Daily Archives: December 9, 2005

What’s the big deal with the Lord of Regulation?

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Spitzer42.jpgMatthew T. Bodie is a Hofstra law professor who is guest blogging over at the Conglomerate blog and, in this post, wonders why fellow law professors such as Stephen Bainbridge and Larry Ribstein are critical of New York attorney general Eliot Spitzer. After extolling the merits of the Lord of Regulation’s crackdown on the mutual fund and investment banking industries, Mr. Bodie then observes:

All of these accomplishments took creative application of the laws, as well as the settlement process, to bring systemic changes to entire industries. . . Now, apparently it makes one a naif to believe that Spitzer has improved things. But really, what is so controversial about what he has done? Who was in favor of the gross conflicts of interests at play in analysts’ recommendations, so luridly displayed in emails? Who thought the rigged bidding in the mutual fund industry was a practice to be encouraged? Really, where’s the problem?

Mr. Bodie’s question is commonly asked regarding the use of the state power to prosecute or regulate through civil litigation the unpopular and greedy businessperson of the moment. “Why shouldn’t (insert the name of any Enron defendant, Arthur Andersen, Martha Stewart, Frank Quattrone, Hank Greenberg, etc) be prosecuted or sued,” the argument goes. “They probably did something illegal. So what if the state has to cut some corners in pursuing them. That’s a small price to pay for protecting us from these evil people, isn’t it?”

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Natural gas prices spike to new record

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oil and gas well at sunset3.jpgIt was the coldest day of this winter season in Houston and much of rest of the U.S. yesterday, and the cold blast was met with a new record price for natural gas — January natural-gas futures hit an all-time high of $15.10 a million British thermal units on the New York Mercantile Exchange and then settled at a record high of $14.994 a million British thermal units.
Although damage to production facilities from the hurricanes earlier this year reduced available supplies of natural gas, the impetus for the current spike is cold weather. Although November was a relatively warm month, December is shaping up to be bitterly cold as weather futures on the Chicago Mercantile Exchange predict that December will be almost 25% colder than normal in Chicago and New York. What is even more remarkable is that the spike in natural gas prices isn’t bigger news than it is. Until the prior spike hike after hurricanes earlier this year, gas futures had rarely risen above the $10 a million BTU level and industry players thought a price of $15 was analogous to $100-a-barrel oil prices. Interesting how perceptions quickly change as people adjust to changing market conditions.

Mistrial declared on remaining counts in Duke Energy trading case

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duke energy6.gifAs anticipated by this earlier post, U.S. District Judge Nancy Atlas declared a mistrial earlier today on the remaining 12 criminal counts against former Duke Energy trader, Timothy Kramer. Two days ago, the jury acquitted Kramer on seven counts and his co-defendant, former Duke Energy trader Todd Reid, on all counts. Earlier posts on the case are here.
This case establishes once again that it’s far easier in most white collar criminal cases involving the prosecution of agency costs to bludgeon a plea bargain out of the defendants than to obtain a conviction through a fair trial.