“Tell them I went rogue and (you) had no idea and you immediately fired me”

The Costa Mesa, Calif. police union scandal breaks wide open with new court papers shedding light on the conduct of a law firm representing the union. [Orange County Register] Two private investigators hired by the law firm called in a fake DUI on the town’s mayor and attached a GPS to a councilor’s car to track his movements, according to the county district attorney’s office. [Daily Pilot] We’ve been covering the scandal for more than two years here, here, and here.

More: union gumshoes alleged to have set honeytrap for opposing councilmember. [Matt Coker, OC Weekly] It’s like Costa Mesa Confidential!

P.S. And yet more from the “playbook”: “keep the pressure up till that person assures you his loyalty then move on to the next victim.” [Steven Greenhut, San Diego Union-Tribune (“Yes, ‘victim'”)]

Banking and finance roundup

  • House Oversight Committee report finds evidence FDIC used Operation Choke Point to strangle access to banking for lawful but disliked businesses [St. Louis Post-Dispatch, Bloomberg, report, Kevin Funnell, HalfWheel (cigar shops), Pete Kasperowicz, The Blaze (guns), Joe Adler/American Banker (critical views)]
  • “Fallout for the S.E.C. and the Justice Dept. From the Insider Trading Ruling” [Peter Henning, NYT DealBook, on challenges to previous cases; earlier]
  • Congress finally trims Dodd-Frank, with a nose hair clipper. Imagine what Sen. Warren will say if it takes up a scalpel or axe [Michael Greve; but see A. Barton Hinkle defending Warren’s position; Matt Levine (“not worth caring about”)]
  • Did tax policy set out to make life tough for American expatriates, or does it just seem that way? [Neil Gandal, WSJ on FATCA, FBAR, etc.]
  • “Like other federal agencies, the SEC has long been good at publicizing its initial accusations of wrongdoing …not so good at letting the public know when those accusations turn out to be unfounded or an overreach” [Russell Ryan via Bainbridge, more on SEC press releases on enforcement actions]
  • A market with next to no entry: “If Primary Bank, Mr. Greiner’s proposed firm, wins approval, it would be only the second new bank the FDIC has cleared in the U.S. since 2010.” [WSJ]
  • “The only people who benefit from shareholder litigation over M&A deals are lawyers. Period. End of discussion.” [Stephen Bainbridge; related, Steve Bradford via Bainbridge (“Delaware’ entire fairness standard morphs into a tax on deals for the benefit of plaintiff lawyers”), earlier here, etc.]

Suit seeks to blame Newtown school massacre on gun suppliers

The new lawsuit by the prominent Connecticut personal-injury firm of Koskoff, Koskoff, and Bieder [news coverage: WSJ Law Blog, CNN] seeks to get around the 2005 Protection of Lawful Commerce in Arms Act by latching on to the law’s narrow exception for “negligent entrustment.” That’s not a reasonable reading of the law, and I argue in a new post at Cato at Liberty that courts should toss attempts like these to revive gun control through litigation, all the more so because legislative attempts to overturn PLCAA (as I discussed last year) are rightfully going nowhere.

Some out there seem to think it’s okay to use litigation as a way of lashing out against opponents, whether by way of a winning case or not:

More: “The Sandy Hook Families’ Lawsuit Against Bushmaster Will Fail. Here’s Why.” [Bob Adams, Bearing Arms] And Eugene Volokh’s analysis breaks down the provisions of PLCAA and its interaction with the specifics of Connecticut law, concluding that “unless there is some evidence that the defendant manufacturers and gun sellers in this case violated some specific gun regulations (judgments actually made by legislatures), plaintiffs’ claim will go nowhere — and rightly so, I think.” Yet more: Steve Chapman.

Tweet-suing Chicago landlord sunk by class action

When Horizon, a large Chicago apartment building manager locked in a legal dispute with one of its tenants, chose to sue her over a disparaging tweet a few years back (more), one of the owning family’s members was quoted in the press as saying that “the suit was warranted and that Horizon is ‘a sue first, ask questions later kind of an organization,'” a comment for which the company subsequently apologized. You’ll never believe what happened next

NLRB and labor law roundup

The National Labor Relations Board has been so hyperactive lately reshaping the law for the benefit of labor unions that it gets a roundup all to itself:

A failed insider trading prosecution, and its costs

I’ve got a new post up at Cato at Liberty about the Second Circuit’s sharply worded dismissal of two insider trading convictions, which alas came too late to avoid massive damage to the enterprises and people concerned. Quoting NYT “DealBook”:

The dismissal of the case also raises questions about the November 2010 raids of Level Global and Diamondback Capital Management by the Federal Bureau of Investigation. Soon after the raid on Level Global, the hedge fund, which was started by Mr. Chiasson and David Ganek, shut down, in part because of requests by investors to redeem their money after the raid. Mr. Ganek was never charged with any wrongdoing by federal authorities.

Diamondback, where Mr. Newman was a portfolio manager, continued to operate for another two years, but it decided to close its doors in December 2012 after receiving a wave of investor redemptions.

Mr. Ganek chided the government in a statement on Wednesday. “For the dozens of my high-integrity colleagues at Level Global who lost their jobs and their reputations because the F.B.I. improperly raided our firm in this now-discredited fishing expedition, today’s legal vindication is a reminder how prosecutorial recklessness has real impact on real people,” he said.

Raids, as opposed to subpoenas and other dull ways of obtaining information sought in an investigation, are irresistible to the press — and they greatly reinforce the public impression that there must have been serious wrongdoing at a target enterprise. That in turn can spell doom especially for financial undertakings, whose business will often be built on client and public trust. And if the case subsequently fails to stick by the evidence or the law, well, it’s on to the next prosecution, right?

More from Stephen Bainbridge and from Ira Stoll (more), who unlike many in the press gave skeptical attention to the case throughout its course.