Two Government Defeats in Securities Cases. I wrote recently on the SEC’s defeat in the Rorech and Negrim case (alleging insider trading) and I briefly mentioned the Bristol-Myers case . Peter J.

Henning, who writes about white-collar cases for the NYT (and is a professor of law at Wayne State University Law School) discusses both cases in this column: “Two More Setbacks in Securities Fraud Cases.”

In the Rorech case, the judge (Judge John G. Koeltl of Federal District Court in Manhattan) “noted that there was significant discussion in the market about how the deal would be structured, and that Deutsche Bank did not restrict its sales staff from discussing the transaction. Thus, the information was neither material nor confidential, and therefore could not be the basis for insider trading liability.”

The Bristol-Myers case, says Henning, “shows how hard it is to prove that corporate executives misled investors in their public statements. Establishing that they said something false is difficult because the statements are often so slippery, couched in vague terms and accompanied by all the usual caveats that can be a shield to any claim to having made a false statement. Failing to disclose information can be even more difficult to prove because it requires showing what a person knew at the time, and that an omission was intentional and not just an oversight.”

Henning seems to present all this as a problem for the law, but in fact it is an opportunity to put the law on a sound basis. What Henning is acknowledging is that promoting a business is not at all like demonstrating the scientific feasibility of an engineering project. That is, it is not based on the calculation of simple, hard facts. It is, rather, an act of enthusiasm, of advocacy, and, yes, of hustling. Until American law reflects that truth, it will be dedicated to the twisted goal of prosecuting and persecuting our country’s most productive citizens.

Google and EU Fascism. There is no sense in pretending capitalism exists in the European Union. What does exist? With Rob Bradely, I am the co-author of a new article in Independent Review that provides a taxonomy of the innumerable terms used to characterize the interventionist state. So, I know that it is tendentious to denominate the interventionist state as “fascist,” but it is also clarifying to do so. European corporations are becoming state-controlled enterprises, and the result is fascism.

Take the case of Google. An NYT column by Floyd Norris (not a philosophically reliable source) states that “this week, the French Competition Authority officially declared Google a monopoly.” Further, Norris writes “Having determined Google has a monopoly, the agency ordered the company to resume offering its services to a French company called Navx, which sells a database to let drivers know where the French police are likely to have radar traps in operation. . . . Google found Navx’s business distasteful— it is arguable that Navx’s customers use the product to help them act illegally with impunity—so last November, Google stopped doing business with Navx. Navx complained to the French government, saying its sales had plunged and that as a result it was facing problems raising capital. On Wednesday, the authority ordered Google to resume selling ads to Navx and to produce clear policies on when advertisers would be turned down. ‘Discriminatory practices may harm competition,’ the authority said, ‘when customers of a company holding a dominant position find themselves disadvantaged in the competition on their own market.’ In other words, it does not matter that Navx is not a competitor to Google. Because Google is dominant in its market—Internet search word advertising—it must act almost as a government agency.” Fascism.

TUI? Trading under the influence? The UK’s Financial Services Authority has banned oil broker Steven Noel Perkins from the financial services industry for five years on the grounds that he is “not a fit and proper person,” because he made huge trades while drunk. This seems to me an extremely dangerous precedent for law and regulation. If what Perkins did actually harmed others, or actually threatened others (as drunk driving does), then he should be punished for the harm or the threat of harm. But no one should be legally punished because some regulator decides he is “not a fit and proper person.”

Government Control of Pharmaceuticals. The U.S. House has passed a bill that would make it illegal for a pharmaceutical company to pay a potential generic competitor not to enter the market. According to Bloomberg News, FTC Chairman Jon Leibowitz “has made restrictions on so-called pay-for-delay deals one of his priorities.” What is the problem here? People often act in ways that they hope will keep their potential competitors from becoming actual competitors, or in ways that make actual competitors into non-competitors. People have even been known to offer political competitors jobs in the executive branch if they will drop out of legislative races. It is the way of the world.

Crying Wolf. Here is a surprisingly insightful story by Lyndsey Layton of the Washington Post: “Officials worry about consumers lost among the recalls.” “Government regulators, retailers, manufacturers and consumer experts are concerned that recall notices have become so frequent across a range of goods—foods, consumer products, cars—that the public is suffering from ‘recall fatigue.’ In many cases, people simply ignore urgent calls to destroy or return defective goods.” The same point can be applied to warning labels: When every product comes with several pages of warnings in minuscule type, people simply cease to inform themselves about any of the dangers. The most cautious consumers are usually those who must depend on themselves for information.


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