The Cost of Doing Business: Corporate Crime and Punishment Post-Crisis

For many years, law and economics scholars, as well as politicians and regulators, have debated whether corporate criminal enforcement deters too much beneficial corporate activity or lets corporate criminals off too easily. This debate has recently grown more polarized: On the one hand, academics, judges, and politicians have excoriated enforcement agencies for failing to send individual bankers to jail in the wake of the financial crisis; on the other, the Justice Department has since relaxed policies aimed at holding individuals liable and reduced the size of fines imposed on corporations.

A crucial and yet understudied piece of evidence in this … Read more

Toward a Mission Statement for Mutual Funds in Shareholder Litigation

Mutual funds own approximately 30 percent of the U.S. equity market, and the Big Three fund families – Blackrock, Vanguard, and State Street – are the largest blockholders in the vast majority of large, publicly traded companies.  This has made mutual funds a force to be reckoned with in American corporate governance.  Mutual funds tout their active engagement in corporate governance and claim to be “good at it.”  But are they?

Traditionally, there are three levers of power in corporate governance: voting, selling, and suing.  Selling is not an option for many mutual funds – especially index funds, ETFs, and … Read more