On the day that
global markets went into free fall and Ben Bernanke played Spiderman shooting the US Market a Spidey Web of an interest rate cut
Heath Ledger was found dead in SoHo
Fred Thompson dropped out of the predidential race
Hillary left South Carolina — the portentious event was
the Supreme Court declined to hear an appeal by Enron investors suing major banks that allegedly helped the Houston company disguise its financial problems. Not only did this probably end, for practical purposes, efforts by shareholders to hold third parties responsible for crippling losses, it served as an end-zone celebration of the power of plutocracy.
I call it the Dred Scott (non)decision of the Bush era. The real decision was the more obscure StoneRidge Investment Partners v. Scientific-Atlanta, involving a deal between a cable company and two business partners, decided last week. In that case, the Court ruled that lawyers and accountants could not be held financially liable for market losses unless investors could show they relied on the third parties to buy or sell stock.
Wow! Lemme see if I’ve got this straight. So if a collusion among entities results in a hugely profitable scam, but when the game is called, the front entity goes under, all the rest get to keep the money they scammed. For instance, as the Washington Post reports,
In the Enron case, investors claimed that banks including Merrill Lynch, Credit Suisse and Barclays participated in transactions that allowed Enron to hide its financial problems and unload stock and debt in the years before it fell apart. The banks denied the claims and refused to settle under intense pressure from plaintiff lawyers, arguing they had done nothing wrong and that the law shielded them from investor lawsuits.
The Supreme Court, to my way of thinking, is telling the big time Grifters of America to go ahead and set up a shell company, advertise under its name, fleece the hoi polloi to their hearts content, throw the shell company out when they’re caught, and laugh all the way to the bank.
Who indeed are these latter day Roger Taneys for the plutocrats? No surprise here. Kennedy wrote the StoneRidge decision, and was joined by Roberts, Scalia, Thomas, and Alito.
Some irony for all those voters who thought, in 2004, that John Kerry was too highfalutin and George Bush was just a regular guy. Shame on you.
But as with Dred Scott, history may turn, eventually.
…Congress may be the last hope for plaintiffs seeking to expand their power to hold corporate miscreants accountable. House Financial Services Committee Chairman Barney Frank (D-Mass.) and Senate Banking Committee Chairman Christopher Dodd (D-Conn.) had urged the Supreme Court to rule on behalf of Enron shareholders. In an interview yesterday, Frank said he would hold hearings on the implications of both court rulings and on the workload of the SEC, which must shoulder the burden now that the Supreme Court has rejected plaintiffs’ right to sue. The agency soon will be operating without any Democratic commissioners, who previously have backed third-party lawsuits.
“There’s no point in legislation because you’d get a sure veto,” Frank said. “There’s zero chance” of passing such a far-reaching law in an election year, he said.
All the more important to look toward next year. So to all the presidential candidates, squabbling or not, what about this? What’s your position on Barney Frank putting in legislation next year? Will you push it? Hard? If you see them ask them!