New York, October 16, 2013— A discussion of how to achieve global justice took center stage in an all-day conference at Columbia Law School that drew roughly 100 lawyers, regulators, investors, and academics.
The Oct. 11 conference, aptly titled the Global Justice Forum, featured panels on mortgage-backed securities, labor standards in the global supply chain, LIBOR manipulation, and cyber crime.
It was presented by Robert L. Lieff ’61, a graduate of the Law School and the Business School, and the Columbia University Richard Paul Richman Center for Business, Law, and Public Policy. Lieff, of counsel at Lieff Cabraser Heimann & Bernstein kicked off the event, outlining the broad theme of global justice and explaining the forum’s objective: to generate energy toward addressing cross-border problems.
“The various issues that are served up today are issues where although the actions may occur in one place, the harms are worldwide,” said Jeffrey N. Gordon, the Richard Paul Richman Professor of Law and co-director of the Richman Center.
Richman Center Co-Director Christopher J. Mayer, the Paul Milstein Professor of Real Estate at the Business School, said the conference brings people from different disciplines together to share their research.
Mayer moderated the first panel discussion, “Misrepresentation by Financial Intermediaries: The Case of Subprime Mortgage-Backed Securities,” which featured Gordon, Harvard Law School Professor Allen Ferrell, Greenwich Financial Services Chief Executive Officer William Frey and Tomasz Piskorski, the Edward S. Gordon Associate Professor of Real Estate at Columbia Business School.
Piskorski said one solution to widespread misrepresentations in the mortgage-backed securities market would be to create a standard set of disclosures about loan quality.
Frey, who brought an investor’s perspective to the discussion, was skeptical the U.S. mortgage-backed securities market could be revived anytime soon. Just the idea of a revival provokes “howls of laughter” from investors, he said.
Gordon said he was more “optimistic” that investor confidence in the mortgage-backed security market could be restored, but first regulatory agencies and law enforcement authorities need to penalize parties who made misrepresentations.
The Case of LIBOR
Gordon moderated the second panel, “Private Indices in the Public Services: The Case of LIBOR.” Speakers included Oxford University lecturer and fellow Daniel Awrey, Lieff Cabraser Heimann & Bernstein Managing Partner Steven Fineman, Michael T. Gass of Choate Hall & Stewart, and Wake Forest University School of Law Professor Andrew Verstein.
Awrey said many bankers suspected the LIBOR, or London Interbank Offering Rate—which governs the rate at which banks loan each other money—was being manipulated even before criminal authorities on two continents started investigations.
Verstein said the LIBOR manipulation scandal is a wake up call to society to evaluate the risks associated with each price indicator.
“Why does this matter?” he asked. “Because price discovery, or price formation is the most important concept that capitalism has going for it.”
Gordon said that although it is difficult to devise a perfect system for an interbank rate, “There is nothing wrong with a private system that comes up with a benchmark.” The problem is when misrepresentations occur, and banks outside the system rely on the rate.
Attendees also heard a keynote luncheon address delivered by former U.S. Department of State Legal Adviser Harold Hongju Koh, a scholar in residence at Columbia Law School and the Sterling Professor of International Law at Yale Law School. Koh called the Obama Administration’s work translating principles of international law to the modern world a “paradigm shift” in U.S. foreign policy.
Labor Standards Around the World
In the afternoon, attendees heard from experts on the panel, “Protecting Workplace Standards in the Global Supply Chain” moderated by Columbia Law School Professor Mark Barenberg, an Isidor and Seville Sulzbacher Professor of Law and co-director of the Program on Labor Law and Policy. The panel focused on how globalization has contributed to poor labor standards in the garment industry.
Barenberg said manufacturing has become increasingly dispersed, with the materials in a single product sourced from various countries around the world.
“The running shoe company might not produce much more than a brand,” said Barenberg, who advises the Obama Administration on global labor issues.
Panelist Theresa Haas, director of communications at the Workers Rights Consortium, said the need for global labor standards is gaining recognition. More than 80 companies have signed an accord that would improve conditions at more than 1,600 factories, Haas said.
The panel also included Fordham University School of Law Professor James J. Brudney, who discussed possible legal remedies. He suggested statutes could be created to govern the garment industry in the same way whistleblower statutes work in the U.S.
Barenberg said another possible solution is for the U.S. to withhold trade benefits to countries that violate existing labor standards, as it has with Bangladesh. Regulation is “one of the strongest political forces for the promotion of labor standards,” Barenberg said.
Cross-Border Cyber Crime
Richman Center Senior Fellow Jesse Greene '75 moderated the last panel of the day, “Prosecuting Cross-Border Cyber Crime,” a discussion of the growing threat of Internet attacks. It featured Columbia Law School Professor Philip C. Bobbitt, the Herbert Wechsler Professor of Federal Jurisprudence, as well as current and former prosecutors and FBI agents.
Cyber crime — unlike traditional military attacks —can be instigated from anywhere by anyone, and should be treated like “epidemiological threats,” Bobbitt said. “The CDC [Centers for Disease Control and Prevention], and not the Pentagon, is probably the model we should pursue,” said Bobbitt. “We must learn to think in terms of vulnerability.”
The panel also included Austin Berglas, assistant special agent in charge of investigating cyber crime at the FBI; Judith Germano, a former federal prosecutor who is now a senior fellow at NYU School of Law’s Center on Law and Security; and Timothy P. Ryan, a former FBI agent who now manages Kroll Advisory Solutions Cyber Investigations practice.
Greene, former chief financial risk officer at IBM, said people often ask him how to completely secure their data and networks against a breach.
“The only way to do that is to get a pair of wire cutters and cut the cable coming into the building,” he said.
Other panelists agreed that it is increasingly difficult to prevent attacks and discussed best practices for companies attempting to secure their systems.
The Richman Center fosters collaboration among Columbia University’s distinguished business and legal scholars in order to generate curricular innovations and advanced research that has the potential to inform public policy as well as the theory and practice of business and law. For more information, visit www.gsb.columbia.edu/richman.
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