Symbiotic Federalism and the Structure of Corporate Law

Enron. Worldcom. Adelphia. Global Crossing.

Tyco. Corporate scandals have made the front pages. Congress has gotten in the act. Members have held numerous hearings, given speeches, and, ultimately, passed the Sarbanes-Oxley Act.

The Securities and Exchange Commission ("SEC") has been busy writing regulations and leaning on the stock exchanges to modify their listing requirements, all in order to restore "investor confidence." Federal prosecutors have indicted executives of Enron, Worldcom, and Adelphia and their minions in the auditing and investment banking industries. State officials have also been active. Several states have passed statutes that resemble or go beyond the strictures of Sarbanes-Oxley. Robert Morgenthau, the Manhattan District Attorney, has indicted the CEO and other officers of Tyco.

And New York Attorney General Eliot Spitzer has vastly increased his political standing by taking on the brokerage houses, perhaps following in the footsteps of Rudolf Giuliani, another renowned prosecutor of corporate criminals. The leaders of corporate America have been galvanized to action, forming committees and task forces, issuing reports, and giving speeches. But where has Delaware been through all this? No bills have been introduced in Delaware's legislature; no hearings held by its committees; its law enforcement agents have taken no action; and its executives have stayed mum.

How is it that Delaware-the home of what has long been viewed as the de facto national corporate law-has sat on the sidelines?