The NYT discusses a controversy at UCLA (mainly, it seems, involving objections by Lynn Stout) to the $10 million gift it just announced from Lowell Milken, Michael’s brother. Lowell was accused many years ago in connection with his brother’s securities violations and escaped prosecution because of his brother’s plea deal. Steve Bainbridge comments in response to the NYT story, discussing this ancient history:
Some of us who were active in the field at the time–as I was–remember the story a bit differently. In our view, the government used threats to go after Lowell as one of the ways on which they coerced Michael into taking a plea deal.
I have more perspective in my paper, Imagining Wall Street. There I note that Oliver Stone’s film Wall Street
may have helped create an environment that became increasingly unfriendly to takeovers. In the year following the film’s release, Drexel and Milken were prosecuted, eventually culminating in the fining and jailing of Milken along with many others in the takeover game, and the demise of Drexel Burnham. Milken pleaded guilty and was sentenced to ten years in jail.68 [United States v. Milken, No. (S) 89Cr.41(KMW), 1990 WL 264699 (S.D.N.Y. Nov. 21, 1990)] * * * It is hard to say how much of that attitude was based on actual events reported in the media, and how much on the fiction Wall Street helped create. Milken was prosecuted not for insider trading, but rather for technical violations of the Williams Act—that is, using Boesky to accumulate non-disclosed positions in target shares.69 [Id. at 4]
In short, there is a big question whether Lowell’s history is such as to taint UCLA by his gift.
But I am not unsympathetic with the idea that law schools are supposed to be teaching their students that ethics trumps money, and so should be careful about whom they take money from, and more generally the company they keep. Indeed, for that reason I wrote critically last year about Bill Lerach’s foray into law teaching.
The real question here is where you draw the line and who decides. Is the decision to turn down a gift based on ethics or politics? More to the point, would the same people who oppose the Milken gift also object to an association with Lerach?
And how do you balance those considerations against the institution’s needs? Interestingly, Professor Stout has written extensively about the need to take the interests of all constituencies into account in corporate decision-making. Where would UCLA’s students stand in the decision Professor Stout favors to reject the Milken gift?
