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Securities and Exchange Commission v. Adams

United States District Court, S.D. Mississippi.

June 1, 2018

Securities & Exchange Commission, et al., Plaintiffs,
v.
Arthur Lamar Adams, et al., Defendants.

          Before Carlton W. Reeves, District Judge.

          ORDER ESTABLISHING RECEIVER SELECTION PROCESS

          CARLTON W. REEVES UNITED STATES DISTRICT JUDGE.

         This case involves a multi-million dollar Ponzi scheme that defrauded hundreds of investors. The ill-gotten gains of that scheme now reside in Defendants' estates. The Court has determined that a receivership over those estates is appropriate.[1] After conferring with the parties, the Court has created a process for selecting a Receiver that incorporates their advice.

         The Court believes that particular care is necessary in appointing officers of the federal judiciary, an institution that fails to reflect the diversity of the public it serves. Just one in five Article III judges are people of color, and only one in three are women.[2] Since 2017, less than one in ten people appointed as Article III judges have been people of color, and less than one in four have been women.[3] Bankruptcy and magistrate judges appointed by the judiciary are even less diverse, [4] and people of color are hired for just one in six clerkship positions.[5] When federal judges appoint counsel in multi-district litigation, fewer than one in five leadership positions are filled by women.[6]

         The same lack of diversity defines the broader legal profession. Despite making up a quarter of the country, people of color represent just one in ten lawyers, and only a third of lawyers are women.[7] At major law firms, fewer than one in ten partners are people of color, and fewer than one in four partners are women.[8]

         Deeper patterns of exclusion appear in Mississippi. While black people make up 40% of the population, [9] they represent fewer than 16% of Mississippi's federal bankruptcy, circuit, district, and magistrate judges.[10] One survey found that fewer than 4% of federal clerks hired in Mississippi, Louisiana, and Texas were black.[11] People of color represent fewer than 11% of the Mississippi bar.[12] Women make up fewer than 16% of Mississippi's federal bankruptcy, circuit, district, and magistrate judges, and just 23% of the state's lawyers.[13]

         It is indisputable that systematic oppression lies behind much of the judiciary's lack of diversity. The legal profession's exclusion and discrimination against people of color, especially in federal courts, have been well documented.[14] Research also establishes that federal courts are “places of discrimination” for women, where they feel “invisible” and face “pain, isolation, and injury”[15] - especially from men cloaked in the robes of justice.[16] Particularly hurtful strains of race- and sex-based hatred have appeared in Mississippi's judiciary.[17]

         No doubt, some steps have been taken to remove these stains. Still, when given the opportunity, courts should take steps to increase their diversity. Justice is a search for truth.[18] That search will fail if a court does not incorporate a wide array of experiences, facts, and perspectives into its decisionmaking processes.[19] “The case for diversity is especially compelling for the judiciary, ” as District Judge Edward M. Chen has said.

         “How can the public have confidence and trust in such an institution if it is segregated - if the communities it is supposed to protect are excluded from its ranks?”[20] To deliver justice and ensure its legitimacy, then, the judiciary must diversify itself.[21]

         In fulfilling that duty here, the Court will use the “inherent power” courts have “to provide themselves with appropriate instruments required for the performance of their duties.”[22]The Court will require the Receiver to take steps to guarantee that its hiring practices are as inclusive as possible, ensuring the participation of those who have traditionally been excluded from legal work in America. Applicants are encouraged to commit to bold and creative steps involving recruiting, retaining, hiring, and other staffing concerns in their applications. Through their fulfillment, those steps may aim for - though may not guarantee achievement of - targets for billable hours performed by those underrepresented in the legal profession. Even steps that aim for very modest targets, such as 25% of hours being conducted by women and 20% of hours being conducted by people of color, would be laudable.

         The Court is looking for a candidate who has the proper professional experience, business acumen, communication skills, ability to manage conflicts of interest, and commitment to inclusion. In sum, the Receiver must be deeply qualified to do justice and identify, collect, and protect all property subject to the receivership and minimize dissipation of estate assets.

         The Court has posted a Receivership Application on the Southern District's website and Twitter account. Candidates (including those whom the parties have previously endorsed) should submit their applications either electronically (reeves chambers@mssd.uscourts.gov) or physically to the Court by 5:00 p.m. Central on June 8, 2018. By June 15, the Court expects to provide select applicants with information necessary to conduct a complete pre-appointment conflicts check. The results of that check should be submitted to the Court by the close of business on June 22. The Court will strive to appoint a receiver by July 1.

         SO ...


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