading in the country if they do not comply with the accounting requirements of the US Securities and Exchange Commission for three consecutive years...If delisted, Chinese companies can remove American investors as their shareholders at a depressed buyout price, and then re-list on Chinese stock exchanges at a much loftier valuation. Jesse Fried, a law professor at Harvard University, argues that the HFCA Act aims to delist Chinese companies from the US exchanges at the expense of Americans holding shares in these companies－a cure likely worse than the disease. And the losses will be suffered by not only big institutional investors but also retail investors, who either directly own the Chinese companies' shares, or have retirement portfolios which include exchange-traded funds that cover these companies.

From a rundown office tower in downtown Shanghai, wedding dresses are sold to the US, wristwatches are shipped to France and cheap trainers are sent to customers in the UK. Dozens of websites and apps operate from the 23-floor Greenland business building, where employees sit in offices that are completely unmarked, apart from the words “Self Confidence” pasted to their glass doors. One man is behind all these ventures, 40-year-old Colin Zheng Huang, the billionaire founder, chairman and controlling shareholder of one of this year’s biggest sensations, the online shopping app Pinduoduo, whose shares have risen by 261 per cent since January...Mr Huang has only occasionally held shares in his own name in China. Even at Pinduoduo, he signed over all his shares in its Chinese business ahead of the company’s 2018 initial public offering to Chen Lei, Pinduoduo’s chief executive, who he studied with at the University of Wisconsin-Madison...Other Chinese tech executives, such as Pony Ma of Tencent or Robin Li of Baidu, have kept tight control of their onshore companies, which run their businesses and hold crucial licences. But Mr Huang holds no shares in Pinduoduo’s VIE. “Colin must really trust Chen Lei or it’s a scary situation, for both Colin and US investors,” said Jesse Fried, a corporate governance expert at Harvard Law School.

An op-ed by Jesse M. Fried and Charles C.Y. Wang: The European Commission recently released a sustainable corporate governance report claiming to find short-termism in EU listed firms, and proposing to solve the problem by shifting power from investors to other stakeholders. But the report’s findings are deeply flawed and its proposals would, perversely, reduce business sustainability in the EU. To try to demonstrate short-termism, the report points to rising levels of gross shareholder payouts—dividends and repurchases—and declining levels of investment. But the report mismeasures both. The actual data paint a very different picture. Start with capital flows. Oddly, the Commission’s report fails to account for equity issuances in measuring capital flows between firms and shareholders. But as we have shown, stock issuances in the EU are substantial, far exceeding repurchases. During 2010-2019, for example, gross shareholder payouts represented 65% of net income.  But equity issuances amounted to 27% of net income, so the ratio of net shareholder payouts to net income was only 38%. The findings about investment are also deeply flawed, as they rely on an incomplete sample. Our analysis of all EU-listed firms reveals that both capital expenditures (CAPEX) and research and development (R+D) actually increased during the period covered by the report, both in absolute terms and relative to revenues.  Moreover, cash balances grew by nearly 40% over the last decade, from €703 to €960 billion. Investment is clearly not limited by a lack of cash. Here’s the irony: while the report fails to show EU businesses are misgoverned, adopting the report’s proposals would actually put these businesses at risk.

Harvard scholars — including Annette Gordon-Reed ’84 and I. Glenn Cohen ’03 — tell of muddling through, insights gained, small wins, and a rescue pup named RBG.

Now that the Electoral College has voted, President Donald Trump’s last stand is anticipated to take place on January 6, 2021, when Congress convenes to officially count the votes of the electors. This final step in the election process is given apparent gravity by a provision of an ancient statute called the Electoral Count Act of 1887 (the “ECA”). The ECA authorizes members of Congress to object to a state’s results and creates a process for resolving any such objections by votes in both the House and the Senate. If majorities of both houses affirm the objection, the ECA provides that the state’s electoral votes will be rejected. If enough electoral votes are rejected to prevent any candidate from getting to 270 votes, the Twelfth Amendmentthrows the election to the House for a state-by-state vote. Since the Republican party controls more state delegations than Democrats do, Trump presumably would be the winner. For a host of reasons, it is almost unthinkable that Trump’s supporters will be able to get an objection through Congress on January 6...Because I haven’t found any scholarly or judicial writing on this specific issue, I checked in with Laurence Tribe, the Carl M. Loeb University Professor and Professor of Constitutional Law at Harvard. Professor Tribe was kind enough to offer this unqualified, definitive response: “[T]he 1887 Electoral Count Act cannot be regarded as an even arguably constitutional path along which the special Joint Session of Congress called for in the Twelfth Amendment might opt to engage in substantive second-guessing of how any given State chose to conduct its Article II function of appointing Electors.” This sounds like case closed.

Several members of the community, including Andrea Saenz ’08, who appeared on the game show share the questions that haunt them and memories of the late host Alex Trebek.

One in every five state and federal prisoners in the United States has tested positive for the coronavirus, a rate more than four times as high as the general population. In some states, more than half of prisoners have been infected, according to data collected by The Marshall Project and The Associated Press. As the pandemic enters its tenth month—and as the first Americans begin to receive a long-awaited COVID-19 vaccine—at least 275,000 prisoners have been infected, more than 1,700 have died and the spread of the virus behind bars shows no sign of slowing. New cases in prisons this week reached their highest level since testing began in the spring, far outstripping previous peaks in April and August...Racial disparities in the nation’s criminal justice system compound the disproportionate toll the pandemic has taken on communities of color. Black Americans are incarcerated at five times the rate of whites. They are also disproportionately likely to be infected and hospitalized with COVID-19 and are more likely than other races to have a family member or close friend who has died of the virus. The pandemic “increases risk for those who are already at risk,” said David J. Harris, managing director of the Charles Hamilton Houston Institute for Race and Justice at Harvard Law School.

An op-ed by Noah Feldman: It’s hard to believe, but exactly year ago, the big news story was President Donald Trump’s impeachment. Twelve months later, a viral pandemic is killing thousands of Americans every day and Republicans are still so loyal to Trump that it took until this week for Senate Majority Leader Mitch McConnell to acknowledge that he’d lost the November election. So it seems worth asking: Did impeachment matter? And what, if anything, was it worth? For one thing, it looks unlikely that the investigation, the impeachment itself or the Senate trial meaningfully affected the outcome of the 2020 vote. Trump emerged with his support from his base roughly intact. And in fact, despite mismanaging the government response to Covid-19 and presiding over an economic meltdown, Trump came nail-bitingly close to winning reelection. It’s easy to conclude that, without the pandemic, Trump would have won. And if that’s correct, it would seem that the impeachment would not have made any difference. As for the congressional races, Democrats lost ground in the House, which could be interpreted as voters’ disapproval of impeachment — although that was not the explanation preferred by the losers. Nor were the handful Republican losses in the Senate read as disapproval of the absurd show trial led by McConnell. But electoral results are not the only measure of the impeachment’s significance. There is also the verdict of history.

In late November, while most of the GOP was refusing to call Joe Biden “president-elect,” General Motors CEO Mary Barra effectively called the race: she withdrew from a lawsuit about California’s ability to set strict fuel economy and vehicle emissions standards, and challenged the CEOs of other automakers to do the same. “We are immediately withdrawing from the pre-emption litigation and inviting other automakers to join us,” Barra wrote in a letter to the heads of 11 environmental organizations. The withdrawal was an acknowledgement—from one of the U.S. automakers that embraced the Trump administration the hardest—that with a new administration, change is coming, whether the world’s automakers like it or not. But even if all the automakers drop their challenge to California it doesn’t mean the incoming Biden administration can just flip a switch and immediately undo Trump’s rollbacks of auto emissions to the planned reductions of four years ago. The process will be slower and more unwieldy than the urgency of addressing climate change demands. And without legislation from Congress, any progress Biden makes could be undone by a future administration. “That’s why it’s so important to move fast on this,” Caitlin McCoy, a staff attorney with the Harvard Law School Environmental and Energy Law Program, told VICE News. “Every time a car that consumes gasoline is sold, that just pushes out our timeline.” ... The first step Biden could take would be to direct the Environmental Protection Agency to restore California’s waiver. “This would restore the state’s legal authority to set stricter emissions standards,” said McCoy.

An op-ed by Bob Bauer and Jack Goldsmith: Now that Donald Trump’s time in the White House is ending, an urgent task is the reform of the presidency that for four years he sought to shape in his image and to run in his personal and political self-interest. What the those years have shown is that the array of laws and norms that arose after Watergate and Vietnam requires an overhaul. Any program for reform of the presidency must give precedence to our health and economic crises. It must also acknowledge political realities. Some reforms can be carried out by the executive branch, but others require legislation. Those must attract at least modest bipartisan support in the Senate. With these constraints in mind, an agenda for reform of the presidency could realistically reflect the following priorities: Executive Branch Reforms. These reforms should focus on restoring the integrity of the rule of law, especially to check presidential interventions in law enforcement for self-protection or to harm political enemies. The Constitution vests executive law enforcement power in the president, so the executive branch must institute most of these reforms. Internal branch reforms lack legal enforceability but can establish or reinforce guardrails that constrain even norm-breaking presidencies, especially by influencing presidential subordinates. Because President Trump defied them regularly, and sometimes his Justice Department did, too, there’s a lot of skepticism about norms. But actually norms succeeded more in checking him than has been appreciated — for example, in ensuring that Robert Mueller, despite Mr. Trump’s opposition, could complete his inquiry; in protecting federal prosecutors in New York in any investigation of matters related to Mr. Trump; and in preventing the Justice Department from carrying out the president’s desire to prosecute his enemies.

President-elect Joseph R. Biden Jr. has selected Michael S. Regan, North Carolina’s top environmental regulator, to lead the Environmental Protection Agency, Mr. Biden’s transition team announced Thursday. The decision elevates for the first time a Black man to lead the powerful department, which is central to achieving the new administration’s climate change agenda. Mr. Regan was not the president-elect’s first choice, and he lacks some of the political star power of Mr. Biden’s other cabinet picks. But he will be on the front lines of the incoming administration’s effort to undo one of President Trump’s most sprawling transformations of the federal government: the unraveling of a half-century of pollution and climate regulations, and the diminishment of the science that underpinned them. “He faces a massive reconstruction and rebuilding operation,” said Jody Freeman, a Harvard University law professor who served as White House counselor for energy and climate change in the Obama administration. Mr. Regan “has to go in and restore the morale of the career staff,” she said. “He has to make it clear that science and integrity are back. He’s got a raft of rules that he’s got to rescind and replace and strengthen.” And, Ms. Freeman added, “He’s got to do this under some time pressure.”

Environmentalists and climate change activists are expressing a feeling this week that's been hard for them to come by in the past four years: optimism. The names of President-elect Joe Biden's key cabinet members who will deal with the issue he's called an "existential threat" emerged this week, and while the behind-the-scenes lobbying for the positions may have been fierce, the prospective team is being hailed as a group of climate all-stars...Many greens were skeptical that Biden was devoted to the climate cause when he emerged as the nominee from the Democratic primary. His climate plan at the time got lukewarm reviews from them, but a mid-year melding of the minds with Sen. Bernie Sanders team and other activists such as Sunrise Movement and alumni of Washington Gov. Jay Inslee's brief presidential bid produced the most aggressive-ever blueprint ever from a party's nominee: $2 trillion in climate spending in four years to set the power grid on a path to clean energy by 2035 and net-zero emissions for the whole country by 2050. Those goals, scientists say, are crucial to reach to stave off catastrophic climate change in the coming decades. But even with the promise, many experts were nervous that Biden's team may not live up to expectations. Now, those fears have disappeared. “It’s hard not to be impressed and even inspired,” said Jody Freeman, director of Harvard Law School's Environmental and Energy Law Program and a former Obama White House adviser...Even if the Senate remains under Republican control after next month's Georgia run-off election, Biden backers are confident the team will make major strides wielding their executive branch power. "It’s the Cabinet officials who have the legal authority," Freeman said. "But what they can use is some help getting policies through a fairly bureaucratic White House. If you order this the right way, you can have a lot of success.”

We talk a lot on this show about how social media platforms have been slow to react to disinformation over the years, and especially around elections — and now the coronavirus and also the coronavirus vaccine. But perhaps the slowest to take a stand is YouTube. The video platform waited until Dec. 9 — more than a full month after the presidential election — before it started to remove videos falsely claiming election fraud or rigging. Researchers have worried about its radicalizing algorithm for years, and the company has basically no interest in working with them. I spoke with Evelyn Douek, an affiliate at Harvard’s Berkman Klein Center for Internet and Society. She said YouTube is flying firmly under the radar. The following is an edited transcript of our conversation.

The pandemic has exacerbated the need for improvements in how we train and protect our workforce. Some of these needs are immediate, such as better worker health protections during the pandemic. Other needs are more longstanding but still urgent, such as equipping workers with the skills that will be demanded in the labor market in coming years. We propose three avenues to make progress along these lines. First, doing more to support the higher education sector in skills training. Second, focusing federal worker training programs on particular occupations and skills. And third, doing much more to support private-sector unions... Despite the decades-long failure of labor law, there is reason for optimism: several academics, advocates, policymakers, and other stakeholders have put forward a menu of policy reforms—both at the state and federal level—that would go a long way to help restore union strength to workplaces. By extension, strong unions can provide workers with the necessary institutional support they need to prepare for the post-COVID economy. For policymakers working to reverse the direction of labor law in this country, there are two paths available. The first, acknowledging the original sins and subsequent weakening of labor, involves a fundamental rethinking of labor-management relations in the United States. This approach is embodied by the innovative work being done by the Clean Slate for Worker Power Project, a project of Harvard Law School’s Labor and Worklife Program headed by Sharon Block and Benjamin Sachs. The project puts forward a plan for rewriting the rules that underpin labor law. For example, they suggest moving away from fundamental system establishment-level bargaining and instead moving toward a sectoral bargaining system, as already exists in Europe.

The city of Detroit is asking a federal judge to impose sanctions against attorney Sidney Powell and other lawyers involved in filing the infamous “Kraken” lawsuit, which the city argues was “frivolous” and was filed for the “improper” purpose of “undermining people’s faith in the democratic process.” Powell, who the Trump campaign cut ties with in late November, has been involved in filing dozens of the over 50 failed legal attempts to overturn the election’s results—most notably lawsuits she dubbed the “Kraken,” because she believed they were based on overwhelming evidence of fraud, that have been embraced by the QAnon conspiracy theory community...While it’s typically uncommon for lawyers to be sanctioned under what Bruce Green, who directs Fordham Law School’s Louis Stein Center for Law and Ethics, describes as a “vague standard,” multiple legal ethics experts told Forbes that Detroit could succeed in punishing the “Kraken” team, though it depends entirely on the judge’s determination...Harvard Law School Professor Mark Tushnet was less convinced, arguing that the notoriety of the defendants may prevent the court from wanting to get involved. “I think it extremely unlikely that this motion will lead the judge to consider seriously the issue of sanctions,” said Tushnet, echoing reservations expressed by Green. “Partly that's because I believe that the judge, like most of us, will just want to put this whole episode behind us, rather than prolonging it. And this motion in particular has the feel of just a follow-up act in the ‘political theater.’”

The Boston Globe's CEO, Linda Henry, chats with Samantha Power, Professor of Practice at the Harvard Kennedy School and Harvard Law School and former U.S. Ambassador to the United Nations and a member of President Obama’s cabinet, for the second installment of The Boston Globe's Women and Leadership series.

The COVID-19 crisis has intensified discussions about corporate purpose and corporate duties to stakeholders. Against this backdrop, the European Corporate Governance Institute and the London Business School Centre for Corporate Governance hosted a virtual debate on stakeholder capitalism between Harvard Law School Professor Lucian Bebchuk LL.M. ’80 S.J.D. ’84 and London Business School Professor Alex Edmans. Held earlier this month, the debate, titled “Stakeholder Capitalism: The Case For and Against,” was moderated by Gillian Tett, chair of the editorial board and editor-at-large of the Financial Times. Stakeholder capitalism is the idea that companies should look to serve all stakeholders, not just shareholders but also customers, employees, suppliers, and local communities. Shareholder capitalism, on the other hand, is the view that companies should focus exclusively on serving in the interest of shareholders, the owners of the stock of the company...Bebchuk, the James Barr Ames Professor of Law, Economics, and finance and director of the Program on Corporate Governance at Harvard Law School, argued that relying on corporate leaders to serve goals other than shareholder value should not be expected to provide material benefits to stakeholders and should be rejected, including by those who deeply care about stakeholder interests, as a way to ensure that capitalism works for stakeholders.

President-elect Joe Biden has picked superstars to advance his global warming agenda. The expected appointment this week of former EPA Administrator Gina McCarthy to oversee Biden's domestic climate policy comes after he tapped former Democratic presidential nominee and Secretary of State John Kerry to represent his climate priorities abroad. McCarthy, who comes fresh from leading the influential Natural Resources Defense Council, can claim a leading role in every EPA rule promulgated under President Obama to combat climate change — first as the agency's air chief and then its leader. Kerry led the U.S. effort to land the Paris Agreement... "I see the McCarthy pick, in particular, as a recognition that the playbook is a regulatory playbook," said Jody Freeman, an Obama administration adviser who now directs the Environment and Energy Law Program at Harvard Law School. "I think there's going to be a lot of emphasis on regulation, especially early on right out of the gate," she said. "EPA has a bunch of rules it has to put back in place, and she knows exactly what that's like." But Freeman and others say that far from overshadowing an EPA administrator, McCarthy would likely use her expertise to be EPA's top advocate in the White House, smoothing the way for regulations written by agency experts. Freeman envisioned McCarthy as a kind of climate change quarterback at the White House who could overcome challenges that might complicate rulemakings or water down their results.

An op-ed by John Coates and Robert Pozen: While the commissioners agreed unanimously on many technical and enforcement issues, policy votes divided on party lines. In 2020, more than half of final rule-makings were partisan affairs with dissents from Democratic commissioners. Partisan politics is part of Washington, D.C. Yet now a window is open for a restart if Joe Biden appoints a diplomatically minded SEC chair who can build a strong consensus among the four other commissioners. Balanced rulemaking can deepen the SEC’s legitimacy, improve staff morale and enhance its ability to resolve difficult problems. Here are five issues for a consensus agenda set by the new Chair: 1. Open private securities markets intelligently: The SEC has long allowed only sophisticated investors to buy private securities, because these securities have minimal liquidity and private issuers provide investors with little information about the risks involved. In the past few years, the Commission seems to have bought the argument that the average Joe should be able to invest in the next Google before it went public. But most startups fail, and successes go through multiple rounds of complicated funding that are difficult to evaluate. The main guards against the dangers of alluring speculation in private securities have been quantitative requirements for “accredited” investors — $200,000 in annual income or $1 million in net worth.

An op-ed by Jack Goldsmith: David Sanger, building on a Reuters story, reports in the New York Times that some country, probably Russia, “broke into a range of key government networks, including in the Treasury and Commerce Departments, and had free access to their email systems.” The breach appears to be much broader. “[N]ational security-related agencies were also targeted, though it was not clear whether the systems contained highly classified material.” The Department of Homeland Security appears to be one of those agencies. Sanger says that the “intrusions have been underway for months” and that “the hackers have had free rein for much of the year.” The original Reuters story on Dec. 13 noted that people familiar with the hacks “feared the hacks uncovered so far may be the tip of the iceberg.” On the evening of Dec. 13, the Cybersecurity and Infrastructure Security Agency issued an Emergency Directive to all federal civilian agencies to review their networks for indicators of compromise. This attack is the latest in a long string of other serious breaches of government networks by insiders and outsiders in the past decade—for example, the Office of Personnel Management (OPM) in 2014-2015; the White House, State Department, and Joint Chiefs email breach during those same years; the 2016 theft of CIA hacking tools; the Shadow Brokers theft of National Security Agency tools in 2017; and Edward Snowden’s mammoth disclosures in 2013 and beyond. These events constitute a stunning display of the U.S. government’s porous defenses of sensitive government networks and databases.