Corporate Governance

Supreme Court Nominee Elena Kagan and Institutional Investors

By Jay D. Dean

On Monday, the Senate Judiciary Committee opened its hearings on Supreme Court nominee Elena Kagan.  So what? Everybody knows the solicitor general is magna cum laude from Harvard Law, clerked for Justice Marhshall, taught law at Chicago, was a poicy adviser in the Clinton administration, became a professor and then dean of Harvard Law, and considers a pre-eminent Israeli jurist as her role model. And she's young.  But what's in it for institutional investors?  While Solicitor General, Kagan advocated in favor of investors in Merck & Co. v. Reynolds, the ?Vioxx? case.  In Vioxx, the Court held, on April 27, that the "discovery" of the facts that "constitute the violation," i.e., securities fraud, required the discovery of scienter-related facts.  Both Justice Stevens, who retired Monday at age 90, and Justice Scalia, who remains on the Court, concurred in that judgment.  In Jones v. Harris Associates, Kagan?s office urged the Court to make it easier for investors to sue mutual fund managers over excessive fees.  There, the Court ultimately ruled on March 30 that liability exists for excessive adviser fees only where the fee is so disproportionately large that it bears no reasonable relationship to the services rendered.  In the so-called f-cubed case, Morrison v. National Australia Bank, where foreign investors sued a foreign company over shares purchased abroad, Kagan?s office ultimately sided with the U.S. Chamber of Commerce.  We commented on that decision and its best practices implications for institutional investors when it was handed down last week.  In Free Enterprise Fund v. Public Company Accounting Oversight Board, decided Monday, Kagan?s office was mostly successful in preserving the bulk of the PCOAB?s powers from constitutional attack.

Full post as published by PomTalk on June 29, 2010 (boomark / email).