Jonathan R. Macey is the Sam Harris Professor of Corporate Law, Corporate Finance & Securities Law at Yale University. This post provides a detailed response to a reply post authored by Professor Joseph A. Grundfest and endorsed by Commissioner Daniel Gallagher, titled No Good Deed Goes Unpunished: A Reply to Professor Macey’s Reply, and available on the Forum here. This reply post engaged with earlier posts by Professor Macey available on the Forum here and here, which offered a critique of a paper by Commissioner Gallagher and Professor Grundfest, titled Did Harvard Violate Federal Securities Law? The Campaign Against Classified Boards of Directors (described in a post on the Forum here).
This post is my second—and I hope final—response to the unsuccessful attempts by SEC Commissioner Daniel Gallagher and Professor Joseph Grundfest to address my criticism of the paper released by them last month (hereinafter “the Paper,” described on the Forum here). In my first post, “SEC Commissioner, Law Professor Wrongfully Accuse SRP of Securities Fraud” (hereinafter “My First Post,” available on the Forum here), I analyzed the spurious claims against the Shareholder Rights Project (SRP) that Gallagher/Grundfest put forward. In this post I address the authors’ most recent reply to my latest post. This most recent reply again shifts allegations dramatically and fails to address the identified flaws in the authors’ analysis. The reply thus confirms and reinforces my original position that the authors wrongfully accused the SRP.
The analysis of My First Post showed that the proposals submitted by investors working with the SRP (SRP proposals) were consistent with the law and with the long-held policies and practices of SEC staff, and I concluded that the authors had wrongfully accused the SRP. In a subsequent post titled “A Response to Professor Macey” (hereinafter “the First Reply,” available on the Forum here), Professor Grundfest attempted to offer a “point by point” detailed response to my analysis. In a response titled Professor Grundfest’s Reply Demonstrates that He and Commissioner Gallagher Wrongfully Accused the SRP (“My First Response”, available on the Forum here), I showed that (i) the First Reply dramatically modifies and weakens the authors’ allegations and (ii) the First Reply itself demonstrates, in conceding some key points that I made and in failing to address some others, that Gallagher/Grundfest wrongfully accused the SRP and should withdraw their allegations.
“There you go again”: Earlier this week, the Forum published a reply to My First Response (“the Second Reply,” available on the Forum here) authored by Professor Grundfest and endorsed by Commissioner Gallagher. Like the First Reply, the Second Reply reinforces my serious concerns about the Gallagher/Grundfest attack.
Below I first discuss the dramatic shift of allegations introduced by the Second Reply as well as the authors’ announced plan to come up with new allegations against the SRP following my debunking of the allegations in the Paper. I next discuss the authors’ consistent failure to address the deficiencies I identified in their claims. I conclude that the repeated attempts to prop up spurious claims, which are admittedly at odds with the long-held policies and practices of the SEC regarding shareholder proposals, are particularly unworthy of a sitting SEC commissioner, and I urge the authors to withdraw their allegations.
