Did Commissioner Gallagher Violate SEC Rules?

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Recently SEC Commissioner Daniel M. Gallagher issued a paper, titled Did Harvard Violate Federal Securities Law? (described on the Forum here and in a WSJ article here). The paper, co-authored with Professor Joseph Grundfest, expressed the Commissioner’s opinions regarding shareholder proposals and the Harvard Law School clinic that assisted public pension funds filing those proposals in the previous three years. The Commissioner did not mince his words. In his opinion, Harvard University and its clinic violated the securities laws by assisting proponents that failed to include references to academic studies contrary to the views of those proponents. The Commissioner was clearly presenting a threat to the University and its clinic. However, his statements also raise a number of questions about his own behavior.

To begin with, the Commissioner should have recognized that, as Professor Macey has shown in a series of posts (available on the Forum here, here, and here), his accusations are without merit and the proposals were entirely consistent with current SEC rules, policies and practices. Furthermore, in making his accusations, the Commissioner deviated from standard SEC procedures and practices.

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