Common Sense: A Lawyer and Partner, and Also Bankrupt

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Common Sense: 2014 Is Looking a Lot Like 2013

Most forecasters are warning stock investors not to expect another year of 30 percent gains, as there was in the Standard & Poor’s 500-stock index in 2013. (The average forecast is for a 6 percent rise in the S.&P. 500, according to Bloomberg.) But the two analysts I selected for this column — Abby Joseph Cohen of Goldman Sachs and Bill Miller of Legg Mason, both of whom were remarkably accurate about 2013 — said another year of strong double-digit gains would not shock them. “We could easily see gains of more than 20 percent” in stocks, Mr. Miller told me. “And the market wouldn’t be overpriced at that level.”

In the many years I’ve been surveying experts for their predictions for the coming year, I cannot recall another time when optimism about the stock market, the economy and corporate profits was so widespread.

As is pessimism about the bond market.

The stock market’s relentless rise this year seems to have tamed all but a few perma-bears. When the Federal Reserve said in September that the economy was too weak for the central bank to taper its purchase of securities, stocks went up. And when the Fed said in December that it would begin to taper — stocks still went up.

The only thing that seemed to stop stocks’ inexorable rise was Congress’s self-destructive gridlock, and even that didn’t last long.

Still, such unanimity may be the most worrisome portent for 2014. As Karl Case, emeritus professor of economics at Wellesley College and a co-founder of the S.&P./Case-Shiller index of housing prices, put it, “When everyone expects something to happen, that’s when it doesn’t.” But neither he nor anyone else I consulted this year was willing to break ranks with the consensus.

“It gives me pause,” Ms. Cohen, senior investment strategist for Goldman Sachs and president of the Global Markets Institute, said, referring to the bullish herd mentality that has gripped Wall Street. “But there’s no reason to be a contrarian just for the sake of being contrarian. I look at the fundamentals. Even after such a strong year in 2013, I think it will continue.”

Ms. Cohen was almost exactly right a year ago, when she predicted the S.&P. 500 would end 2013 at 1,787. (It closed at 1,848.) At the time, her forecast seemed wildly bullish, especially since stocks were at near record levels, and had registered gains four years running. “There was a significant mispricing of assets a year ago,” she said, referring to both stock prices (too low) and bonds (inflated).

That’s not as obvious now that stocks have gained. “There’s something artificial about current asset prices, which have been largely driven by liquidity,” she said. “But we’ve begun a transition to valuations that are driven by fundamentals.” And those, she said, are strong. She cited an expanding United States economy, higher job creation, gains in labor productivity, lower energy prices and subdued inflation. “This will provide staying power,” she said.

Goldman Sachs’s baseline forecast for the S.&P. 500 at the end of 2014 is 1,900, or a modest 3 percent gain. But that assumes no expansion in the market’s price-to-earnings ratio. In similar periods with low inflation, market multiples have ranged from 18 to 20 times projected earnings, Ms. Cohen said, compared to the market’s current valuation of about 15 times earnings. If that multiple expands to 19, the S.&P. 500 would rise to about 2,200, according to the Goldman Sachs model. That would produce a 19 percent rise in the S.&P. 500.

Mr. Miller, who runs the Legg Mason Opportunity Trust, returns to this column for the third consecutive year. He was also accurate in his forecast for 2013, and as a mutual fund manager, he put his money behind his forecast: His fund rose a remarkable 67 percent in 2013 on the heels of a 40 percent gain in 2012, helping him regain his sterling reputation for stock picking, which was briefly tarnished by the financial crisis. (Before 2008, Mr. Miller’s fund outperformed the S.&P. 500 for a record 15 consecutive years.)

This article has been revised to reflect the following correction:

Correction: January 3, 2014

An earlier version of this article misstated the name of the Legg Mason investment fund run by Bill Miller. It is Legg Mason  Opportunity Trust, not Legg Mason Capital Management Opportunity Trust.

Common Sense: Record Prices Mask a Tepid Art Market

The art market would seem to be going through the roof. But is it?

Despite the headlines and the hyperbolic enthusiasm of many auctioneers and dealers, the broad market for fine art is in the doldrums, according to experts who track sales data. Many works are selling near or below their low estimates or failing to sell at all.

As measured by the Mei Moses World All Art Index, a widely cited benchmark, the market for fine art declined 3.3 percent in 2012, and gained 2.2 percent through November, even with the recent record-setting sales. Strip out traditional Chinese art, the value of which has been surging for years thanks to the interest of wealthy Chinese buyers, and the performance would be much worse.

By comparison, the Standard & Poor's 500-stock index gained 13.4 percent in 2012 and is up more than 27 percent so far this year.

At Sotheby’s, where “Silver Car Crash” set a record for Warhol, another image of a car crash, this one in green called “5 Deaths on Turquoise,” sold for just a little more than $7 million. A Warhol portrait of Liz Taylor with a yellow background went for $18 million (not counting commissions), below its $20 million to $30 million estimate. And at Sotheby’s, another Rockwell with a religious theme, “Walking to Church,” sold for just $2.8 million before the buyer’s commission, below its $3 million to $5 million estimate. (Estimates don’t include commissions.)

But at least they sold. Sanford Robinson Gifford’s Civil War masterpiece, “Sunday Morning in the Camp of the Seventh Regiment,” which was on loan to the White House and had hung in the Oval Office for over 20 years, didn’t sell at this week’s auction at Christie’s, which must have come as a shock to New York’s Union League Club, which had owned the painting since 1871. It was estimated to fetch $3 million to $5 million.

A Christie’s spokeswoman said afterward that “there was steady client interest” in the painting before the auction, “given the painting’s exceptional rarity and historical significance.” But at the auction, the bidding “simply did not meet the reserve price.” The spokeswoman, who declined to be named, citing Christie’s policy, added that interest in the work was still “very much alive.”

What explains the sharp gap between perception and reality?

“What we’ve seen is that the explosive prices represent only a tiny, tiny subset of lots,” said David Kusin, a former Metropolitan Museum of Art curator who also worked on Wall Street and now runs Kusin & Company, a consulting firm in Dallas that specializes in the economics of the art market. “They get all the press, but we’ve seen relatively stable hammer prices in most categories over the past few years.”

And just two distinct categories have pushed up the averages.

“Postwar, contemporary art — artists active from 1950 to the present — which includes Francis Bacon, Jackson Pollock, has been doing extremely well for the past 25 years,” Michael Moses, a retired professor of economics at New York University’s Stern School of Business and a co-founder of the Mei Moses Art Index, told me this week. “And traditional Chinese art — works created before 1900 — has been doing even better.”

Mr. Moses said his data indicated that traditional Chinese art had gained a compounded annualized rate of return for the 10 years ending in 2012 of 15.5 percent. Postwar and contemporary art gained 11.6 percent. By contrast, old master paintings gained only 3.3 percent and American paintings just 1 percent. And the overall index gained 7.4 percent.

Some find the whole notion of an art market to be distasteful. Michael Findlay, author of “The Value of Art,” and a director at the Acquavella Galleries in New York, said: “What I believe in is the social and aesthetic value of art. We live in a society where everything is so monetized, the only way people can talk about art is in terms of money.”

Preoccupations: The Horse Sense That Builds Trust

In India, I learned the mindfulness method for monitoring our thoughts. It allows us to view our dysfunctional habits as a kind of cloud that covers our true, healthy nature. Mindful awareness can apply to mental and emotional patterns, like the dance of subjugation and entitlement, where one person imposes his or her agenda at the expense of the other, who passively surrenders to the other’s control.

For instance, a physician at one of my workshops had a colleague who was a bit of a bully — opinionated and critical. This colleague would tell her emphatically how he saw things and what she ought to do. She would just listen — but fume afterward, thinking over and over about what she wished she had said. It was a classic case.

Then, one day, she applied what she had learned about mindfulness and changing patterns. Her colleague was his usual blustery, domineering self. But after he was done, she paused, collected her thoughts and told him calmly: “I don’t agree with you. People can have their own opinions. I respect the way you do things but prefer to do things differently.” Taken aback, he walked off without a word. She told me he was never the same bully with her again.

For five years, I’ve studied with R.J. Sadowski, known as Bob, who trains horses by integrating horse-whispering principles with what he calls “horsemindship.” He analyzes the subtle predator/prey dynamics between humans and horses. I’ve seen these dynamics apply to humans interacting with one another.

As herd animals, horses are always ready to cooperate, if they trust you and you show that you understand how they see the world — if, as Bob puts it, “You speak horse.” Collaboration in a herd operates naturally, with horses looking out for one another — unlike the us-versus-them approach that humans can too often take.

Horse whispering has helped me see how horses are natural peacemakers and how the herd dynamic can be a model for human group behavior. When people “join up,” as it is called in horse whispering, a genuine connection results that makes everything run more smoothly.

At a workshop I gave at the Omega Institute in the Hudson Valley in New York, I invited Bob and his horses to demonstrate predator/prey principles and the concept of joining up. He brusquely grabbed a rear hoof of one horse and lifted it, as if to change its horseshoe, destabilizing the horse as it wobbled on three legs — the way of force and control. Then he showed a more connected, joined-up approach: he gently rubbed the horse above its leg, slowly rubbing down toward the foot. By the time his hand was halfway down the leg, the horse had lifted its hoof, freely offering it.

A diverse range of people attended the workshop. One, a business executive, spoke up when Bob finished: “I’m pretty high-powered in my business role, and I guess I use predatory tactics all the time — which makes me successful in sales. If I set out to make a sale, I pitch very aggressively, and I’m good at closing.” Then her tone changed to a vulnerable sadness, as she added, “And when I do, afterward I end up feeling awful.” We explored how she could be successful while taking a gentler, more empathic approach in sales.

Making a sale at any cost too often means that the customer ends up with the wrong product or service — and may not return. The best salespeople and account managers typically realize the value of nurturing the relationship and earning loyalty, joining up with a customer to understand his or her needs — then trying to meet them. If they don’t have what’s needed, they are honest about that.

If we are predatory, we might get what we want, but it can harm the connection. Just as horses read intentions, so do people — and kindness is good for any relationship. As Bob advises, “Don’t put your purpose before your connection.”

TARA BENNETT-GOLEMAN is the author of “Mind Whispering: A New Map to Freedom From Self-Defeating Emotional Habits.”

Common Sense: Waiting to Woo Vodafone, and Paying the Price

Yet Verizon shareholders seem to have taken the price in stride, even though it is $30 billion more than was rumored just a few months ago. Verizon shares are about the same as they were before rumors of the deal surfaced last week, even though the share price of the acquiring company usually drops. But consider the math: if 45 percent of Verizon Wireless is really worth $130 billion, then Verizon’s 55 percent stake alone should be worth $159 billion. Yet the enterprise value of all of Verizon, including its debt, was $176 billion this week.

That suggests Verizon is overpaying. And the staggering price also raises other questions: why did Verizon wait so long to buy the rest of the wireless company? Why now? And why did it ever put its crown jewel, wireless assets, into a joint venture to begin with?

“I was advocating that we buy out Vodafone from Day 1,” Dennis Strigl, the former chief executive of Verizon Wireless, told me this week. “The whole issue for us was there was never a better time to buy than the year before. We just kept building more value and, therefore, a higher price. I wish we’d bought it in 2001.”

And Verizon could have bought it even more cheaply in 1999, when Vodafone outbid Bell Atlantic for AirTouch Communications, the company that provided the assets for Vodafone’s stake in Verizon Wireless. AirTouch would have given Bell Atlantic, which later emerged as Verizon Communications, a nationwide cellular footprint to compete with AT&T, since Bell Atlantic at the time served New York and much of the East Coast, and AirTouch covered California and the West. (AirTouch itself resulted from a combination of the wireless assets of the former Bell operating companies Pacific Telesis and US West.)

According to Mr. Strigl, Verizon’s strategy was always to create a coast-to-coast network. To compete with AT&T’s then-popular nationwide calling plan, Verizon started paying its customers’ roaming charges in areas where it did not offer service. “That wasn’t sustainable,” Mr. Strigl said.

But Bell Atlantic dropped out of the AirTouch bidding at $45 billion — $85 billion less than it is now paying just for AirTouch’s former cellular assets in the United States. (Air Touch also owned extensive international assets that were not part of the Verizon Wireless venture.) Vodafone, based in Britain, snagged the company for $62 billion, in what will now be seen as one of the best deals ever.

Of course, it is easy to say with the benefit of hindsight that Verizon missed the opportunity of a lifetime when it let AirTouch slip from its grasp. In 1999, the year of that deal, cellular service was erratic, cellphones were clumsy and mostly limited to voice calls, and customers were coping with roaming charges by turning off their phones except when making calls.

Vodafone’s chief executive then, Christopher Gent, now looks like a visionary. But he was criticized at the time for overpaying for AirTouch (and other acquisitions that transformed Vodafone into a global giant) and was excoriated in the British news media in 2003 for his £10.4 million pension. (Mr. Gent is now chairman of the pharmaceutical giant GlaxoSmithKline and a senior adviser at Bain & Company.)

According to an investment banker working on the deal at the time (who did not want to be named because he is involved in the current deal as well), Verizon may have underestimated Vodafone’s determination to hold on to the wireless assets because it thought Vodafone was mostly interested in AirTouch’s international assets. “We did bid, but they didn’t want to sell,” Mr. Strigl said. “At least, they didn’t want to sell except at a very high price.”

Common Sense: Long Odds For Authors Newly Published

Mystery solved? Maybe not. It’s no surprise that “The Cuckoo’s Calling,” a detective story set in a London populated by supermodels and rock stars, shot to the top of best-seller lists once the identity of the author was revealed. But if the book is as good as critics are now saying it is, why didn’t it sell more copies before, especially since the rise of online publishing has supposedly made it easier than ever for first-time authors?

“It makes me sad,” Roxanne Coady, founder of R. J. Julia Booksellers in Madison, Conn., and the online retailer JustTheRightBook.com, told me last week from Maine, where she said she was sitting near a stack of unread new books. “Because not everyone turns out to be a J. K. Rowling. It reminds me how difficult it is for even good books to succeed.”

It’s not entirely clear why Ms. Rowling decided she wanted “to fly under the radar,” as she put it on the Robert Galbraith Web site, other than to say that “being Robert Galbraith has been all about the work, which is my favorite part of being a writer.” Writing under a pseudonym obviously ruled out any tedious book signings or publicity appearances, but Ms. Rowling doesn’t have to do anything she doesn’t want to.

And it wasn’t about money, since Ms. Rowling is donating all royalties to charity. “If sales were what mattered to me most, I would have written under my own name, and with the greatest fanfare,” she said. (A spokeswoman in London for Ms. Rowling responded to my questions by directing me to the Galbraith Web site, and said Ms. Rowling would have no further comment.)

Ms. Rowling’s last book, “The Casual Vacancy,” an adult comedy of manners published under her name and the first since the end of the Potter series, was met with high expectations and withering reviews from prominent critics. Michiko Kakutani wrote in The New York Times, “the real-life world she has limned in these pages is so willfully banal, so depressingly clichéd that ‘The Casual Vacancy’ is not only disappointing — it’s dull.” The Los Angeles Times faulted “Rowling’s inability to engage us, to invest us sufficiently in her characters.”

Still, with hardcover sales of just over 1.3 million copies, it was the No. 1 hardcover fiction title of 2012, according to Publishers Weekly’s annual ranking, outselling John Grisham, James Patterson and Danielle Steel.

Ms. Rowling may well have felt that the reaction, both critical and commercial, was distorted by her fame, and hence decided on a pseudonym for “The Cuckoo’s Calling.” It’s not clear exactly who was in on the secret: her agent, of course, and at least someone at Little, Brown & Company, her publisher, including her editor, who also edited “The Casual Vacancy.” (“The Cuckoo’s Calling” was published by Mulholland Books, a Little, Brown imprint.) “Few people within the publishing house knew the true identity of Robert at the time,” Nicole Dewey, a Little, Brown spokeswoman, told me, declining to be more specific about who knew.

But that already distorted the experiment to some extent. Given how difficult it is for first-time fiction authors, especially in a crowded genre like mystery, to find both an agent and publisher, it’s not clear “The Cuckoo’s Calling” would have made it off the slush piles. At least one other publisher, Orion Books, which like Little, Brown, is a subsidiary of the Hachette Book Group, rejected the manuscript. An editor there told The Telegraph in London that the book “didn’t stand out.”

In any event, a publishing contract is hardly a guarantee of critical or commercial success. Much depends on how a new manuscript is treated by the publisher. Morgan Entrekin, the president and publisher of Grove Atlantic, is widely viewed as a master at introducing new literary talent to the marketplace. He published “Cold Mountain” by then first-time novelist Charles Frazier, which went on to win the National Book Award and sell over 11 million copies.

“There’s no question, if a publisher decides to get behind a book, to invest its publishing capital, to use its traction with the chains, with Amazon, fight for the promotion money to get the book into the front of stores, you can do a lot to bring attention to a worthy first novel,” he said.

Mr. Entrekin cited “Matterhorn,” by first-time novelist Karl Marlantes, which he published in 2010. The author “worked on the book for over 20 years and couldn’t find a publisher,” Mr. Entrekin said. Then, as the book was about to be published in a tiny first edition, Mr. Entrekin got a copy from a buyer at Barnes & Noble, loved it, and bought out the first printing.

He re-edited it, cut 300 pages, got advance quotes from prominent authors, introduced the author to booksellers and hosted a media lunch in Manhattan. Amazon.com gave the book a glowing review, chose it as a best book of the month, and got an exclusive review from Mark Bowden, author of “Black Hawk Down.” “ ‘Matterhorn’ is a great novel,” his review began. It sold over 400,000 copies.

Common Sense: Getting Tesla From Here to There

I met Mr. Berkley this week when I dropped into the Tesla showroom on West 25th Street in Manhattan. The spare white-walled space could easily pass for one of the art galleries on either side of it, the art in this case being the single “signature red” Model S on the showroom floor. Several customers were stroking its sleek curves and sculptural door handles as I walked by.

Mr. Berkley was seated at a desk around the corner, and urged me to pull up a chair. With his scruffy beard, Levis and loosefitting polo shirt, the 27-year-old graduate of Indiana University looked as if he’d walked out of Google’s New York headquarters a few blocks away. Actually, he’d been working in wealth management before joining Tesla in November.

I gave him a simple but seemingly insurmountable task: sell me a Tesla.

This was not just a journalistic stunt. I’m in the market for a new car since the lease on my current model expires later this year. Like most car enthusiasts I know, I love the Tesla story: South Africa-born entrepreneur Elon Musk, now an American citizen, reinvents the automobile with a zero emission, all-electric model that in performance, appearance, technology and comfort puts the legacy automakers to shame. Despite enormous skepticism, he takes his venture public, produces more cars than Tucker, Vector and DeLorean combined (to cite three of Tesla’s legendary but failed predecessors), draws rave reviews from the automotive press, and makes a fortune as Tesla stock soars to dizzying heights. It’s the American dream writ large.

Yes, I’d love to buy a Tesla. But a) I live in New York City and park in a public garage; b) drive on weekends to a house in rural upstate New York, far from any current or planned Tesla charging station; c) can afford only one car; d) occasionally make longer car trips far beyond the Tesla range; and e) the base Tesla S costs $71,000 before rebates.

I’m hardly alone in facing such obstacles. Everyone who walks into a Tesla showroom has to be persuaded by someone like Mr. Berkley to become an early adapter — someone willing to take a gamble on a largely unproven $71,000 electric car that needs to be both reliable and safe.

I discussed the Tesla phenomenon this week with Adam Jonas, a managing director and the leader of Morgan Stanley’s global auto research team, who agreed that getting potential customers past many of the same obstacles I face “is an important issue. The population that has the financial means and the motivation to buy this car tends to live in densely populated urban areas, where the parking and municipal infrastructures still aren’t there. Tesla still has a lot of work to do to get into parking garages and get municipalities to install charging stations.”

Mr. Berkley tackled the issues head-on as I raised them, and I liked that he said at the outset that the Tesla “might not work for you.” With Google Maps on his screen, he calculated that the route from my parking garage to my house upstate was 88 miles. With a charging station installed in my barn, I could charge the battery overnight, and comfortably make the 176-mile round trip, even with the lower-cost standard battery, which delivers an estimated range of 208 miles. Mr. Berkley said that if I adhered to 55 miles per hour on the highway, I was likely to get 230 miles.

That didn’t quite solve the problem, since the Tesla loses as much as 10 miles in range for every day it isn’t used, and my car sits in the garage during the week. That might cost me 50 miles a week, which would be cutting it close. I might have to get the more powerful battery, which adds $10,000 to the base price and extends the range to an estimated 265 miles, or 300 at the 55-mile speed limit.

What about longer trips? Mr. Berkley showed me a map of the country with current and planned high-speed charging stations, where Tesla owners can recharge the battery in 30 to 40 minutes at no cost. Two of these stations are up and running in Connecticut, which would have made it possible for me to drive the Tesla on a recent trip to Wellesley, Mass., which is 200 miles from Manhattan, with just one recharging stop. By the end of 2014, the company expects to have stations covering 80 percent of the continental United States, most near coffee shops, restaurants and other amenities.

Common Sense: For Airlines, It May Be One Merger Too Many

Until this week, when the Justice Department filed suit to block the proposed merger of the airlines’ parent companies, it had been notably lax on airline mergers. What the antitrust division deemed acceptable — even beneficial — for Delta Air Lines and Northwest Airlines (in 2008), and Continental and United Airlines (2010), and Southwest Airlines and AirTran Airways (2011) now “threatens substantial harm to consumers,” the complaint says.

US Airways has been doubly unlucky. United abandoned a merger deal with US Air in 2001 after the Bush administration said it would file an antitrust suit. And the head of the Justice Department’s antitrust division, William J. Baer, said this week that the department might have sued to block US Airways’ 2006 hostile bid for Delta if US Airways hadn’t abandoned the takeover. (US Airways did get approval to acquire America West in 2005.)

The government “abandoned the framework it used in approving the last three airline mergers,” said Paul T. Denis, a partner at Dechert L.L.P., which is representing US Airways. “In some ways, the complaint is a throwback to the 1970s,” before market-oriented economic analysis led to a broad revision in antitrust policy. “Now they’re saying those prior mergers were anticompetitive. That’s surprising. But even if they believe that, it’s not relevant to whether this merger will have an adverse effect.”

US Airways and American have come out fighting. The government “got this one wrong, very wrong,” Richard Parker, an antitrust litigator at O’Melveny & Myers and former director of the Federal Trade Commission’s antitrust arm, the Bureau of Competition, said at a news conference on Wednesday. He stressed that only a judge could block the merger and vowed to take the case to trial. But perhaps the airlines shouldn’t have been so surprised by the lawsuit — and shouldn’t be quite so eager for a courtroom showdown.

“It’s a different regime, different standards and a different time,” said Herbert Hovenkamp, professor of law at the University of Iowa and widely regarded as a dean of the antitrust bar. The relevant question may not be why the department moved to block the American-US Airways deal, but why it approved the United-Continental merger — a move it now seems to regret.

Mr. Baer of the Justice Department told me this week: “We consider every merger one at a time. Here, we had a proposed merger that would reduce the legacy carriers from four to three. That’s not the same as six to five, or five to four. That logic would get you from two to one pretty quickly.”

And while he said he couldn’t comment on the earlier airline mergers, since he has been the antitrust chief for just seven months, “if you look at the net effects, what we’ve seen is a reduction in capacity and higher prices, and not the benefits that were promised.”

Whatever the recent precedents, the proposed American-US Airways merger violates the Justice Department’s merger guidelines, which the Obama administration finally seems to be taking seriously. The merger would substantially reduce competition because “there are too many routes that would create a monopoly or oligopoly,” Professor Hovenkamp said.

According to the Justice Department, the American-US Airways merger would substantially reduce competition in over 1,000 city pairs served by the two airlines. Among the more egregious examples it cited are Charlotte, N.C.-Dallas; Charlotte-Durango, Colo.; Dallas-Philadelphia; and Kahului, Hawaii-Tampa, Fla. It said the merger would create four out-and-out monopolies, albeit on secondary routes, including three that serve St. Croix in the Virgin Islands. And it said the merger would reduce competition on more than 1,000 routes.

It’s pretty clear what happens when concentration increases substantially on a route between two cities. After Continental and United merged, the combined airline accounted for 79 percent of the service between O’Hare International Airport in Chicago and George Bush Intercontinental Airport in Houston. During a three-month period after the merger, fares on that route were 57 percent higher than they were three years earlier, according to the aviation industry Web site PlaneStats.com. United’s fares overall increased 16 percent in the same period.

Common Sense: After Post Sale, Spotlight Shines More Intensely on The Times

Great journalism takes courage. It takes a sense of public mission. It takes independence. It takes time. Perhaps most of all, it takes money.

For decades, America’s great newspaper families had all of these. They shielded their editors and reporters from the pressures of advertisers and the short-term interests of public shareholders and Wall Street analysts. Subscribers were attracted to great journalism, advertisers followed, and big profits flowed to the family members and shareholders.

This week’s announcement that the Graham family had decided to sell The Washington Post and most of its publishing assets to Amazon’s chief executive, Jeffrey Bezos, surely quashed any lingering doubts that the old model is all but dead.

The sale of The Post inevitably puts The New York Times in the spotlight: will the Sulzbergers succumb to the forces that led most every other major newspaper family to sell?

“It’s absolutely true that the family did not want to be out there all by themselves,” Alex Jones, author of “The Trust: The Private and Powerful Family behind The New York Times,” and the director of the Joan Shorenstein Center on the Press, Politics and Public Policy at the John F. Kennedy School of Government at Harvard, told me this week. “They’re now the only iconic newspaper family, and it’s a lonely place to be.” Mr. Jones said he spoke to several family members after the Post announcement, and said they were shocked by the news. Nonetheless, “They’re absolutely committed to the stewardship of The New York Times,” he said.

The chairman and publisher of The Times, Arthur Sulzberger Jr., and his cousin, Michael Golden, the vice chairman, confirmed that this week. In a statement, they said, “The Times is not for sale” and stressed that the company was “profitable and generates very strong cash flow, which we believe makes us perfectly able to fund our future growth.” They added, “The Times has both the ideas and the money to pursue innovation.”

That The Times and its controlling family would be among the last survivors should come as no surprise, since it is the strongest of the great newspapers journalistically, and it is profitable. The Times has won 112 Pulitzer Prizes since 1918, including four this year, more than any other newspaper. A week ago, The Times reported quarterly operating earnings of $77.8 million, up 13 percent from a year earlier.

By contrast, The Washington Post’s newspaper division had losses of $53.7 million last year, with no end in sight.

Donald Graham, the chairman and chief executive of The Washington Post Company, who spoke to Mr. Sulzberger shortly after the sale was announced, told me this week: “I don’t think our deal has any implications whatever for The New York Times Company. The Post and The Times are completely different businesses, as different as, say, The Post and The Wall Street Journal. The Times is quite profitable and should be for a long time.”

But Mr. Graham also said the Post sale was not just about profits or money. As he put it in his letter this week to Post employees, “The point of our ownership has always been that it was supposed to be good for The Post.” He added, “The newspaper business continued to bring up questions to which we have no answers,” and concluded, “We were certain the paper would survive under our ownership, but we wanted it to do more than that. We wanted it to succeed.”

In the wake of the announcement, the Sulzberger family held two meetings, one with the Ochs-Sulzberger family trust, which owns a controlling stake in the company, and the other with the broader family, to discuss the Post sale and the decision to issue a statement from Mr. Sulzberger and Mr. Golden. The family surely has much to discuss, because it faces the same question the Graham family did: Would The Times be better off both journalistically and financially under different ownership?

Common Sense: At SAC, Rules Compliance With an ‘Edge’

The firm said it spends “tens of millions of dollars,” on compliance, “deploys some of the most aggressive communications and trading surveillance in the hedge fund industry,” has hired big-name lawyers like Peter Nussbaum and Steven Kessler to oversee compliance, and has a staff of “no fewer than 38 full-time compliance personnel.”

Which sets up the question: What were they doing?

On Thursday, the federal government charged SAC with running an insider trading scheme that flourished from 1999 to 2010, the result of an “institutional indifference” to unlawful conduct. On the face of it, it’s impossible to reconcile SAC’s avowed devotion to both legal and ethical behavior and the government’s allegations.

It may be true, as SAC concedes, that even the best compliance programs “may not detect individuals determined to evade firm policies or break the law.” But that doesn’t explain the insider trading “on a scale without known precedent in the hedge fund industry,” as the government put it, which already includes guilty pleas by five employees, insider trading indictments of two more, and SAC’s own settlement of Securities and Exchange Commission charges for $616 million, the largest insider trading penalty ever.

Whether the elaborate compliance system at SAC was little more than a Potemkin village will be at the center of both the S.E.C.’s civil enforcement against Steven A. Cohen, SAC’s eponymous billionaire founder, for failure to supervise his employees, and this week’s criminal indictment against the firm. (Mr. Cohen hasn’t been charged with any crime.) As Harvey Pitt, the former S.E.C. chairman, told me this week: “When it comes to compliance, you have to live, eat, breathe and drink it. It has to be embedded in a firm’s DNA.” And that process, he emphasized, had to start at the top, with Mr. Cohen.

SAC maintains that’s exactly what both the firm and Mr. Cohen have strived for, and that “Mr. Cohen himself exemplified” that “compliance is the responsibility of all of its employees.”

Such an effort, SAC said, began with its hiring process. The “firm does not take lightly its decision to employ someone,” it said in a document responding to an S.E.C. action last week contending that Mr. Cohen failed to supervise SAC’s employees. The firm said it refused to hire candidates because of concerns about compliance issues. When I asked for an example, the firm declined to identify any.

But the government cited multiple examples of SAC employees who were hired precisely because of their purported “contacts,” including one who “has a share house in the Hamptons with the C.F.O.,” or chief financial officer, of a publicly traded company and is “tight with management” at the company, as one internal SAC e-mail enthused. Another prospect was praised for “mining his industry contact network for datapoints.” The government said SAC rarely, if ever, showed any interest in ethics, integrity or compliance in vetting candidates.

On the contrary, when SAC’s legal department raised objections to hiring Richard Lee after another hedge fund warned that he was part of an “insider trading group,” Mr. Cohen “decided to hire Mr. Lee anyway,” and overruled the legal department, the indictment contends. Mr. Lee began insider trading almost as soon as he was hired. (Mr. Lee pleaded guilty this week to conspiracy and securities fraud charges and is cooperating with the government’s investigation.)

SAC has also stressed its continuing training programs, which include requiring employees to certify their adherence to a compliance manual and attend sessions with “prominent outside speakers.” These included Mr. Pitt, who is now chief executive of Kalorama Partners, a consulting firm that advises clients on compliance issues; and Stephen Cutler, a former chief of enforcement at the S.E.C. who is now general counsel at JPMorgan Chase, who spoke to the employees while in private practice. Mr. Cohen himself was “an active participant in this process,” SAC said.

But not all that active, apparently. Mr. Cohen didn’t bother to attend all the lectures, according to participants, although he did meet with the speakers individually.

Common Sense: Fair Play Measured in Slivers of a Second

Two seconds may not seem like much, but for high-speed traders with supercomputers, it’s plenty.

The difference was arresting. On Friday, just 500 shares of a leading Standard & Poor’s 500 exchange-traded fund traded during the first 10 milliseconds of the two-second window before the release of the University of Michigan data to Thomson Reuters’ regular clients, according to the market research firm Nanex. A year ago, on July 13, 2012, 200,000 shares traded during that 10-millisecond period, Nanex said.

Friday’s trading was all but “nonexistent,” said Eric Hunsader, founder of Nanex. “It was all about gaming the news, not the news itself.”

As an attempt to level the playing field for all investors, Mr. Schneiderman’s action clearly had an immediate effect. And he has said the settlement with Thomson Reuters is only a first step. While Thomson Reuters agreed to suspend the two-second advantage while his investigation continues, its regular clients get a five-minute jump on the general public, which gets the data at 10 a.m. Thomson Reuters pays the University of Michigan close to $1 million a year for the right to distribute the data.

The five-minute edge may well be the next target, since either everyone gets the information at the same time, or they don’t, whether the gap is seconds, minutes or hours. And Mr. Schneiderman has made it clear that Thomson Reuters isn’t the only target of a wide-ranging investigation.

The University of Michigan index falls into a broad category of private data that can move markets, or stocks in individual companies. About a dozen indexes compiled by private sources regularly affect markets; some of those are also released early. Other data is more industry-specific, but can also move sectors and individual stocks. Media companies have been trying to generate revenue and increase profits by charging fees for early access to all kinds of information.

All of this raises the question: Should everyone have access to market moving information at the same time? It turns out the answer is hardly self-evident.

For some market experts, the attorney general’s move is long overdue. Mr. Schneiderman is “a mile ahead of the Securities and Exchange Commission, which has to be dragged slowly and grudgingly toward raising the standard of behavior,” said John Coffee, a professor and expert on securities law at Columbia Law School.

The Securities and Exchange Commission is also collecting data on Thomson Reuters’ practices, although officials at the agency have said their jurisdiction is limited. An S.E.C. spokesman declined to comment.

Mr. Schneiderman’s investigation is the latest in a long series of efforts to reduce both the reality and the perception that the nation’s securities markets are rigged to favor those who already have money, power and special access. A vast network of laws and regulations is aimed at creating a more level playing field for investors, like criminal laws that ban securities fraud and the S.E.C.’s Regulation Fair Disclosure, which requires companies to widely disseminate market-moving information about themselves. Consider also the simultaneous public release of government information like employment data and the Federal Reserve minutes.

The goal is not just fairness, but to make capital markets more robust by encouraging the public — not just professional speculators — to invest.

“The reason America’s markets are the best and strongest markets in the world is that individuals always believed they could get a fair trade,” Mr. Schneiderman told me this week. “If you did your research well, you weren’t at a disadvantage because of information you couldn’t possibly access. It wasn’t a rigged casino.”

This article has been revised to reflect the following correction:

Correction: July 12, 2013

An earlier version of this column erroneously included an index from the Institute for Supply Management among those that are released early to some users. The I.S.M.’s manufacturing data is released at 10 a.m. eastern time to all users, including clients of Thomson Reuters.

Common Sense: Uncertainty at the Fed as Markets Oscillate

“He’s already stayed a lot longer than he wanted or he was supposed to,” President Obama told Charlie Rose in an interview that was broadcast on June 17 on Bloomberg TV, all but confirming that he wouldn’t reappoint Mr. Bernanke when his term expires at the end of this year.

The best the president could muster was that Mr. Bernanke was an “outstanding partner along with the White House” in warding off “what could have been an economic crisis of epic proportions.”

A White House spokesman said Mr. Obama meant that as praise, but supporters of the chairman, and even many who have disagreed with him on policy issues, were quick to question both the timing and substance of the comment.

Not only did the comment come across as faint praise for a long-serving public servant who guided the nation’s monetary policy through a severe crisis, but its timing could also hardly have been worse. Mr. Bernanke was in the midst of important Federal Open Market Committee meetings and that very week began the delicate task of communicating the Fed’s plans to “taper” its latest round of quantitative easing. Markets went into convulsions and interest rates shot up. While no one blames Mr. Obama for that, adding another element of uncertainty about Fed policy may have contributed to the volatility.

Others were critical of the president’s choice of the word “partner” to describe the Fed chairman’s role, since the Federal Reserve is an independent agency overseen by Congress. “Any Fed chairman would bristle at the idea they were a partner with a president,” Senator Bob Corker, the Tennessee Republican who serves on the Senate Banking subcommittee on financial institutions and consumer protection, told me this week. “I can understand why people who want to protect the independence of the Fed would be concerned.”

Others pointed out that the Fed has taken the lead in efforts to stimulate the economy as Congress blocked the White House from further stimulus measures, and thus “partner” overstates the White House’s role in the recovery.

By contrast, although history hasn’t been kind to the legacy of Mr. Bernanke’s predecessor, Alan Greenspan, he received a send-off commensurate with his record five terms of service. The Fed itself announced Mr. Greenspan’s decision to retire, and in late October 2005, President George W. Bush announced his choice of Mr. Bernanke at a White House news conference where he lavished praise on the departing chairman as a “legend” who had “dominated his age like no central banker in history” while Mr. Greenspan looked on. On the same occasion, Mr. Bernanke said Mr. Greenspan “set the standard for excellence in economic policy making.”

With many economists and investors fixated for months on the question of when and how quickly the Fed would curtail its extraordinary efforts to stimulate the economy, Mr. Bernanke’s suggestion, just two days after the president’s comments, that the Fed might taper its bond-buying earlier than expected sent markets reeling. Stocks fell across the globe and interest rates rose, with 10-year Treasuries hitting their highest yields since 2011. The volatility index, which was already rising the week before the president’s remarks, leapt to a new high for the year.

Mr. Obama “instantly made Ben a lame duck before the end of his term,” said one economist, who may be a future candidate for Mr. Bernanke’s position and, like many people I interviewed, asked not to be named. “He undermined his credibility both inside the Fed and in financial markets.” While Mr. Bernanke tried to reassure markets that the Fed would monitor the economy and respond as appropriate, this person said, “Part of the negative reaction in asset prices was because market participants have confidence in Ben, but now he won’t be around to oversee that.”

People close to Mr. Bernanke told me that the chairman took the president’s comments in stride, but said he was concerned about the severe market reaction. “He wouldn’t want to feed stories about this when he’s trying to articulate a complex message about monetary policy,” one adviser said.

The people close to the chairman said he had already told the president he wanted to leave at the end of his term. He is expected to return to teaching and research at Princeton, where he delivered this year’s baccalaureate address. He quipped in the speech that his remarks had “nothing whatsoever to do with interest rates” and observed that life was unpredictable.

This article has been revised to reflect the following correction:

Correction: June 28, 2013

An earlier version of this column misstated the occasion of Mr. Bernanke’s speech at Princeton. It was the baccalaureate service, not the commencement.

Common Sense: How Cooper Union’s Endowment Failed in Its Mission

So why does Cooper Union now find itself forced to charge tuition of an estimated $20,000 a year, abandoning what many consider its most important legacy?

This week, angry students were occupying the president’s office in protest. They might be even angrier to learn that some of their future tuition dollars could be going to support wealthy hedge fund managers who oversee some of the school’s $666.7 million endowment.

Cooper Union may be an extreme example, but it’s hardly the only college suffering from a combination of decades of bad decisions and recent treacherous markets. Its endowment was typical of the many endowments and pension funds that took the plunge into so-called alternative investments like hedge funds, which have lured investors with the promise of generous and steady returns in both good times and bad. And compared with many universities, Cooper Union did a good job managing its endowment through the recent financial crisis. As recently as 2009, the school maintains, it ranked first among all American universities for endowment performance.

Even so, hedge funds couldn’t solve the college’s dire financial problems, and many hedge funds have been far more successful at lining the pockets of their managers than beating market averages. (The typical hedge fund manager charges a fee of 2 percent of assets plus 20 percent of any gains.) In fiscal year 2009, which ended June 30, 2009, Cooper Union’s hedge funds and other managed assets lost 14 percent, and the returns since then have lagged the stock market’s recovery. Today, Cooper Union’s endowment is lower than it was at the end of fiscal year 2008, even as the Standard & Poor’s 500-stock index has hit new highs. From 2009 to 2012, a simple, low-fee mix of 60 percent stocks and 40 percent bonds far outperformed hedge fund indexes.

Weak hedge fund performance is hardly Cooper Union’s only financial problem. Today’s crisis has been brewing for decades if not longer, and comes after years of what looks like bad management decisions with little accountability or supervision by New York’s attorney general, who oversees nonprofit institutions. Over the decades, Cooper Union has sold off assets piecemeal, failed to diversify its endowment, taken on debt and built a lavish new building. After the 2000-1 stock market plunge, the managed endowment, excluding the Chrysler Building, lost half its value. The school never cultivated its potential donor base, leaving most graduates with the impression that it was wealthy and didn’t need alumni contributions.

In some ways, it’s surprising that the school’s trustees managed to stave off charging tuition as long as they did. “We’ve only been one step ahead of the bailiff for decades,” said John C. Michaelson, a trustee who runs an investment firm and has been chairman of the investment committee since 2012, as well as from 2005 to 2008. “We were pulling rabbits out of hats.”

The simplest rule of asset management, one familiar to even novice investors, is diversification. Yet Cooper Union’s endowment is highly unusual in that it’s concentrated in a single asset — the land under the Chrysler Building — which accounts for nearly 84 percent of its assets, according to its most recent financial statement.

By contrast, Emory University in Atlanta, which as recently as 2001 had 60 percent of its main endowment in Coca-Cola stock, has since sold all of it and diversified into other assets.

Having so much of the endowment in a single asset “is against everything I stand for,” Mr. Michaelson said. He and other trustees said they considered selling it in 2006, when the college was facing mounting financial deficits, but concluded that would be impractical. Cooper Union receives annual lease payments of $9 million from the owner of the Chrysler Building, Tishman Speyer Properties, and $18.2 million in so-called tax equivalency payments that would otherwise go to New York City. The right to the tax revenue couldn’t be transferred to a buyer.

Common Sense: Sham Shareholder Democracy

It turns out there are many stronger cases — 41.

That’s the number of publicly traded companies where directors actually lost their elections last year, meaning that more than 50 percent of the shareholders withheld their votes of approval. Yet despite these resounding votes of no confidence, they remained in their posts.

At least at H.P., all the directors got a majority of the votes cast, and even then, two resigned and a third gave up his post as chairman. But at Cablevision Systems Inc., the New York cable and media company controlled by the Dolan family, three directors lost shareholder elections twice in the last three years — in 2010 and 2012 — and received only tepid support in 2011. Nonetheless, the three remain on the board.

“As fiduciaries, we can’t sit by and let the board make a mockery of our fundamental right to elect directors,” said New York City’s comptroller, John Liu, who oversees the city’s pension funds, which own more than 532,000 Cablevision shares. “Shareowners need accountable directors who will ensure the company isn’t being run for the benefit of insiders at our expense.”

Mr. Liu sent the company a letter earlier this month urging it not to nominate the three again and threatening a proxy fight. “The fact that all three directors remain on the board suggests that one of the few rights” afforded shareholders is “illusory,” he wrote. Mr. Liu warned that he’d oppose their election and that “my office will also encourage other shareholders to join us.”

Mr. Liu didn’t get a response, but a Cablevision spokesman told me this week, without being specific, that Mr. Liu’s letter was “woefully misinformed, inaccurate and political.” In proxy materials released by Cablevision this week, all three directors — Thomas V. Reifenheiser, John R. Ryan and Vincent S. Tese — were renominated for new terms.

Even directors who resign after losing votes don’t necessarily leave. Two directors of Chesapeake Energy in Oklahoma, V. Burns Hargis, president of Oklahoma State University, and Richard K. Davidson, the former chief executive of Union Pacific, were opposed by more than 70 percent of the shareholders in 2012. Chesapeake requires directors receiving less than majority support to tender their resignations, which they did. The company said it would “review the resignations in due course.” (After a shareholder outcry, Mr. Davidson left a month after the vote, but and Mr. Hargis only left last month.)

At Iris International, a medical diagnostics company based in Chatsworth, Calif., shareholders rejected all nine directors in May 2011. In keeping with the company’s policy, they submitted their resignations. And then they voted not to accept them. The nine stayed on the board. (The company was acquired in late 2012 by the Danaher Corporation.)

A list of companies retaining directors who were rejected by shareholders in 2012 — so-called zombie directors — was compiled by the Council of Institutional Investors, which represents pension funds, endowments and other large investors. The list includes not just smaller, family-controlled companies, where disdain for shareholder views may be more ingrained, but also Loral Space & Communications, Mentor Graphics, Boston Beer Company, and Vornado Realty Trust.

“It’s appalling,” Nell Minow, a co-founder of GMI Ratings, which rates companies based on risk to shareholders, including corporate governance issues, told me this week. “It’s the No. 1 issue in corporate governance.” She noted that the reason such a thing is possible is that many companies operate under a “plurality” voting system, in which directors run unopposed and just one vote is enough to be elected. And even companies that require a majority vote may decline to accept a director’s resignation.

Common Sense: Why Bad Directors Aren’t Thrown Out

Imagine having to run on this track record:

¶ After ousting Mark Hurd as chief executive in 2010 amid messy accusations of sexual harassment, the board hired Léo Apotheker to replace him, even though Mr. Apotheker had been fired as chief of the European software giant SAP after just seven rocky months. Most of the board didn’t bother to meet Mr. Apotheker, let alone ask him any probing questions about his tenure at SAP, before rubber-stamping the choice of the board’s four-member search committee.

¶ In 2011, H.P.’s directors unanimously approved the acquisition of the British software maker Autonomy for $11.1 billion, a deal that was considered wildly overpriced even at the time. Less than a year later, H.P. wrote off $8.8 billion of that and claimed it had been defrauded. (Autonomy officials have denied the allegations, which are being investigated by authorities in both the United States and Britain.) Some consider Autonomy to be the worst corporate acquisition in business history. In the 2012 fiscal year, H.P. wrote off a total of $18 billion related to failed acquisitions and other missteps.

¶ With Mr. Apotheker at the helm and the board backing his strategic initiatives, H.P. announced that it was considering abandoning its giant personal computer business, then changed its mind. After Mr. Apotheker had been on the job a disastrous 11 months, the board demanded his resignation, and then paid him more than $13 million in termination benefits.

Shareholders might have forgiven what Fortune magazine called a “tawdry reality show” if the stock had performed well. But from the time Mr. Apotheker was hired in September 2010 until he left in 2011, the stock went from more than $45 a share to a little more than $22. Despite a recent rally, shares are still below $24, even as the Dow Jones and Standard & Poor’s 500-stock indexes are hitting new highs.

“You really couldn’t have a stronger case for removing directors,” Michael Garland, executive director for corporate governance in the New York City comptroller’s office, told me this week. “There’s been a long series of boardroom failures that have harmed the reputation of the company and repeatedly destroyed shareholder value over an extended period of time.”

Yet all 11 H.P. directors were re-elected on March 20.

H.P. is hardly an isolated case. According to Patrick McGurn, special counsel for one of the major shareholder advisory services, Institutional Shareholder Services, shareholder efforts to remove directors in uncontested elections rarely succeed or come close, even in egregious circumstances. Last year, there were elections for 17,081 director nominees at United States corporations, according to the service. Only 61 of those nominees, or 0.36 percent, failed to get majority support. More than 86 percent of directors received 90 percent or more of the votes. Of the 61 directors who failed to get majority approval, only six actually stepped down or were asked to resign. Fifty-one are still in place, as of the most recent proxy filings.

“People are calling them zombie directors,” Mr. McGurn said. But that hasn’t stopped them from serving on boards for what is typically lucrative compensation for relatively little work. (H.P.’s directors received a mix of cash and stock payments ranging from $292,000 to $380,000 in 2012.

While the H.P. board has been largely reconstituted since the Apotheker debacle, all but one (Ralph Whitworth, a well-known value investor who joined in November 2011) approved the disastrous Autonomy deal. Raymond Lane, seen as an ally and supporter, at least initially, of Mr. Apotheker, was named chairman at the same time Mr. Apotheker took the helm. Working closely with Mr. Apotheker, Mr. Lane proposed five new directors. John Hammergren, chief of the McKesson Corporation, has been on the board for eight years, and G. Kennedy Thompson, chief of Wachovia before it was forced into a merger with Wells Fargo during the financial crisis, has been a board member for seven years. Mr. Hammergren was on the search committee that recommended Mr. Apotheker’s appointment.

In its proxy materials, H.P. didn’t address the company’s record under these directors, but nonetheless recommended that shareholders vote for the entire slate, citing the risk of “destabilizing” the company by changing directors in an “abrupt and disorderly manner.” As to Mr. Lane, Mr. Hammergren and Mr. Thompson, it repeatedly cited their “experience” in running global companies, but said nothing about their roles in selecting Mr. Apotheker or other directors, the Autonomy acquisition, other failed strategic initiatives or, indeed, anything at all about their tenures at H.P.

This article has been revised to reflect the following correction:

Correction: March 29, 2013

An earlier version of this article used outdated figures for the board’s compensation in 2012. The directors received a mix of cash and stock payments ranging from $292,000 to $380,000 in 2012, not $290,000 to $355,000, which was the payment range for 2011. The earlier version also misstated the compensation of Mr. Lane, the board chairman, for 2012. He received neither a cash award nor equities in 2012, though he received two large equity awards in 2011.

Common Sense: Some Columns Revisited: Apple, ‘The Voice’ and Gay Marriage

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Common Sense: A Popular, but Not Quite Fair, Tax Proposal

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Common Sense: Another Fumble by the S.E.C. on Fraud

With public anger at Wall Street still at fever pitch, the pressure was enormous on Mr. Steffelin, whose reputation until then was unblemished. JPMorgan Chase, the giant bank responsible for the exotic mortgage security, known as a collateralized debt obligation, or C.D.O., at the center of the case, had already caved in, agreeing to settle and pay $153.6 million.

“Do you really want your client to be the poster child of the JPMorgan C.D.O. fraud?” an S.E.C. lawyer had told Mr. Lipman, as the lawyer later told the judge in the case.

Mr. Steffelin was angry and incredulous that it had come to this, and his first impulse was to blame his lawyer. He yelled at Mr. Lipman over the phone.

 Mr. Steffelin, who worked for a financial firm that advised JPMorgan on the deal, was formally charged on June 21, 2011. But on Friday, in a rare public about-face, the S.E.C. asked Judge Miriam Goldman Cedarbaum of Federal District Court in New York to dismiss the charges against Mr. Steffelin with prejudice, meaning the case can’t be refiled.

Now, if Mr. Steffelin is going to emerge as a “poster child” for anything, it will be as a victim of regulatory overreach.

 “It’s very unusual and unusually embarrassing for the S.E.C.,” said John C. Coffee Jr., a professor at Columbia Law School and an expert in securities law.

An S.E.C. spokesman, John Nester, said: “Our duty in all cases is to achieve a just and appropriate outcome. Our decision here appropriately reflects information that came to light as the litigation progressed.”

Coming on the heels of a jury’s acquittal of a midlevel Citigroup executive, Brian Stoker, this summer on charges in another mortgage-backed securities deal, the S.E.C.’s campaign to hold someone accountable for the huge losses in mortgages at the heart of the financial crisis is in shambles.

Of the three individual defendants in these cases, only Fabrice Tourre, the self-described Fabulous Fab, who is currently on leave from Goldman Sachs, still faces trial, now scheduled for July 2013.

The failure to go after high-ranking officials at the big banks responsible for the mortgage crisis has been a recurring issue for the government in its pursuit of individual fraud cases.

As the foreman of the jury that acquitted Mr. Stoker this summer told my Times colleague Peter Lattman, “Stoker structured a deal that his bosses told him to structure, so why didn’t they go after the higher-ups rather than a fall guy?”

Professor Coffee pointed out: “Very few high-ranking individuals at any institution have been charged. Take the Goldman Sachs case. It was strong. But the highest-ranking individual charged was the Fabulous Fab, and he was the equivalent of a trainee sergeant. This is part of a pattern.”

The S.E.C. points to more than a hundred cases related to the financial crisis that have brought in about $2.2 billion in penalties. They include Angelo Mozilo, the co-founder of the mortgage lender Countrywide Financial, who paid $67.5 million to settle S.E.C. fraud charges, and senior officers of Fannie Mae and Freddie Mac, the government-backed mortgage companies. But otherwise, few if any of the individual defendants would qualify as boldface names.

When I met the square-jawed, 43-year-old Mr. Steffelin, he expressed a mix of relief that he was on the brink of vindication, bewilderment that he was ever singled out for blame and anger that he was subjected to a long, painful and unjust ordeal to satisfy a public lust for someone to hold responsible for the mortgage debacle.

As his lawyer Mr. Lipman told the judge in October 2011, “This case was about getting on the front page of The Wall Street Journal.”

Mr. Steffelin said he came under intense pressure to settle. But “I looked at this, and realized that if I settled, this would be with me for the rest of my life. It would effectively end my career,” he said. More important, he was steadfast in his belief that he hadn’t committed a fraud, acted negligently or done anything else wrong.

“I kept saying there was nothing there, and I kept thinking the S.E.C. would realize that, and the case would go away, but it didn’t,” he told me.

Common Sense: Comparing the Tax Bite With Obama and Romney

Would you pay more or less in tax? And how would that stack up against the richest Americans like Warren Buffett, who’s currently paying a lower rate than his secretary?

Considering how central these issues have been to the campaign, it’s curious how hard it is to come up with answers, perhaps because both candidates want voters to believe that someone’s else’s taxes may have to rise, but not theirs. Whether Mr. Romney’s math adds up and whether taxing the rich would make a dent in the deficit might make an interesting public policy debate, but those issues further obscure the most basic question, which is what effect the proposals will have on each of us.

I’m not saying voters should simply vote their pocketbooks. But I would at least like to know how much I’m being asked to pay and what I might expect in return. This has been especially true since I discovered this year that I paid a rate in federal income tax that’s nearly twice as high as Mr. Romney’s. As I said then, I’m not faulting Mr. Romney for taking advantage of the existing tax code, but that disparity continues to rankle.

Tax reform and the related issue of economic growth have been major themes in the campaign that will end on Tuesday. The economy has taken center stage, and both candidates have been making much of tax platforms that aim to spur growth and job creation while promoting fairness. Mr. Romney has been the more ambitious, calling for sweeping tax reform that would lower rates while broadening the base by limiting unspecified deductions and loopholes. “Tax policy shapes almost everything individuals and enterprises do as they participate in the economy,” he says on his “Mitt Romney for President” Web site.

President Obama has called for a return to the top rates that prevailed in the Clinton administration and higher rates on capital gains and dividends. “We can’t get this done unless we also ask the wealthiest households to pay higher taxes on their incomes above $250,000 — pay the same rate we had when Bill Clinton was president,” Mr. Obama said last month while campaigning in New Hampshire. “We created 23 million new jobs, and we went from a deficit to surplus. That’s how you do it.”

So what would the impact of their tax proposals be? After consulting several tax experts, I did the calculations both on my own returns for 2009 and 2011 as well as for the wealthiest 400 taxpayers.

For the Romney plan, I took the proposals from his Web site that apply to taxpayers with adjusted gross incomes over $200,000: a 20 percent cut in the top rate (to 28 percent from 35 percent); dividends and capital gains taxed at the existing preferential rate of 15 percent; and the abolition of the alternative minimum tax. Mr. Romney hasn’t said what itemized deductions he would abolish or limit, but he has said he might cap or eliminate those deductions for high-income taxpayers.

Mr. Romney has mentioned a cap on deductions of $17,000, and has also said: “One way, for instance, would be to have a single number. Make up a number, $25,000, $50,000. Anybody can have deductions up to that amount And then that number disappears for high-income people,” meaning high-income people would be allowed no itemized deductions.

So in the spirit of Mr. Romney’s comments, I eliminated all itemized deductions. I retained the self-employed health insurance deduction and the deduction for contributions to a qualifying retirement plan. So far as I can tell, Mr. Romney hasn’t proposed abolishing those.

I took Mr. Obama’s tax proposals from his proposed budget and subsequent campaign statements, in which he has called for a return to Clinton era rates of 36 percent (for single taxpayers in roughly the $200,000 to $400,000 bracket) and 39.6 percent for those earning over $400,000 for both ordinary and dividend income and a 20 percent rate on capital gains. While Mr. Obama has talked about repealing the A.M.T., he hasn’t actually proposed doing so and has only suggested indexing it to inflation, so I retained the A.M.T. in the Obama calculations.

I assumed the Obama proposals would raise my rate and the Romney plan would lower it. But the Romney plan actually increased my rate to 25.5 percent from 22.2 percent in 2011, and to 27.6 percent from 26.7 percent in 2009. The Obama plan raised it even more substantially, to 30.6 percent in 2011 and 29.3 percent in 2009.

Including the minimum tax in the Obama plan had a significant impact. If Mr. Obama abolished it, my rate under his plan fell to 29.7 percent in 2011 and to 26.7 percent in 2009 — lower than the Romney plan, in fact, in 2009. If Mr. Romney allowed me the $17,000 in itemized deductions he has mentioned, it would have only a negligible impact, lowering my rates 0.5 percent.