Ken Cuccinelli delivering his concession speech
• VA-Gov: Remember Ken Cuccinelli? Remember E.W. Jackson? Of course you do. They were the nut butters that Virginia Republicans put forth to run as a ticket for governor and lieutenant governor two years ago, and both lost gloriously—Cuccinelli, to a former DNC chair who ran as a loud-and-proud progressive, and Jackson, who got crushed by a punishing 11-point margin. Democrats can thank the GOP profusely for both opponents, because Republicans spurned more electable options by choosing to select their nominees at a party convention rather than via a traditional primary.
It's no secret that conventions tend to be dominated by ultra-conservative activists who prize purity over electability even more than your standard crop of primary voters. Jackson is a prime example: He took less than 5 percent in the 2012 Senate primary, but defeated several better-known and more formidable opponents at the next year's convention. Obviously, Team Red learned its lesson... right?
Shah, psych! Republicans in the Old Dominion just agreed to hold a convention once again in 2017, as part of a compromise that involves conducting a proper presidential primary on Super Tuesday next year. That suits Virginia Democrats just fine. They don't much care which GOPer earns the state's presidential delegates, but they sure would like to see more Cucinellis and Jacksons in two years' time. And now, they just might get their wish.
• FL-Sen: When we first learned more about Alan Grayson's hedge funds, we naturally pondered the optics of vocal populist running rich people's money via investment vehicles registered in the Cayman Islands, a country Mitt Romney helped popularize as the most notorious one-percenter tax haven in the Western Hemisphere. On top of that, you have a sitting congressman and would-be senator maintaining a sideline business while still trying to represent his constituents and run for office. You'd think one might preclude the others.
But then there's also the matter of House ethics rules, which prohibit members from outside employment "that involves a fiduciary relationship." That term sounds fancy, but it just means that one party owes another party a legal duty to act solely in that other party's interests. In the investment context, a fund manager has to put the interests of his investors ahead of his own; in a very simplified example, he can't keep a hot stock tip all to himself but rather has to use that knowledge on behalf of his fund.
Naturally, we'd wondered whether Grayson might be running afoul of this prohibition, but we didn't have any business law experts on hand to answer our questions. Fortunately, Politico has some—a whole stable of 'em, in fact. When asked, Grayson claimed he does not have a fiduciary duty to his investors because they are "sophisticated," but every attorney and professor Politico's Matt Dixon spoke to said, "No freaking way":
Bernie Black, a professor with the Northwestern University School of Law and Kellogg School of Management, said Grayson's rationale was "complete nonsense."
"You can't avoid fiduciary duty by saying 'my investors are smart,'" Black said. "The core of fiduciary duty is the duty of loyalty, which is basically, 'I won't steal.' A hedge fund manager can't justify stealing from his investors by claiming they are smart."
"I am surprised by the assertion that a hedge fund manager would not owe fiduciary duties," said Eric Chaffee, a University of Toledo law professor specializing in securities law.
Mark Astrita, an New York attorney who specializes in securities law, called Grayson's contention that he does not have fiduciary responsibility "absolutely incorrect."
"The fact that the investors are "qualified investors" (properly called "accredited investors") is part of the definitions for the exemption, and does not address fiduciary duty," he said in an email.
Steve Perfect, associated professor with the Florida State University School of Business, said someone in Grayson's position usually has a fiduciary duty unless a specific agreement waiving the responsibility.
"Someone with that type of relationship would be considered to have a fiduciary duty to the hedge fund and the investors," Perfect said.
He said even if a specific agreement were in place releasing Grayson of fiduciary duty, one would still be in place between him and fund itself.
The same rules also forbid members from using their names in connection with any business entities whose operations involve fiduciary relationships. All of Grayson's funds (it turns out there are three, not two, as previously thought) feature his name, like the "Grayson Master Fund (Cayman) Ltd." Dixon notes that Grayson's investment entities "have never been examined by the House ethics committee." That may now change.
• NH-Sen: The U.S. Chamber of Commerce is touting a poll from Fabrizio Lee that shows Republican Sen. Kelly Ayotte leading Democratic Gov. Maggie Hassan 52-41 in a hypothetical matchup. But except for the notoriously unreliable Gravis Marketing, which had Ayotte up 51-43 in April, every other pollster has shown a close race: PPP had Hassan up 1, Public Opinion Strategies (a GOP outfit) had Ayotte ahead by 1, and even an earlier Gravis poll had Ayotte on top by just 2, calling into question their later numbers that had her winning by 8. So don't read too much into these numbers, especially since the Chamber is releasing little more than toplines.
• PA-Sen: Republican Sen. Pat Toomey is already out with his first TV ad of the cycle. His spot features a woman who describes herself as a "survivor of child sexual abuse" and praises Toomey for his "leadership on this very important issue." Toomey's campaign is refusing to discuss the size of the buy, so you know it's small, and Emily Cahn confirms that he's spending just $22,000 in the Pittsburgh market to air it.
• OR-Gov, SoS: Republican Sid Leiken, architect of the fakest poll there ever was, has decided against making a bid for governor and will instead run for secretary of state next year. That post will be open because the current occupant, Jeanne Atkins, said that she would not seek a full term when she was appointed to the job after Kate Brown was elevated to the governorship following John Kitzhaber's resignation earlier this year. Three Democrats are also considering the race for SoS: House Majority Leader Val Hoyle, Labor Commissioner Brad Avakian, and state Sen. Richard Devlin. As the Willamette Week points out, Republicans have not won a statewide race in Oregon since 2002.
• IA-01: We hadn't heard Pat Murphy's name all cycle, and with good reason: The former state House speaker posted a bitterly disappointing loss against Republican Rod Blum last year, one that was hard to excuse even in face of the GOP wave. (Obama carried the 1st District 56-43, and Blum is an extremist whom even the NRCC despises.) Yet to our great surprise, an unnamed source has told Roll Call's Emily Cahn that Murphy intends to give things another go and enter the Democratic primary.
It's an especially strange move because Cedar Rapids City Councilwoman Monica Vernon has been in the race for months, and she's already consolidated support from the likes of EMILY's List and has had lots of time to fundraise. In face, Vernon secured an endorsement on Tuesday from Democratic Whip Steny Hoyer, the second-ranking Democrat in the House.
What's more, Murphy's people don't even seem to have the basics right. His backers claimed to Cahn that he'd "outperformed" Bruce Braley, the Democrats' disastrous Senate candidate whose open seat Murphy had sought, but that's not true at all. According to our calculations, Braley lost the 1st by 0.4 percent—sad, since it was his own district, but that was better than Murphy, whom Blum beat by 2.3 percent.
A consultant for Murphy did note that his guy won more raw votes than Braley did in the 1st District. That's true, but irrelevant. Several minor candidates ran for Senate while no third parties ran in the 1st. To compare apples to apples, you have to either look at each candidate's margin of victory (or loss), as we did, or strictly focus on the two-party vote. Either way, though, you get the same result. But if you still insist on using raw votes, then you also have to consider what the Republicans got. In that case, Braley lost the 1st by 1,258 votes, while Murphy lost it by 6,617.
Murphy defeated Vernon in the primary last time, but given his liabilities and his late start, he hasn't set himself up for a repeat performance. And Iowa Democrats may not be displeased with that.
• NY-21: Documentary filmmaker Aaron Woolf, who ran one of the worst campaigns of 2014, has mercifully decided not to seek a rematch against freshman GOP Rep. Elise Stefanik. (Woolf once painfully tried to excuse his invisibility on the campaign trail by saying he's a "press release kind of guy." That's sort of like an NBA player declaring he's "more of a locker room guy.") However, Democrats are still without a candidate in this 52-46 Obama seat, though retired Army Col. Mike Derrick had said he expects to make a decision around the end of June. Well, here we are.
The Daily Kos Elections Morning Digest is compiled by David Nir and Jeff Singer, with additional contributions from David Jarman, Steve Singiser, and Daniel Donner.