Refining the Apple Rule

apple%20logo.jpgMatthew Bishop of The Economist, who has been writing recently on imposition of ill-advised regulation on business, has come up with a refinement to Larry Ribstein’s Apple Rule (see also here) — i.e., the exception from corporate criminal liability for a popular (as opposed to an unpopular) business executive who is involved in alleged wrongdoing at the executive’s company:

This suggests to The Economist the need for a new Apple rule to guide prosecutorsóat least in cases, such as backdating, where the main supposed victim is a companyís shareholders. Our rule: if a criminal prosecution is likely to hurt a companyís share price, then donít prosecute.
Are we serious? Well, we think it’s worth a discussion . . . Cost-benefit analysis is largely absent from Americaís approach to regulating business wrongdoing, not only in criminal prosecutions, and that is probably one of the main reasons why Americaís capital markets are indeed losing their competitive edge. At the very least, encouraging the Department of Justice and the Securities and Exchange Commission to employ a few less lawyers and a few more economists would be a step in the right direction.

But what about the Dell Rule? — the exception in which a popular chairman of a company gets a pass on criminal liability when the chairman steps back into the CEO seat with the company under the cloud of a criminal investigation. We already know what happens to an unpopular chairman when the Dell Rule does not apply.

Eichenwald’s non-disclosure

kurt%20eichenwald.jpgFormer NY Times reporter Kurt Eichenwald — best known for his coverage of the Enron scandal for the Times and his book on the scandal, Conspiracy of Fools — penned this Times article (related blog post here) over a year ago that told the sad story of a teen-ager who was seduced by online pedophiles.
Well, fresh from making a mint off of writing about Enron’s alleged non-disclosures, it appears that Eichenwald has his own non-disclosure problem relating to this story, at least according to this NY Times Editor’s Note:

An article by Kurt Eichenwald on Dec. 19, 2005, reported on a teenage boy’s sexual exploitation on the Internet, and an accompanying Reporter’s Essay by Mr. Eichenwald published on nytimes.com explained the details of his initial contact with the subject.
The essay was intended to describe how Mr. Eichenwald persuaded Justin Berry, then 18, to talk about his situation. But Mr. Eichenwald did not disclose to his editors or readers that he had sent Mr. Berry a $2,000 check. Mr. Eichenwald said he was trying to maintain contact out of concern for a young man in danger, and did not consider himself to be acting as a journalist when he sent the check.
Mr. Eichenwald explained in his essay that, at the outset, he did not identify himself to Mr. Berry as a reporter. After they met in person, but before he decided that he wanted to write an article, Mr. Eichenwald said he told the youth that the money would have to be returned. Times policy forbids paying the subjects of articles for information or interviews. A member of Mr. Berry’s family helped repay the $2,000.
The check emerged as part of a criminal proceeding involving Mr. Berry in which a Michigan man is charged with criminal sexual conduct, enticing a minor to commit immoral acts and distributing child pornography. The trial began yesterday.
The check should have been disclosed to editors and readers, like the other actions on the youth’s behalf that Mr. Eichenwald, who left The Times last fall, described in his article and essay.

This New York Magazine article reports on Eichenwald’s testimony as a witness in the criminal proceeding and Eichenwald’s long explanation with related reader comments over at PoynterOnline is also quite interesting. Meanwhile, the Gawker weighs in with a snarky post here. As the story continues to gather steam, MediaWire Daily chimes in earlier this week with this interesting aspect of Eichenwald’s payment to Berry, and this FAIR article reports on a kerfuffle that recently arose between Eichenwald, the Times, Slate and journalist Debbie Nathan over investigating online child porn in violation of child predator laws, which Gawker is reporting will result in a $10 million defamation lawsuit by Eichenwald against Nathan. Finally, Michelle Malkin piles on here.

Jody Conradt steps down

Jody%20conradt2.jpgLongtime University of Texas women’s basketball coach Jody Conradt resigned on Monday, ending a coaching career at UT that spanned 31 years and produced 900 wins, a national championship with an undefeated team in 1986, 21 NCAA tournament appearances, three trips to the Final Four and membership in the Basketball Hall of Fame. The Chronicle’s Richard Justice has a nice tribute to Coach Conradt here.
I’ve never had the pleasure of meeting Coach Conradt, but we have many mutual friends who tell me she is a classy person. A fixture at University of Texas athletic department golf outings around the state during the off-season, Coach Conradt can tell a story with the best of them, as reflected by this classic one about former Longhorn Coach Darrell Royal. Inasmuch as she remains quite popular at UT and in Austin, Coach Conradt will almost certainly be retained by UT in some alumni-related capacity.
By the way, the end of this Joseph Duarte/Chronicle story on Coach Conradt’s resignation contains this week’s candidate for the worst sentence published in the Chronicle:

“Conradt said she’s comfortable leaving the program where it’s at.”

Argh!