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[In]Securities Guest Blog: As Hollow as it Seems by Aegis Frumento Esq
June 4, 2020
[In]Securities
a Guest Blog by
Aegis J. Frumento, Partner, Stern Tannenbaum & Bell
Aegis J. Frumento, Partner, Stern Tannenbaum & Bell
As Hollow as it Seems
The past few weeks have been déjà vu -- again. Tens of thousands of senseless deaths, another black man murdered, mass protests accompanied by violent riots, a government woefully out of its depth, and, in an absurdist counterpoise, a spectacular launch from Cape Canaveral. I swear I'm reliving my childhood, and not in a good way.
All this is eerily reminiscent of the country in the last half of the 1960s. Like now, the nation was a powder-keg. Every year in the 1960s saw African-Americans killed by white supremacists, either by lone gunmen, or by mobs, or by organized groups like the Ku Klux Klan. Each time, police protection was wanting, or complicit, and Blacks noticed. Medgar Evers was killed in 1963. When Malcolm X was murdered in 1965, the Watts area of LA erupted in four days of violence.
By 1967, it all came to a head. Body bags were starting to arrive from Vietnam, many containing the remains of Black soldiers. Unemployment among Blacks was pervasive. A few African-American groups publicly embraced violence as the only alternative, since non-violent protest seemed futile. The year 1967 is now fondly remembered as the "Summer of Love" by those who prefer to forget its unlovely parts. In 1967, riots broke out in 23 cities, the most destructive in Newark and Detroit. The property damage was extensive. Then, as now, the violence was laid at the feet of a small number of provocateurs intending to exploit what otherwise were peaceful protests.
In the wake of the 1967 disturbances, President Lyndon Johnson convened a blue-ribbon commission to study the causes of racial unrest. Chaired by Illinois governor Otto Kerner, it published its report in the spring of 1968. The Kerner Commission Report didn't tell anyone anything that they didn't know in 1968 (and it won't tell you anything that you don't already know today) about the causes of racial protests and unrest. Still, it's worth reading, if only so you can avoid reading whatever silly report is commissioned to explain this year's protests and riots, because nothing's changed. It's available online. See, https://babel.hathitrust.org/cgi/pt?id=mdp.39015000225410&view=1up&seq=7.
Shortly after the Kerner Commission Report was issued in 1968, all hell broke loose in that year. In April, Martin Luther King was assassinated. In June, Robert F. Kennedy was assassinated, on the cusp of winning the Democratic presidential nomination and quite likely the presidency; instead, we got five years of Richard Nixon. That spring saw race riots break out in Washington, Chicago, Kansas City, and a dozen other cities. Later in the year, riots broke out in Chicago to protest the Vietnam War at the Democratic convention. Protests against the War and the continued discrimination against African-Americans made for almost continual civil unrest.
As I remember it, this year of 2020 is not yet as bad. But there are parallels. Then we had senseless deaths in Vietnam, which the government could've avoided and didn't. Today we have over 100,000 dead from Covid-19, which the government could've avoided but didn't. Then we had public assassinations of Black leaders. Today we have police executions of unarmed private African-American citizens, made publicly available through the smart phones of bystanders. In fact, it is amazing how people continue to behave badly knowing full well they are being recorded. They seem to have lost all sense of shame. I know the barbarity of Derek Chauvin and the lunacy of Amy Cooper are not really comparable, but their utter shamelessness is of a kind.
And there is nothing mysterious about the causes of racial civil unrest. According to the Kerner Commission Report, "White racism is essentially responsible for the explosive mixture which has been accumulating in our cities since the end of World War II." As it was true in 1967, it is true today.
Also from the Kerner Commission Report: "To some Negroes police have come to symbolize white power, white racism, and white repression. And the fact is that many police do reflect and express these white attitudes." If the events of the past week, together with the dozen deaths of unarmed African-American citizens at the hands of police in the past decade, have taught us anything, it is that, a half century later, far too many police still do.
Likewise, it should surprise no one that social unrest is inextricably linked with unemployment. To quote the Kerner Commission Report again, "Pervasive unemployment and underemployment are the most persistent and serious grievances in minority areas. They are inextricably linked to the problem of civil disorder." Today, because of the pandemic, 40 million Americans are out of work, almost a quarter of the workforce. A very great many of those are African-American. https://fortune.com/2020/05/28/us-unemployment-rate-numbers-claims-this-week-total-job-losses-may-28-2020-benefits-claims-job-losses/. They are angry, and who can blame them.
And the Kerner Commission also knew what needed to be done. "The major need," it said, "is to generate new will -- the will to tax ourselves to the extent necessary to meet the vital needs of the Nation." Unfortunately, since the 1960s, the will to tax ourselves has been sorely lacking. In fact, since the 1980s, the mantra of both Democratic and Republican administrations has been to cut taxes, which is only another way of saying that the rich should get richer. And so today, CEOs of major corporations are paid several hundred times what their workers are paid rather than a dozen or so times as in the 1960s. And the super-rich are not shy about wanting to keep it that way, to the point of jumping in bed with a miscreant like Donald Trump to do so. See https://www.newyorker.com/magazine/2020/05/11/how-greenwich-republicans-learned-to-love-trump. They don't seem to care that they are being recorded either.
We have lost much to the pandemic. Over 100,000 lives and counting; 40 million jobs so far; an estimated $16 trillion economic loss that will take a decade to recover. But even when you think you've lost everything, you find you can always lose a little more. Today's unrest was sparked by the murder of George Floyd. But our society today is again a tinderbox, as it was in the mid-60s. Something was bound to ignite it. All we can do is stand with those who seek a better world and be active participants in molding the changes that will inevitably come in the wake of the pandemic. And hope that the result will be a safer and more equitable Nation, a better place for us -- for all of us -- to live.
ABOUT THE AUTHOR
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.