Amid a hair-splitting debate over the meaning of the words ‘willfully' and ‘knowingly' in Section 32 of the Securities Exchange Act of 1934, Professor John C. Coffee acknowledges, "If you're loafing through life, you might find the distinction between these two words boring. But if you have any intention of being a lawyer, this will be important."
Thus begins a discussion of the 1934 Act that grew out of U.S. v. Murdoch, a case that continues to address critical issues—particularly whether a person is guilty of securities fraud if she did not have an evil purpose or an awareness that she was committing a wrongful act.
Prof. Coffee points out that the judge who ultimately defined these words—Henry Friendly, formerly chief judge of the 2nd Circuit Court of Appeals—was as famous to lawyers in his time as the Beatles were to the general public. It will not be the last reference to pop culture in a class that veers from the Martha Stewart trial to the question of who has jurisdiction to penalize poor conduct by professional basketball players.
Black Letter Law/White Collar Crime looks at corporate scandals over the past 30 years—for example, Enron, Drexel Burnham, Ivan Boesky, overseas questionable payments, and corporate political contributions—to help students understand how conflicts of interest can trigger crimes, from bid-rigging to insider trading. The seminar is co-taught by Prof. Coffee, one of the nation's most eminent corporate law scholars, and Jed Rakoff, a federal district judge in the Southern District of New York (and former prosecutor), who discusses his own involvement in major cases, such as WorldCom. About a quarter of the class material is new each year. "The trouble with a casebook is that it freezes you in time," says Prof. Coffee. "We like to do the scandal du jour."
Federal District Judge Jed Rakoff (left) with Professor John C. Coffee. Photo credit: Dustin Ross
The semester begins with substantive law and the primary federal statutes: the mail and wire fraud acts, the Hobbs Acts, the federal securities laws, RICO, the obstruction of justice statutes, and the Foreign Corrupt Practices Act. It moves on to corporate criminal responsibility, sentencing guidelines, and the role of new enforcers, such as the New York attorney general.
In discussing issues such as an ongoing investigation of the insurance industry in New York state, the class is asked to consider: What is the role of a lawyer advising a corporation? What is the role of the board of directors? The general counsel? How far can a prosecutor push his or her legal theories?
"These are not just criminal prosecutions but major crises in corporate governance," says Prof. Coffee. The class also addresses societal mores and the effect that a major scandal can have on the business world and shareholders. Students discuss whether, as public morality shifts, lawyers should apply yesterday's morality to today's world.
Unlike classes that rely heavily on judicial decisions, Black Letter Law focuses more on indictments and SEC complaints. The course addresses how possible violators could (and should) be charged, defenses that a defendant may raise, and evidentiary issues. Also discussed is the constitutionality of federal sentencing guidelines—of particular interest to students leaning toward careers as federal prosecutors or SEC enforcement attorneys. The combined expertise of the two professors makes Black Letter Law/White Collar Crime among the Law School's most exciting offerings.