Following on this post from a couple of weeks ago, Michael J. Wing, an attorney who lives in Tyler but practices out of Houston, faces up to 20 years in prison after pleading guilty in Tyler earlier this week to wire fraud charges over defrauding one investor of $500,000 in 2004.
Wing had been charged with 18 counts of securities and wire fraud and, although his plea deal involves only one defrauded investor, he also admitted to defrauding 10 investors of more than $7 million. No sentencing date has been scheduled yet. Hat tip to Letter of Apology for the news.
Daily Archives: April 27, 2006
Confounding contango
This post from last week noted the seeming contradiction between rising oil prices at a time of rising inventories and the current longstanding “contango” in the oil trading market — i.e., futures contracts for a given product are priced substantially higher than that same product for near-term delivery.
In this post, Clear Thinkers favorite James Hamilton takes a stab at explaining the situation, and casts doubt on the conventional wisdom that speculation is a separate force from supply and demand in affecting the price of oil. In so doing, Professor Hamilton makes the following common-sense observation, which you will never hear from politicians and a mainstream media that prefer to characterize business interests that make money speculating on oil prices as greedy capitalists:
[I]f these speculators turn out to be right [that prices will be higher in the future] and earn themselves a tidy profit, they will have done us all a favor. By bidding up the price of oil today and filling the storage facilities to the brim, they will have caused consumers to conserve today in order to have more oil available in the event that we do run into a big shortfall in production before September. On the other hand, if the speculators turn out to be wrong, they bought high and sold low. That would be destabilizing, forcing us all through some current pain, which, if we somehow could predict the future with certainty, will turn out to have been unnecessary. Our only consolation would be that the speculators will undoubtedly feel our pain, and then some, as their multibillion dollar bets flew into the wastebasket.
So, the only reason I see to be concerned about the contribution of speculation is if you think that the speculators are in danger of making huge losses. But if that’s your concern, I have a simple cure — just put yourself on the selling side of some of those futures contracts — let their pain be your personal gain.
Defining a framework for Constititutional interpretation
This previous post notes Yale Law School Constitutional Law professor Jack Balkin‘s (of the popular Balkinization blog) article in which he favors the “living Constitution” approach over originalism as a theoretical framework for interpreting the U.S. Constitution.
In this recent blog post, Professor Balkin addresses a basic structure of constitutional interpretation and the limits of interpretive theory, and breaks down the topic into four basic issues: fidelity, interpretation, construction, and constraint. He then notes:
[T]he issue of what fidelity requires is not the same thing as the question of how the system produces constraint. That is to say, it’s possible (in fact it is likely) that the requirements of fidelity permit people to arrive at a wide range of different answers to constitutional questions over time, and that the work of constraining interpretation and construction is achieved by other features of the system. It is often assumed that what constrains judges are a set of rules of interpretation and construction, that, if followed, will produce correct answers that will also constrain judges, or, less ambitiously, keep judges from making arbitrary decisions (and poor decisions) or keep them from moving too far out of the mainstream of constitutional thought.
My view, by contrast, is that theories of constitutional interpretation, even the best theories, offer only part of the constraints necessary for the practice of judicial review, particularly when constitutional issues become most strongly contested. Rather, much of the work of constraint is produced by structural and institutional features of the constitutional system.
Check out the entire post.
Explaining corporate agency costs
During the Lay-Skilling trial, the questionable governmental policy of criminalizing corporate agency costs is on full display.
In this TCS Daily column, Clear Thinkers favorite Stephen Bainbridge lucidly explains corporate agency costs and why shareholders deserve protection from theft, but not from risk-taking.
Given the government’s overwhelming prosecutorial power and the real presumption in cases involving failed business decisions, the criminalization of corporate agency costs is a serious threat to justice and to creation of wealth and jobs. Professor Bainbridge is an expert at the top of his game on this key business law issue, so don’t miss his analysis.