Submitted by Erik Shawn, Feb 9, 2007 11:47

Mr. Howard, a lawyer with a large international business firm that frequently represents the tobacco industry, notes that he is Chairman of a bi-partisan organization called Common Good. However, Mr. Howard's editorial, particularly when read in combination with the equally one-sided, and frankly conflicting, editorial of Stanford Law professor Joseph Grundfest in Wednesday's Wall Street Journal, makes clear that his view on legal reform is neither in the common good nor on the right track.

Mr. Howard writes that U.S. securities markets are losing their pre-eminence because of the decline in the IPO market. Notwithstanding the fact that the current standing of the US securities markets is probably best measured by trading volume - just note the NYSE has the largest in the world and hit a record of over 2.8 billion shares traded on July 24, 2002 - Mr.Howard states that the decline in US based IPOs is somehow reflective of some greater problem in the American legal system. First, companies that conduct IPOs abroad and offer shares to US investors are still subject to the reach of US securities laws. Second, a point obviously missed by both Professor Grundfest and Mr. Howard, it has long been known that it is, in fact, the active dual enforcement of US securities laws by both the government and the private bar that makes investing in the US markets so attractive to begin with.

Investors have long enjoyed the security of the greater protection offered by the US legal system. Dual enforcement also helps avoid the problem faced in the US in the early part of Bush II's Adminstration, when it was widely recognized that the SEC was asleep at the wheel and some of largest examples of corporate fraud every seen in the United States were undertaken. It is hardly a coincidence that, as Mr. Howard points out, 2005 was a year filled with a large number of securities litigation settlements many of which directly resulted from that fraud. Finally, to take Derek Bok's twenty year old quote as an example of the decline of entpreneurs in the US is truly remarkable, in light of the fact that the last twenty years have produced some of the greatest examples of successful American innovation and entrepreneurialism that the world has ever seen. Is there really any question that the most fundamentally sound and important companies in the US, or from around the world, will still choose to list their shares in the US ? I don't think so.

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