GUEST BLOG: Dishonorable Services by Aegis Frumento Esq

December 20, 2018

'Tis the season for locking them up. 

General Michael Flynn just decided to defer sentencing for lying to the FBI after it became clear that federal District Judge Sullivan would otherwise have made him the fifth of Donald Trump's lackeys to go to jail. General Flynn says the FBI should have warned him not to lie. He thinks they should have treated him like a dumb teenager, seeing as he acted like one. Judge Sullivan, on the other hand, seemed ready to ignore the Special Counsel's recommendation of leniency. "Arguably, you sold out your country," he excoriated Flynn, and he refused to guaranty him no jail time. With that, Flynn decided to complete his cooperation agreement before being sentenced. In retrospect, I think Robert Mueller recommended leniency suspecting that the judge would still hold Flynn's feet to the fire to strengthen his cooperation, in essence playing "good cop" to the judge's "bad cop." It's an impressively savvy move by some very smart lawyers.

Meanwhile, a few days ago Michael Cohen got three years in the slammer, in part for lying to Congress. Maybe Cohen didn't know there was anything wrong with that either, Congress being a place where everyone lies to each other anyway. Or maybe he got confused when he read that it was an honor for John McCain and George H.W. Bush to lie there. Meanwhile, Rudy Giuliani, after calling Cohen a rotten liar, suggested that Trump can lie with abandon because he's not under oath. Really? That would make a difference to him??

Cohen implicated the President in paying hush money to two mistresses to influence the election. The President got back at Cohen by calling him a "rat," which is what mobsters call former confederates who spill family secrets. But don't we all know Trump has things to hide? Even if we don't know today exactly what Trump is hiding, none of us will be surprised -- much less shocked -- when all that is finally revealed.

That's the problem with this Trump show we have to sit through. It's awful! The acting is amateurish, the dialogue is dumb as dirt, the plot is plodding and predictable, and the characters -- well, the characters are woefully under-developed. Fortunately, there's much better TV available. I briefly considered re-watching The West Wing, but decided that having flawed human beings act in good faith for the public good was too much of a fantasy right now. Instead, I'm catching up on Game of Thrones.

At his sentencing, Michael Cohen explained himself

I felt it was my duty to cover up his dirty deeds rather than listen to my own inner voice and moral compass. My weakness can be characterized as a blind loyalty to Donald Trump, and I was weak for not having the strength to question and to refuse his demands.

Which is pretty much like saying, "I knew if I lay with a dog, I would get up with fleas -- but the dog told me to and I couldn't say no." 

That's actually an explanation I can understand. In the late 1950s, a psychologist designed an experiment to determine whether Germans possessed peculiar character traits that made them susceptible to falling under Nazi sway. Before taking his experiment to Germany, he did couple of test runs in his own college town. Those tests became one of the most famous psychological experiments in the literature. Stanley Milgram showed that even normal residents of New Haven, Connecticut, would inflict painful and even dangerous electrical shocks on innocent strangers when ordered to do so by persons they believed to be in authority. After that revelation, Milgram saw no point taking his experiment to Germany. 

More recent research in behavioral economics suggests that this blind obedience is due to our fundamental laziness. We will always take the path of least resistance, that which requires the least mental effort. It is easier, it will always be easier, to do as you're told, to just follow orders, than to do the hard work of rethinking your assumptions, beliefs and commitments, and then to say "no" to an authority figure.

That is why I have such empathy for the many clients I've represented over the years, in DOJ, SEC and FINRA investigations and prosecutions, whose essential explanation was that despite their misgivings, they were only doing what they understood their bosses or their firm or the market expected of them. There were brokers who thought "truthful hyperbole" was, well, honest, because everyone did it. There were traders who just followed firm-sanctioned trading desk procedures as they went about skimming a basis point here and a basis point there for the greater profit of the firm. There were salesmen who persuasively sold financial products they didn't themselves believe in, because that's what they were trained to do and what their firm told them to do. They were, all of them, little Michael Cohens blindly loyal to a boss, a firm, a peer group, an accepted practice, or -- the most self-aware of them all -- a fast buck.

I'm not saying that "I was just following orders" is a good excuse. It wasn't at Nuremburg and it isn't here and now, as Flynn, Cohen and many others will learn. I'm only saying that the inclination to follow orders is a well-known human frailty. Therefore, those who exploit that frailty by giving orders are doubly responsible for the consequences. He who gave the orders is ultimately the most responsible for Flynn's and Cohen's lies, and also for letting sick little girls die in federal custody ( and for stranding desperate refugees in Mexico to have 6-digit numbers written on their forearms ( The ill consequences of bad orders are hard to stomach, and it's good they are.

In Game of Thrones, there is a form of knight's oath that, so far as I can tell, is original. At least, I have not found anything like it in historical feudal practice. The Thrones knight pledges loyalty and service. In return, the lord pledges room, board, and this: "to ask no service of you that might bring you dishonor." The fictional lord promises never to give an order that shouldn't be followed, and that's really quite remarkable. Imagine all the modern analogues of feudal lords -- all the corporations, department and desk heads, bosses and political leaders -- pledging never to give an order that might dishonor an underling. Or would that be taking fantasy too far?


Aegis J. Frumento
Stern Tannenbaum & Bell
Co-Head, Financial Markets Practice

380 Lexington Avenue
New York, NY 10168

Aegis Frumento is a partner of Stern Tannenbaum & Bell, and co-heads the firm's Financial Markets Practice. Mr. Frumento represents persons and businesses in all aspects of commercial, corporate and securities matters and dispute resolution (including trials and arbitrations); SEC and FINRA regulated firms and persons on regulatory compliance issues and in SEC and FINRA enforcement investigations and proceedings; and senior executives of public corporations personal securities law and corporate governance matters.  Mr. Frumento also represents clients in forming and registering broker-dealers and registered investment advisers, in developing compliance policies, procedures and controls, and in adopting proper disclosure documents. Those now include industry professionals looking to adapt blockchain technologies to finance and financial market enterprises.

Prior to joining the firm, Mr. Frumento was a managing director of Citigroup and Morgan Stanley, a partner and the head of the financial markets group of Duane Morris LLP, and the managing partner of Singer Frumento LLP.

He graduated from Harvard College in 1976 and New York University School of Law in 1979. Mr. Frumento is a frequent author and speaker on securities law issues, and is often quoted in the media on current securities law developments.

NOTE: The views expressed in this Guest Blog are those of the author and do not necessarily reflect those of Blog.