Jones Day Sticking Up for the Little Guys

Jones Day has published a new commentary, “Possible Challenges to Retroactive Restrictions on Executive Compensation.”  It’s basically a primer for how bonus recipients from AIG Financial Products (and whatever unfortunate company happens to next draw the public ire) can fight to retain their payments.

We’ve criticized the government’s strategy of paying the bonuses in the first place and then trying to claw them back with taxes.  In particular, we have blamed the lawyers, especially Patrick Shea of Paul Hastings, for providing rote regurgitation of statutes with no substantive guidance or counsel.

Enter Jones Day.  Michael A. Carvin, Noel J. Francisco, Timothy J. Finn, Jayant W. Tambe, Christian G. Vergonis, and C. Kevin Marshall have cast their nets widely to present numerous flaws in, and potential responses to, the government’s actions. 

The highlights after the jump.

The team writes

• Both contractual and constitutional challenges to the application of Section 7001 to existing TARP recipients are available.

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  • A suit for declaratory and injunctive relief could be brought now in the U.S. District Court for the District of Columbia.
  • Or a financial institution could sue for damages in the Court of Federal Claims upon complying with the Secretary’s new standards.
  • The choice depends on an institution’s priorities—trying to forestall the new standards or being compensated for the harm they cause.

• Similar legal challenges could be raised to a bonus tax. Additionally, a bonus tax could be challenged as an unconstitutional bill of attainder.

Related posts:

1. Bienvenidos a Mexico, Senor Jones Day
2. Spending Cuts Only Affecting Other Guys
3. Wachtell Dumped
4. More on AIG Bonus Counsel
5. A Tale of Two Bonus Dilemmas