Bush Hopes to Limit Private Securities Fraud Litigation

By TChris, Section Court Decisions
Posted on Wed Jun 13, 2007 at 08:19:16 AM EST
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The Supreme Court will decide "whether investors can pursue lawsuits to recover investment losses if they can prove collusion between Wall Street institutions and scandal-ridden companies." Seems like a no-brainer that investors should be entitled to sue the entities that helped defraud them, right? Not to the Decider.

"We think the SEC is the right entity to bring those lawsuits and make sure investors are protected," [economic advisor Al] Hubbard said in describing the president's views. "We are in a society that is overly litigious and it's very harmful to society, very harmful to investors."

The president wants to curb "unnecessary lawsuits," with "unnecessary" evidently defined as any lawsuit he doesn't personally authorize. The SEC disagrees.

The Securities and Exchange Commission voted 3-2 to ask the solicitor general to support shareholders in the pending court case.

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Bush Hopes to Limit Private Securities Fraud Litigation | 12 comments (12 topical)

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Are lawsuits by Judge Bork necessary? (5.00 / 2) (#1)
by Molly Bloom on Wed Jun 13, 2007 at 09:48:37 AM EST

Bush and the law (5.00 / 1) (#2)
by LizDexic on Wed Jun 13, 2007 at 10:03:08 AM EST

Why don't people just laugh when Bush, "le moron stupide" suggests laws or changes in laws?

After all, the man was turned down from the University of Texas law school...and I believe that he is not above holding a life-long grudge because of this.

Cheney never graduated college. Rove is no "genius"...only compared to Bush...and these three have led the gutting of the justice department.

Wrong Headline (none / 0) (#3)
by Fritz on Wed Jun 13, 2007 at 12:30:45 PM EST

The 9th Circuit Court of Appeals is in conflict with current law that the President supports. This has nothing to do with fraud, but to add another deep pocket defendant for trial lawyers to harrass. I'm surprised how silent the left was when Robert Rubin on behalf of Citigroup called the Treasury Department about helping ENRON.

No, I think it's the correct headline. (5.00 / 1) (#4)
by kindness on Wed Jun 13, 2007 at 12:51:02 PM EST

Bush Gave Policy Views on Top Court Case in today's SF Chronicle said:

"In a lawsuit that harks back to the Enron scandal, the Bush administration is at odds with the federal agency that oversees securities markets as well as with state attorneys general and consumer and investor advocates. President Bush personally weighed in with his views before the administration decided not to support investors whose securities fraud case is now before the Supreme Court."

What bush43 didn't say was that:

"Bush's role in the case underscores its significance. The outcome of the Supreme Court case could determine whether investors can pursue lawsuits to recover investment losses if they can prove collusion between Wall Street institutions and scandal-ridden companies...The Securities and Exchange Commission voted 3-2 to ask the solicitor general to support shareholders."

So, bush43 is going against his own SEC protecting the CEO's & Corporate Board circle jerk.


SEC (none / 0) (#6)
by Fritz on Wed Jun 13, 2007 at 03:20:04 PM EST

SEC Commissioners do not serve at the pleasure of the President so it is not his agency. This is a joint and severable argument to find deep pockets to sue. Perhaps I should reconsider, then John Edwards could be sued for issuing sub-prime loans to poor people, when he was working at the hedge fund to learn about poor people.


Ahh, the strawman argument. (none / 0) (#7)
by kindness on Wed Jun 13, 2007 at 03:44:28 PM EST

Yes, why don't you bring up a ridiculous point about someone not involved in this thread at all? Maybe you could throw in the South Park/Cocheran Chewbacca defense as well.

You'll note while I did refer to the SEC as "his", it's a grammatical usage of english meaning the SEC under bush43's watch. But again, why quibble with the meat of an argument when you can try to spin straw(men) into gold?

Joint & deep pockets? Hmmm. Seems to me that the case being decided involves actual investors and stockholders of a company. These aren't class action lawyers on the prowl.

Do write me when you get a coherent argument together.


geez, i don't know, (none / 0) (#8)
by cpinva on Wed Jun 13, 2007 at 04:13:13 PM EST

that's asking a lot! lol

Do write me when you get a coherent argument together.

coherent argument, we don't need no stinkin' coherent argument!

yeah, god forbid the people actually defrauded should be able to sue, to attempt to recover that which they were defrauded of. just who do these people think they are, anyway?


The SEC has a different agenda (none / 0) (#10)
by Fritz on Wed Jun 13, 2007 at 06:02:46 PM EST

The SEC asked the 9th Circuit Appeals to apply a new rule, the 8th & 5th rejected it. I'm confident the SCOTUS will reverse the 9th's new definition. This expansion of primary liability upon investment banks or other actors has not been added to the statutes. The investment banks also had reporting requirements for the alleged fraud of buying barges off the coast of Nigeria from ENRON, that the value had to be real, if it wasn't they would have primary liability and failure in their fiduciary responsibility to their own shareholders. Simply because ENRON had some illiquid assets and requested help from the investment banks to provide investors is not fraud. The only way ENRON could show a legitimate profit on this asset was through a sale, it's not illegal. If this asset could be marked to market, the same gain would be registered; prove the fraud. I understand why the SEC wants any party that knows the purpose of the sale is to affect earnings should be liable, but that could apply to just about any transaction.


Dude, stop. (5.00 / 1) (#11)
by kindness on Wed Jun 13, 2007 at 08:54:55 PM EST

The article I linked to listed nothing about the 9th Circuit Court. And your Enron ravings...I live in California. I'm still paying for their fraud.

You've completely ignored the point of the articles linked and gone on rampage somewhere off in duh space. More power to ya. Don't expect us to join you there though.


: Your ignorance (none / 0) (#12)
by Fritz on Thu Jun 14, 2007 at 10:58:53 AM EST

Simply because you don't have intellectual curiosity to discover the background of this case being taken by SCOTUS and are willing to drink the biased reporting of the media, should give you pause how gullible you are. This case is about extending primary liability to secondary actors that had no fiduciary responsibility to the plaintiffs in this case. So do you think that you personally should be held liable for fraudulent actions taken by a seller of a product to you? You knew that the seller of the HDTV's was moving inventory to increase sales, slashing prices. Now the creditors of the HDTV seller claim you knew the price was too good and should have told them that they were being undermined, making you responsible for the fraud. Don't worry, SCOTUS will reverse the 9th and protect you from such frivolous lawsuits.

ignorance is no excuse (none / 0) (#9)
by Sailor on Wed Jun 13, 2007 at 05:58:26 PM EST

bush nominates them, appoints them when congress is in recess and they are a part of the exec branch. Yes, all your bases belong to bush.

fritz lives up to his nom de plume every day.


ein kleines zeitgeist (none / 0) (#5)
by Sumner on Wed Jun 13, 2007 at 01:39:42 PM EST

How things work in the Real World:
cf. Enron and Arthur Andersen LLP

I remember Lou Dobbs shilling for Arthur Andersen LLP over Joseph Berardino.

Arthur Andersen LLP's conviction gets overturned; Ken Lay dies, his wife keeps the money; the post-Enron-inflated-marketplace-energy-prices remain the same.