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Who Watches the Watchers?: FINRA, Self-Regulatory Organizations, and the Next Evolution of Appointment and Removal Jurisprudence
Full text linkThere are private, non-profit corporations exercising significant executive power. Known as self-regulatory organizations (SROs) these non-governmental organizations make binding rules and sometimes enforce statutory law governing massive industries. One such SRO is the Financial Industry Regulatory Authority (FINRA). In 2022 alone, FINRA permanently barred 227 individuals and suspended 328 individuals from the financial industry, imposed 26.2 million dollars in restitution, and referred 663 cases for prosecution. FINRA’s regulatory jurisdiction is massive. In 2022, it oversaw 3,378 securities firms including 150,647 branch offices and 620,882 individuals nationwide. This immense power is wielded not by the government, but rather by a private non-profit corporation. FINRA’s oversight of the securities industry and enforcement of securities law is constitutionally suspect. In our system of delegated power, enforcing federal law is a function of the Executive Branch. Even if FINRA were a state actor, its agents who adjudicate complaints and levy sanctions do not meet the requirements of the Appointments Clause and are not properly subject to presidential removal. The Supreme Court has held that an individual who exercises “significant authority” pursuant to the laws of the United States is an Officer of the United States. “Significant authority” includes rulemaking, adjudication, the issuing of advisory opinions, and eligibility determinations––all tasks that FINRA Officers routinely participate in. FINRA’s Hearing Officers seem an awful lot like Officers of the United States. Hearing Officers are tasked by statute with enforcing the nation’s securities laws. They can levy sanctions that carry the force of federal law. Hearing Officers demand testimony, rule on motions, regulate the course of a hearing, decide the admissibility of evidence, and enforce compliance with discovery orders by punishing contempt. This Note argues that FINRA employees that exercise the same power as Officers of the United States are Officers of the United States. They must be appointed according to the Appointments Clause and subject to presidential removal as outlined by Supreme Court jurisprudence. This Note argues that the Supreme Court should hold that FINRA is governmental for Constitutional purposes. It then outlines a judicial and a legislative remedy to bring FINRA’s officer-like employees into compliance with the Appointments Clause and Supreme Court removal jurisprudence. It concludes by advocating for the judicial remedy as both practically feasible and within the scope of the recent jurisprudence of the Roberts Court
A Democratic Participation Model for Corporate Goverance
Full text linkCorporate law is in the grip of a fundamental conundrum: whether corporations should seek only to serve shareholders or instead attend to the interests of all stakeholders. The doctrine of shareholder primacy, which focuses the corporation’s attention on the goal of maximizing shareholder wealth, has been startingly successful, capturing the theory and practice of corporate governance for roughly fifty years. But recently the costs of this monomaniacal focus on the financial interests of one set of corporate participants have become clearer. At a time when the original reasons for restricting the corporate franchise to shareholders have been shown to rest on faulty assumptions and the misapplication of standard economic theory, shareholder primacy’s fingerprints have been discovered all over potentially catastrophic problems such as dramatically rising income and economic inequality, accelerating climate change, and the unleashing of vast sums of money upon politics. Stakeholderism promises a better way—a focus on meeting the needs of all stakeholders in the corporation through a balanced approach to governance. But stakeholder theorists have largely offered only hortatory suggestions for corporate boards, unable to develop concrete reforms to implement their concepts. So we now find ourselves at a stalemate: Shareholder primacy improperly orients the purpose of the corporation around maximizing shareholder wealth and power, while stakeholder theory has failed to develop a workable model of governance that would put its ideas into practice. This Article breaks the corporate governance stalemate by presenting a new model of corporate governance based on the theory of democratic participation. The model supports the extension of the corporate franchise beyond shareholders to other stakeholders, but only when governance rights can accurately capture the preferences of those with sufficiently strong interests in a manageable way. We explain the principles of the model and apply it to a variety of stakeholders with potential governance claims: shareholders, employees, creditors, consumers, and communities, among others. Assessing their interests, the accuracy of markers for those interests, and the manageability of those markers, we show how a variety of firm participants could be integrated into the governing structure of the corporation. This new model would allow appropriate stakeholders to define and effectuate their own interests through governance and would help ensure that the corporate purpose debate results in something more than empty rhetoric
Minimal Justiciability
Full text linkFederal courts adjudicate only justiciable disputes. But justiciable as to whom? The Supreme Court has hinted at an answer, holding that at least one plaintiff must show standing for each remedy sought in a federal case. But it has never explained this “one-plaintiff rule,” and recently some scholars have criticized it, arguing that Article III instead requires each plaintiff to show standing in every federal case. This Article offers the missing explanation. Justiciability limits judicial power, it contends, and judicial relief is the constitutionally relevant expression of that power. Thus, Article III requires only one plaintiff with standing and a live, ripe claim for each remedy sought. But, like many of Article III’s other limits on federal jurisdiction, this rule is a constitutional floor that Congress can adjust. So the one-plaintiff rule is like the requirement of minimal diversity for federal diversity jurisdiction: Congress cannot require less than one justiciable dispute per remedy, but it can require more. The Article terms its interpretation “minimal justiciability.” By laying the theoretical groundwork for the one-plaintiff rule, it defends a longstanding practice that saves courts hundreds of justiciability analyses each year—and that enables well-resourced institutions to join with injured individuals in challenges to government action and other important cases. The theory also reveals Congress’s power over the one-plaintiff rule, paving the way for potential legislative solutions to problems like the rule’s abuse by states in suits against the federal government. Finally, the theory explains why one plaintiff can show standing for relief that also benefits others, like an injunction that forbids an official to enforce an invalid law. In so doing, it clarifies the connection between standing and remedies and answers an important justiciability objection to nationwide injunctions and other forms of universal relief
Thinking Beyond Confinement: The Suspension of Minnesota’s 48-Hour Law and the False Choice Between Incarceration or Institutionalization
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Tonry’s Blueprint for the Comparative Study of Sentencing Law and Policy
Full text linkThis essay explores Michael Tonry’s treatment of sentencing law and policy within the U.S. as an inherently comparative project. The essay draws from Tonry’s “early period” in comparative sentencing from the late 1970s to the middle 1990s, when his writing was largely U.S.-centric, focued on quickly changing conditions in dozens of states and the federal system. Tonry classified the several models of “sentencing reform” that were being tried across the country, drew contrasts in the legal architectures of the new systems, collected data and evaluation research for as many states as possible, and treated the reform-active states as “laboratories” whose experiments could be evaluated for the benefit of other jurisdictions. The essay examines the importance of this body of work and illustrates the impact it has had on research and policy communities over several decades. In addition, the essay suggests that “Tonry’s blueprint” holds great value for future researchers in comparative criminal justice policy
A Quadruple Bind? How Romantic Partner Dynamics May Hold Women Back at Work, Especially in the “Winner Take All” Economy
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Revival of Industrial Policy Implications for International Trade Law
Full text linkIn recent years, the world’s major economies, such as the United States, China, and the European Union, have adopted policies that aim to promote domestic industries in strategic areas, such as semiconductors and electric vehicles, through substantial subsidization. These policies have been justified for the need to secure supply chains and protect national security interests, but they are also incompatible with the rules of international trade law, such as the WTO Subsidies and Countervailing Measures Agreement. There are considerable challenges to addressing this incompatibility as these economies have shared interests in promoting these policies for their own domestic industries. The increasing economic and political tensions between China and other powers, such as the United States, generate substantial political support for maintaining the current trajectory, which is justified by national security concerns, regardless of their incompatibility with WTO law. The current U.S. block of the appointment of Appellate Body members also creates an additional barrier to addressing this issue in the WTO dispute settlement body. This article discusses the revival of industrial policy and examines its implications for international trade law, including incompatibility with the WTO subsidies regime and regulation under GATT Article XXI. The article also explores pathways to bridge the present gap between the requirements of international trade law and industrial policies