[In]Securities Guest Blog: Click Boom by Aegis Frumento Esq

July 16, 2020

Click Boom

Aaron Burr is enjoying a moment.

Three weeks ago, as an omen, John Bolton contributed his The Room Where it Happened to the expanding Trump Presidential Library. The title's from a song in the hit musical Hamilton, sung by Burr, bemoaning Alexander Hamilton making political deals over dinner while he's left outside. 

Ten days later, on July 3, the filmed version of Hamilton started streaming on the Disney+ platform. (See it. It's great.)

And the very next week, Aaron Burr showed up in one Supreme Court decision after another.

It started on July 6, when the Court ruled that members of the electoral college could be punished by their state if they didn't vote for the candidates they pledged themselves too -- if they became "faithless electors." Three Washington State electors voted for Colin Powell instead of Hillary Clinton (to whom they were pledged), hoping others would follow their example and deprive Donald Trump of an Electoral College majority, throwing the election into the House of Representatives. Justice Kagan took the opportunity to write this about the last time that happened, in the election of 1800:

Jefferson and Aaron Burr ran that year as a Republican Party ticket, with the former meant to be President and the latter meant to be Vice. For that plan to succeed, Jefferson had to come in first and Burr just behind him. Instead, Jefferson came in first and Burr . . . did too. Every elector who voted for Jefferson also voted for Burr, producing a tie. That threw the election into the House of Representatives, which took no fewer than 36 ballots to elect Jefferson. (Alexander Hamilton secured his place on the Broadway stage -- but possibly in the cemetery too -- by lobbying Federalists in the House to tip the election to Jefferson, whom he loathed but viewed as less of an existential threat to the Republic.)

Chiafalo v. Washington, https://www.supremecourt.gov/opinions/19pdf/19-465_i425.pdf. 

Justice Kagan was kind to say "lobbying." Even in the show, all Hamilton says is, "Jefferson has beliefs. Burr has none." But the real Alexander Hamilton didn't mince words. On January 4, 1801, he wrote this about Burr to South Carolina Representative John Rutledge, and I quote:

  • He is in every sense a profligate; a voluptuary in the extreme, with uncommon habits of expense; in his profession extortionate to a proverb.
  • All his visible property is deeply mortgaged, and he is known to owe other large debts, for which there is no specific security
  • At a critical period of the War, he resigned his commission, assigning for cause ill-health. . . He was afterwards seen in his usual health.
  • In civil life, he has never projected nor aided in producing a single measure of important public utility
  • No mortal can tell what his political principles are. He has talked all around the compass.
  • The truth seems to be that he has no plan but that of getting power by any means and keeping it by all means. 
  • He knows well the weak sides of human nature, and takes care to play in with the passions of all with whom he has intercourse. 
  • By natural disposition, the haughtiest of men, he is at the same time the most creeping to answer his purposes.
  • All his conduct indicates that he has in view nothing less than the establishment of Supreme Power in his own person.
  • As he never can effect his wish by the aid of good men, he will court and employ able and daring scoundrels of every party . . . and of all the bad passions of the Society
  • Though possessing infinite art of cunning and address -- he is yet to give proofs of great or solid abilities.
  • It is likely that any innovations which he may effect will be such as to serve the turn of his own power.
Today, we'd call it a Tweet-storm. Hamilton's indictment turned Rutledge and many others who had supported Burr against him. No wonder Burr shot him.

Three days later on July 9 came two more Supreme Court decisions, those dealing with subpoenas for President Trump's financial records and tax returns, and Aaron Burr shows up again. 

In Trump v. Vance, the New York County DA sought to enforce a grand jury subpoena for the President's tax and financial records from his bank and accounting firm. https://www.supremecourt.gov/opinions/19pdf/19-635_o7jq.pdf. The President said that since he was immune from criminal prosecution -- you know, like he could with impunity "shoot someone on 5th Avenue" -- no mere state prosecutor could enforce any criminal subpoena to get his records. That set Chief Justice Roberts off on his own history lesson:

In the summer of 1807, all eyes were on Richmond, Virginia. Aaron Burr, the former Vice President, was on trial for treason. Fallen from political grace after his fatal duel with Alexander Hamilton, and with a murder charge pending in New Jersey, Burr followed the path of many down and-out Americans of his day -- he headed West in search of new opportunity. But Burr was a man with outsized ambitions. Together with General James Wilkinson, the Governor of the Louisiana Territory, he hatched a plan to establish a new territory in Mexico, then controlled by Spain. Both men anticipated that war between the United States and Spain was imminent, and when it broke out they intended to invade Spanish territory at the head of a private army.

Burr imagined himself as Emperor of Mexico. When no war with Spain ensued, Wilkinson denounced him to President Jefferson for fomenting a secession plot, with Burr leading a spun-off territory. He was arrested and put on trial for treason. In the course of that trial, Burr subpoenaed Jefferson's correspondence with Wilkinson, and Chief Justice Marshall ordered the President to comply. Jefferson said he would to the extent he could without damaging the national interest. But then the charges against Burr were dismissed so the subpoenas were never enforced. 

Oh, and by the way, the NY DA gets Trump's financial records. 

The next case, Trump v. Mazurs USA LLP, involved subpoenas issued by congressional committees. https://www.supremecourt.gov/opinions/19pdf/19-715_febh.pdf. The Court noted that usually, disputes between Congress and the President over production of presidential records are resolved between themselves. "Historically, disputes over congressional demands for presidential documents have not ended up in court. Instead, they have been hashed out in the 'hurly-burly, the give-and-take of the political process between the legislative and the executive.' " Chief Justice Roberts then gives us a another bit of history -- 

In early 1807, after Jefferson had disclosed that "sundry persons" were conspiring to invade Spanish territory in North America with a private army, the House requested that the President produce any information in his possession touching on the conspiracy (except for information that would harm the public interest). Jefferson chose not to divulge the entire "voluminous" correspondence on the subject, explaining that much of it was "private" or mere "rumors" and "neither safety nor justice" permitted him to "expos[e] names" apart from identifying the conspiracy's "principal actor": Aaron Burr.

But in that case, Congress accepted Jefferson's restriction, and the courts did not get involved. "[O]ne case every two centuries," observed the Chief Justice, "does not afford enough experience." So it made law from scratch: Congress could subpoena the President for legislative purposes, but it needed clearer reasons than those given here. Looking through the congressional verbiage, the Court saw that Congress was really on a hunt for Trumpian wrongdoing. That wasn't the province of legislation, but of impeachment. And the Justices were unanimous -- even the dissenters agreed -- that subpoenas would be enforceable against a President in the context of an impeachment.

In 1973 Gore Vidal published a historical novel, Burr, in which he has our anti-hero observe that "The law is simply whatever is boldly asserted and plausibly maintained." The Supreme Court decisions in Vance and Mazurs showed that Trump could not plausibly maintain his bold assertions of unrestricted Presidential immunity. Some pundits think Trump actually won because now the voters won't get to see his tax returns before the election. See, e.g., https://www.nytimes.com/2020/07/09/opinion/trump-taxes-supreme-court-.html. As a voter, I say, "Who cares?" We already assume he cheated on his taxes or didn't pay any. If you want to shock me, show me his tax returns are squeaky clean. What's really important about these cases has nothing to do with the voters. Rather, they establish that New York State can be ready to prosecute Trump if he loses, and that Congress can get his records for a future impeachment if he wins. That's the chess game to which The Donald brought his checkers. 

But let's get back to Mr. Burr, sir. None of those historical vignettes mattered to the Court's decisions. The 12th Amendment makes the election of 1800 irrelevant today, and none of the subpoenas issued in Burr's Mexican adventure resulted in any judicial precedent. The Court included those stories for effect -- but to what effect? 

Once a piece of writing leaves the writer's desk, the reader's reaction to it becomes more important than the writer's intent. This reader's reaction is that, memory revived by a Broadway show, Burr comes naturally to mind when writing about Trump. We shouldn't be surprised. 

Alexander Hamilton's indictment of Burr was merciless. And yet, Burr was still one of the Founding Fathers. If one believes that the early Republic was some kind of Jeffersonian paradise, then, if Hamilton was even half right, Aaron Burr played the Serpent. 

Which is why Donald Trump is no aberration. His is a legitimate voice in the national conversation, one that dates all the way back to the Founding -- Aaron Burr's. Trump tells Burr's story. Many now, from his former national security advisor to his niece, have said of Trump much the same what Hamilton said of Burr. Trump is the Aaron Burr of our time, as Burr was the Donald Trump of his. They represent an authentic American archetype -- the self-absorbed huckster who strives to be in the room where it happens, but without a clue what to do when he gets there.


Aegis J. Frumento

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 BrokeAndBroker.com Blog.

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