April 2, 2011
Congressman Kucinich on the Growing Threat of Corporate Plutocracy
Here is some of what Democratic Rep. Dennis Kucinich (OH) had to say in a recent interview with Democracy Now:
[T]he attack on public employees really presages an attack on the entire public sphere. So what’s happening here is ... a destructive undermining of the principle of government of the people . . . . [T]his is about privatization, writ large. It’s about attempting to create circumstances where the physical assets of the state, that were purchased through people’s tax dollars over many generations, are about to be auctioned off … often to a lower bidder, in order for the private sector to profit. . . . [W]e are at the threshold of a whole new world here, where workers are either going to be restored to a position of dignity in our society, or they’re going to be reduced to a second-class citizenship. . . . [T]he thinking is that there is no such thing as government of the people. This idea of government of the corporations, by the corporations and for the corporations has actually taken hold. It’s taken hold in the Citizens United case. It’s taken hold in Buckley v. Valeo. And now it’s taken hold with [Ohio] Senate Bill 5. . . . [A]t this point, unions are one of the last lines of defense against a corporate plutocracy. . . . One of the things that I’m concerned about with respect to this particular White House is what seems to be the extraordinary influence that Wall Street has. We could not have 15 million, 14-15 million people out of work, unless there are those who are helping to manage the engines of this economy who feel that … to have that level of unemployment is somehow conducive to a functioning of the economy in order to keep the cost of labor low. . . . In some cases, you have an attempt, as in Michigan, to write laws that would even lead to the abolition of local governments … taken over by an unelected board.
For no extra charge, here is an excerpt from one of Juan Gonzalez's questions for Rep. Kucinich regarding Ohio S.B. 5:
[O]ne of the interesting aspects [is] that union members would be—or the governments, local governments, would be prohibited from collecting the voluntary political donations of workers to the political funds of their unions. This seems to be a direct attempt to prevent unions from being able to develop a political war chest before the upcoming elections, obviously, before the upcoming presidential elections.
Peak Oil Drives Return to the Big Easy
I have the great pleasure of being back in New Orleans. My wife and I bought our first house here when we came to the Big Easy to attend law school at Tulane, and there is always something special about being in this city for both of us. This trips marks my first opportunity to speak at my legal alma mater as a law professor, and I'm quite excited about it.
When we came to Tulane, neither of us knew then what kind of law we would practice, or where, much less that would both want to (and be able to) become law professors. From the moment we set foot in New Orleans, though, we knew we loved it here. And once we started experiencing law school, we both knew we loved that, too. A lot of people can't say that, but we truly did. A lot of it was the subject matter, of course. I also think part of that was because we did it together, and so even when it was hard, it was never lonely. We still love being a part of the law school experience, and we love what we do, and we're thankful to have the opportunity to do what we love. And, again, we get to do that together.
Why is this relevent to this blog? To the the extent it is, I suppose it is because it serves as part of the background for why I do what I do. As I have said before, I believe that energy law and policy is business law and policy. That is true of environmental law and policy in many cases, too. As such, I am excited to be a part of the Tulane Law School Summit on Environmental Law & Policy on the panel, Are We Out of Gas?: The Peak Oil Question. Here's the session abstract:
Oil is not a renewable resource. Peak oil theory suggests that at some point in time demand for oil will be higher than the supply of oil. As oil reserves are depleted, finding and processing black gold will cost more money; possibly to the point where oil extraction will not be worth the costs. Panelists will discuss the legal and political issues revolving around the theory of peak oil. Oil is not a renewable resource. Peak oil theory suggests that at some point in time demand for oil will be higher than the supply of oil. As oil reserves are depleted, finding and processing black gold will cost more money; possibly to the point where oil extraction will not be worth the costs. Panelists will discuss the legal and political issues revolving around the theory of peak oil.
April 1, 2011
More on David Sokol and Insider Trading: Now a Harder Case
Yesterday, I indicated that, based solely on the facts in the Berkshire Hathaway press release, it was unlikely that David Sokol violated Rule 10b-5. (See that post for the full chronology.) My argument was that, based solely on those facts, Sokol did not have any material nonpublic information at the time of the trade.
The Wall Street Journal today reported additional facts that make that conclusion a little more uncertain. As I reported yesterday, most of Sokol’s trading occurred on January 5-7, before he discussed a possible deal with the Lubrizol CEO and before he even broached the possibility of an acquisition of Lubrizol with Warren Buffett. But, according to the Journal, on December 13, before Sokol bought any Lubrizol stock, he met with investment bankers from Citigroup and asked them to set up a meeting with Lubrizol’s CEO. The investment bankers contacted Lubrizol on December 17 and told Lubrizol that Berkshire Hathaway was interested in Lubrizol.
Those additional facts, which were not disclosed in the Berkshire Hathaway release, make the question of materiality a little murkier.
As I indicated yesterday, the Supreme Court's opinion in Basic says that materiality depends on a balance of the probability that an acquisition will occur and the magnitude of the transaction if it does occur. These additional facts affect the probability portion of the analysis. When Sokol purchased on Jan. 5-7, the possibility of the Lubrizol deal was more than just an unexpressed idea in his head that Berkshire should acquire Lubrizol. Investment bankers were involved and Lubrizol had already been approached. The involvement of investment bankers is one of the facts specifically flagged by Basic as relevant in determining whether a possible acquisition is material. The information Sokol had when he traded still might not be material, but these additional facts make his argument on that issue more difficult.
It’s also interesting that the Berkshire Hathaway press release didn’t include the additional details reported by the Journal.
March 31, 2011
Insider Trading Liability for Sokol? Not Likely
Sorry for the number of posts today, but there's a news item I couldn't resist.
David Sokol, the chairman of several subsidiaries of Berkshire Hathaway, resigned on March 28. Sokol was one of the potential successors to Warren Buffett, Berkshire Hathaway’s legendary leader, so Sokol’s resignation was surprising to say the least. News stories about the resignation are available here (Wall Street Journal) and here (New York Times).
The reports of the resignation include descriptions of stock trades Sokol made in Lubrizol, a company that Berkshire Hathaway eventually purchased for $9 billion. Some have speculated as to whether Sokol engaged in illegal insider trading. Warren Buffett has an unequivocal answer to that question: “Neither Dave [Sokol] nor I feel his Lubrizol purchases were in any way unlawful.” But, according to the Wall Street Journal, “the SEC is reviewing the Berkshire press release and considering whether to launch an investigation.”
I have no personal knowledge of anything that happened. But, if the public report of the facts are correct, I think it's highly unlikely that Sokol has engaged in insider trading in violation of Rule 10b-5.
Here’s a chronology derived from the Berkshire Hathaway news release :
1. December 14: Sokol purchased 2,300 shares of Lubrizol.
2. December 21: Sokol sold those 2,300 shares.
3. January 5, 6, and 7: Sokol purchased 96,060 shares of Lubrizol, pursuant to a 100,000-share limit order he had placed.
4. Jan. 14 or 15: Sokol for the first time discussed with Warren Buffett the idea of purchasing Lubrizol. Buffett was skeptical.
5. Jan. 24: Buffett sent Sokol a short note indicating his skepticism about acquiring Lubrizol.
6. Jan. 25: Sokol discussed a possible purchase with James Hambrick, the CEO of Lubrizol.
7. Subsequent to Jan. 25, Sokol reported his discussion with Hambrick to Buffett and the Berkshire Hathaway board approved the purchase.
According to the Wall Street Journal, the profit on Sokol’s 96,060 shares would be $3 million.
Larry Ribstein says whether Sokol is liable for insider trading depends on whether Sokol breached a duty to Berkshire Hathaway when he bought the stock. Larry’s right, of course, that liability for insider trading under Rule 10b-5 requires a breach of fiduciary duty. The Supreme Court’s opinions have made that clear since its Chiarella decision in 1980, and subsequent Supreme Court cases—Dirks v. SEC (1983) and U.S. v. O’Hagan (1997)—reaffirm the breach-of-duty requirement.
But there’s a much stronger reason why Sokol is probably not liable. One is liable for trading on nonpublic information only if that information is material, and Sokol doesn’t appear to have had any material information when he purchased the stock—at least if we accept the Berkshire Hathaway account.
According to Berkshire Hathaway, Sokol had not suggested the Lubrizol acquisition to anyone prior to his purchases. He approached Buffett a week after his last purchase and the matter did not go to the full board until much later. Thus, the only nonpublic information Sokol could have had at the time of the trades was knowledge that he intended to suggest the Lubrizol acquisition to Buffett.
Was that material? Fortunately, Basic v. Levinson, decided by the United States Supreme Court in 1988, addresses this very question: whether information about a possible acquisition is material. Basic says that one must consider both the probability that the acquisition will occur and the magnitude of the transaction if it does occur.
It’s pretty clear that the magnitude of the Lubrizol transaction, if it did occur, was fairly high: it was a $9 billion deal offering a substantial premium above the pre-deal price of the Lubricol stock.
But the probability at the time Sokol purchased was extraordinarily low. Basic says to consider “indicia of interest in the transaction at the highest corporate levels.” Some of the indicia Basic points to are “board resolutions, instructions to investment bankers, and actual negotiations between the principals or their intermediaries.”
If one accepts the Berkshire Hathaway account, nothing even close to that had happened when Sokol bought his stock. The Berkshire Hathaway board had not even discussed the Lubrizol deal, much less approved a resolution to negotiate with Lubricol. Sokol himself was not even a director of Berkshire Hathaway. As far as is known, no one had contacted an investment banker. And, at the time of the trades, there had been no negotiations. Sokol himself didn't talk to Lubrizol until after the stock purchases. Under Basic standards, the probability was virtually nil.
Basic says to weigh the probability and magnitude together to determine materiality, and the magnitude is high, but magnitude alone certainly can’t be enough if there is absolutely nothing to establish probable corporate interest in the deal. A thought in one employee’s head (unless, perhaps, that employee were Warren Buffett himself) does not make a possible acquisition material.
Inside (The Academy) Job
I realize I'm late to the party here, but I just watched "Inside Job." The thing that was most striking to me was the indictment of academics.
[T]he film … portrays an academic environment festering with direct and indirect conflicts of interests. Economists and B-school professors appear content to churn out papers and reports without revealing the full web of financial ties affecting their thinking…. Ferguson goes on to describe a multi-billion dollar industry of “academics for hire.”
The film does an excellent job of discussing the lack of professional standards governing disclosures of conflicts of interest in economics. Ferguson asks why economists who have been paid by Wall Street banks to write papers that support Wall Street's agenda are not required to disclose that fact. Various prominent economists tell him that this is absolutely no problem. When Ferguson points out that medical journals rightly insist that researchers disclose the sources of their funding, one Harvard economist is literally rendered speechless.
Buchanan, however, is not satisfied with director Charles Ferguson's apparent conclusion that this is somehow about academics telling lies to get paid. Rather, "[t]hey are true believers whose arguments are congenial to Wall Street." Buchanan continues:
The better question, therefore, is how it has come to pass that the economics profession is dominated by men (and it is still very much a boys' club) who believe such nonsense. Some of these guys still think that there was no bubble -- that the financial crisis was actually a rational, equilibrium response to economic fundamentals. And even those who will not say anything quite that crazy publicly are still unfazed by the manifest failures of their ideology.
One possible explanation (and I really am just thinking out loud here) may go as follows: Imagine that the pool of really smart academic economists is made up of two evenly divided sides in terms of ideology. One of the sides, however, has the added benefit of liberal (pun intended) financial support that includes opportunities to write reports, present papers, and testify before important panels, etc., that the other side does not. When academic institutions are making hiring/promotion decisions, which group will be favored?
Income Volatility, Taxes, and State Budget Shortfalls
This article in the Wall Street Journal hasn’t received as much attention as it should have. I haven’t double-checked the Wall Street Journal’s statistics but, if correct, the story helps to explain the severity of some states' recent budget shortfalls.
In general, at both the state and federal levels, people with more income pay more taxes than people with less income. That would be true whether or not the income tax system was progressive, taking a higher percentage of tax from high-income earners than from low-income earners. Even in a flat tax system, people who earn more would pay more. For example, with a flat 10% tax, a person making $500,000 would pay $50,000 and a person making $30,000 would pay only $3,000.
I don’t want to debate how progressive our tax system is or whether it’s a good thing. But it’s clear that, on average, news stories of some big corporations paying no taxes notwithstanding, government derives more of its revenue from high-income taxpayers.
As a result of that, state income tax revenues can be heavily dependent on receipts from high-income taxpayers. In some states, that can be very dramatic. As the Wall Street Journal article points out, prior to the recent recession, 45% of California’s income tax revenue came from the top 1% of taxpayers (households earning more than $490,000 per year).
The problem with that, as the article points out, is that income at those levels can be very volatile—more volatile than average incomes. From 2007 to 2008, the incomes of the top 1% fell 15%, compared to a drop of 4% for the nation as a whole. States that were heavily reliant on high-income earners saw their state income tax receipts drop precipitously. Unless spending drops to match that drop in revenues, a budget shortfall results.
One answer, of course, is to plan for that volatility—to set aside tax revenues when times are good to be used when times are bad. But most states don't seem to be very good at doing that.
What would you substitute for the New York Times?
As most of you have heard, the New York Times has begun charging for unlimited access to their online site. You can view up to 20 stories a month for free, but after that (with some exceptions), you're going to have to pay--a minimum of $195/year after the introductory promotion. (The Times says it will be offering a discounted academic rate, but the details have not yet been announced.)
I am a regular reader of the online Times, and I like it, but I'm not sure it's $195/year better than the non-pay sites that are available. (I pay for the Wall Street Journal, but, for a business law professor, that's a slightly different issue.) Therefore, I'm posing the following question to our readers: if you had to substitute another newspaper's free site for the New York Times, which would it be?
March 30, 2011
Different Fiduciary Obligations for LLC Managers and Corporate Directors
Lewis Lazarus recently posted Directors Designated By Investors Owe Fiduciary Duties to the Company as a Whole and Not to the Designating Investor at the Delaware Business Litigation Report. In his article, he explained
[The Delaware] cases teach that directors designated by particular stockholders or investors owe duties generally to the company and all of its stockholders. Where the interests of the investor and the company and its common stockholders potentially diverge, the directors cannot favor the interests of the investor over those of the company and its common stockholders.
Professor Bainbridge weighs in (here), agreeing that the above is the general rule, but that in some cases that may not be best. He gives a few examples, such as a struggling company granting a union nominee a board position or a time when preferred shareholders can elect a board majority because no dividends were paid for a sufficient period of time. He then notes that a director's "sponsor might reasonably expect the directors not just to 'advocate' for the shareholder's position, but to vote for it and take other action." Professor Bainbridge concludes that he still doesn't "think the sponsor should be able to punish the directors for failing to" vote as the sponsor desired and that such cases should be viewed "contextually."
This all got me thinking about VGS, Inc. v Castiel, 2000 WL 1277372 (Del. Ch.), which I recently covered in class. That case involved a manager-managed LLC, with a three-person Board of Managers. Castiel named himself and Quinn to the Board, and Sahagen added himself. Sahagen and Castiel got into a feud, and Quinn defected to Sahagen's side. Quinn and Sahagen then merged the LLC into VGS, Inc., without notice to Casteil, via written consent. (This case is also a great lesson into the perils of poor drafting.)
Despite the plain language of the LLC agreement, the court bails out Castiel (and his lawyers) finding that
As the majority unitholder, Castiel had the power to appoint, remove, and replace two of the three members of the Board of Managers. Castiel, therefore, had the power to prevent any Board decision with which he disagreed.
. . . .
Notice to Castiel would have immediately resulted in Quinn's removal from the board and a newly constituted majority which would thwart the effort to strip Castiel of control. Had he known in advance, Castiel surely would have attempted to replace Quinn with someone loyal to Castiel who would agree with his views.
This is not how we tend to react in the corporate context. Sponsors generally can't bind directors to a specific vote, and they don't usually require notice of a director's intended votes. Think Ringling Bros-Barnum & Bailey Combined Shows v. Ringling, 53 A.2d 441 (Del. Sup. Ct. 1947); McQuade v. Stoneham, 263 NY. 323 (1934); or even perhaps Ramos v. Estrada, 8 Cal. App. 4th 1070 (1992).
In VGS, it seems to me the court should have determined this action was improper (if it was) because Sahagan and Quinn were acting in a way that implicates a conflict of interest and that they were inappropriately taking something that wasn't theirs. That is, it was an act of fraud, self-dealing, or a conflict of interest. At least then Quinn and Sahagan could defend their decision-making process and the decision itself.
I have been working on a short piece arguing that the courts may be developing rules that respect LLCs as unique entities. Professors Ribstein and Bainbridge, among others, have long advocated that courts apply rules appropriate for LLCs rather than blindly adopting corporate or partnership rules, and I would advocate a similar position here. In VGS, however, my decision would place far more weight on the contract itself and respect the powers granted to the board. That is, I might allow Castiel the authority he sought and was granted in this case in the LLC context, even though that power is in conflict with general corporate law directors' rules. But, I would only grant the power if Castiel expressly acquired that power on the front end. Here, Castiel did not, and absent fraud or self-dealing, I think he should have lost.
March 29, 2011
Dallas on the Great Recession
Lynne Dallas has posted Short-Termism, the Financial Crisis and Corporate Governance on SSRN with the following abstract:
This paper is a comprehensive exploration of why financial and non-financial firms engage in short-termism with particular attention given to the financial crisis of 2007-2009. Short-termism, which is also referred to as earnings management or managerial myopia, consists of the excessive focus of corporate managers, asset (portfolio) managers, investors and analysts on short-term results, whether quarterly earnings or short-term portfolio returns, and a repudiation of concern for long-term value creation and the fundamental value of firms. This paper examines how market and internal firm dynamics contribute to short-termism by considering various structural, informational, behavioral and incentive problems operating within firms and markets.
Regarding structural problems, this paper explores how the internal dynamics of traditional and shadow banks contribute to short-termism. It also explores the contribution of short-term (high turnover) trading, including momentum and high frequency trading, to short-termism. It examines the role of "dumb money" (noise traders) in causing overvalued equity resulting in over-investments by non-financial firms, and the role of transient institutional investors in contributing to earnings management by managers of non-financial firms. It also addresses the ability of activist shareholders through the use of shareholder voting rights or takeovers to use non-financial firms as short-term arbitrage opportunities.
This paper also examines competitive pressures on firms, such as where markets present manager with a prisoners’ dilemma in which the dominant strategy is to engage in earnings management. In addition, the paper considers how informational problems in markets lead firms to utilize myopic signal and signal jamming behaviors and how these inefficiencies create a market for lemons in which such behaviors are encouraged. It also considers behavioral factors that contribute to short-termism, such as overoptimism, herding, and the tendency to underestimate or disregard low-frequency economic shocks. This paper also explores cultural aspects of financial and non-financial firms that foster short-termism, particularly in trading firms, and the importance of executive compensation arrangements to firm cultures.
Finally, this paper considers various regulatory responses to mitigate short-termism, including an evaluation of relevant provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The paper proposes coordinated and functionally equivalent regulation of the traditional and shadow banking system. It also proposes regulation of financial products, such as derivatives, collateralized debt obligations and subprime mortgages, and disclosure and due diligence obligations for those involved with such products, such as issuers, underwriters and credit rating agencies. It proposes a reexamination of financial reporting obligations to focus market participants on long-term value and true drivers of business success. In addition, it proposes that states change their corporation law to provide that only long-term shareholders may vote. Long-term shareholders would be defined by the duration of their share ownership and the characteristics of their portfolios. In addition, a reexamination of fees or taxes on securities transactions, including stock, debt and derivative transactions, is proposed as well as consideration of modifying capital gains taxes. Finally, changes in fiduciary duty law, board structure, and executive compensation arrangements are proposed to mitigate short-termism. It is the objective of this paper to seek changes that would prevent a financial crisis in the future, such as the financial crisis of 2007-2009 that has had such a devastating impact on the United States and global economies.
March 28, 2011
Buy this book!
A few weeks ago, I noted a new book: Typography for Lawyers, by Matthew Butterick. I have now had an opportunity to read it and I urge everyone who cares about their written (or published) work to run out and buy it immediately.
Butterick is both a lawyer and a professional typographer, and he deals with all aspects of the typography of legal documents—everything from a detailed analysis of font selection to more complicated page-layout issues. He provides convincing illustrations of his points and the book also has its own web site that provides additional examples. The book also explains how to set up most of the formatting choices he recommends in both Word and WordPerfect.
As several former law review editors will attest, I am very particular about my writing and how it appears on the printed page. Since reading Butterick’s book, I have changed my default font, my margins, and several other default document settings in Word. (None of that is visible here, since the blog has its own style requirements.) He even convinced me to change from two spaces to one at the end of sentences, something I have always been particularly stubborn about. I have also completely revised my vita (not that I’m going anywhere) and reformatted my exams. As stubborn as I am, I can give no stronger endorsement to the book.
Let the Regulators Work It Out: AT&T's New Deal Policy?
Following the announcement of the AT&T merger with T-Mobile, theories abound about the potential value and goals of the proposal. Over at the Wall Street Journal Deal Journal, it was noted that some believe AT&T may not care if it gets all or most of T-Mobile, as long as they get a sizable chunk:
Citadel Securities weighed in with a very intriguing notion: Maybe AT&T doesn’t plan to buy all of T-Mobile, after all?
[W]e now believe AT&T’s strategy may not necessarily require getting full (or almost full) approval for the deal – nor do we think AT&T plans to call off the deal and pay the $3B reverse breakup fee. Rather, we think AT&T may simply be intent on acquiring however much of TMobile the regulators allow, and divesting the rest as required…..
Our read of the Stock Purchase Agreement filed Monday suggests AT&T is ready to divest up to 40% of T-Mobile’s subscribers –and we think AT&T may not be opposed to divesting even more in order to get the deal closed.
This is an interesting notion, and it is certainly possible. If so, though, I find it disappointing. It's one thing to structure a deal you think can work (or hope can work) to see what happens. It's quite another to just proceed and see what you can get without assessing the regulatory problems. That is, if the Citadel Securities assessment is correct, AT&T may have just proposed a complete merger to see what it can keep, without assessing for itself what should be permissible and what is not under applicable law and regulations. If I'm the regulator, and a significant part of the deal is improper (e.g., more than 40% of the deal), I'd be inclined to decline the whole thing. Let AT&T and T-Mobile come back with a plan that is, at least, in the ball park.
I understand that some people don't like the antitrust laws and other laws and regulations, and it is certainly their right. But if you are working on a deal with major antitrust implications, it seems to me you should be taking those laws and regulations into account in the proposed structure. It's not the regulators' job to tell companies what deal will work; it's the regulators' job to determine whether the deal does work. Unless, of course, you want even bigger, slower government.
March 27, 2011
Agreeing With Bainbridge ... Almost
Readers of this blog know that I'm a big fan of Stephen Bainbridge. And this is despite the fact that we probably disagree on 70% of the issues on which our respective blogs overlap. So, it's nice when I can post about something we appear to agree upon: The Supreme Court's problematic failure to put forth a coherent theory of the corporation to support its various proclamations about what rights corporations do and do not have.
Bainbridge: US law confers personhood on the corporation without a coherent theory of why it does so or where the boundaries of that legal fiction are to be located. As I complained after the recent AT&T decision: Chief Justice Roberts could have summed up his opinion far more succinctly: "Because at least 5 of us say so."
Me: Sooner or later the Court is going to have to take this issue on. Cases involving the rights of corporations aren’t going away any time soon, and ignoring the issue seems almost disingenuous. For example, in Citizens United the majority told us that there was nothing about corporations qua corporations that justified restricting their political speech solely on the basis of their corporate status—corporations, after all, are merely associations of citizens. But in FCC v. AT&T, corporations are effectively deemed to be so obviously different from individuals as to make it almost laughable that they should be understood to have personal privacy rights. Wrote Justice Roberts: “’Personal’ in the phrase ‘personal privacy’ conveys more than just ‘of a person.’ It suggests a type of privacy evocative of human concerns—not the sort usually associated with an entity like, say, AT&T.” Well, before you said it was so in Citizens United, many would not have usually associated a constitutional right to unbridled political speech with corporations, as evidenced by the seemingly common response to the opinion: “Who knew that corporations were entitled to the same right to free speech that individual citizens are?”
However, having noted an apparent point of agreement, I must raise a question about Bainbridge's further assertion in the post linked to above:
Corporations have the same obligation to obey the law as natural persons.
To the extent that corporations don't actually exist and thus can't be physically put in jail, this seems not quite correct. Furthermore, the actual human decisionmakers and "owners" often appear to be significantly immunized from jail for corporate malfeasance because of the responsibility dilution inherent in doing business in the corporate form. This is obviously to a significant degree an empirical question, but I'm certainly not going to take at face value the assertion that corporations are precisely as subject to the law as natural persons. Particularly when that assertion is trotted out in support of fending off attempts to regulate corporations more rigorously because, "They have no soul to save and they have no body to incarcerate."