I find this unbelievable. Washington Post, Aug. 15, In High Court Filing, It’s U. S. vs. Investors. Whatever happened to Bubble Boy’s great sense of humor (or something) at the charity fundraiser, telling the assembled rich and mighty, “Some people call you the elite. I call you mah base.” I guess he meant they were something he’d stand on to wipe his shoes.
The Bush administration yesterday sided with accountants, bankers and lawyers seeking to avoid liability in corporate fraud cases, arguing that investors must show they lost money after relying on deceptions by third parties in order to proceed with private lawsuits.
So if you relied on Enron’s fraudulent annual reports to make investment decisions, you could sue Enron for fraud. What you couldn’t do is sue the “independent” auditor who “verified” the annual report and said it was trustworthy. If Arthur Andersen, Enron’s accounting firm, still existed, you couldn’t sue them either for aiding and abetting the fraud.
“Words or actions by a secondary actor that facilitate an issuer’s misstatement but are not themselves communicated to investors, simply cannot give rise to reliance (and thus primary liability in a private action),” [according to US Solicitor general who filed the Administration’s brief.]
He’s said, this pillar of the legal community said, that if accountants, lawyers, or bankers knowingly participate in a fraud, but don’t send reports directly to investors, what the company does with the fraudulent numbers is nobody else’s fault.
By the same logic, if I, as a botanist, tell someone exactly how to make ricin from castor beans, knowing that they need a method to kill one of their peskier in-laws, then it’s nothing to do with me if the in-laws die of ricin poisoning. Yet the law would put me behind bars for years as an accessory to murder. So, what’s the big difference between assisting a murderer or assisting in fraud that beggars thousands?
Business advocates pointed out that … allowing such private lawsuits to proceed would have the practical effect of forcing businesses to settle cases rather than risk crippling jury awards.
“Litigation, transaction, and compliance costs would soar — squeezing bottom lines for companies in the U.S. and deterring foreign investment — at the expense of the American economy, its workers and investors,” warned Marc Lackritz, chief executive of the Securities Industry and Financial Markets Association.
That isn’t some pinko commie talking. It’s the head banana of a financial trade association. According to him, the US economy is so corrupt and riddled with criminals that if we try to do anything about them the whole thing will collapse.
He ought to know, I guess.
And the criminal Administration sides with … the criminals. Why do I keep getting surprised by this? Why?
Crossposted at Shakespeare’s Sister