Comments on: Question of the Day – Lawsuits and Corporate Fraud http://allfinancialmatters.com/2007/10/09/question-of-the-day-lawsuits-and-corporate-fraud/ A personal finance blog dedicated to discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance. Sat, 11 Feb 2012 20:32:19 +0000 hourly 1 http://wordpress.org/?v= By: The Money Moose http://allfinancialmatters.com/2007/10/09/question-of-the-day-lawsuits-and-corporate-fraud/comment-page-1/#comment-152884 The Money Moose Tue, 16 Oct 2007 03:23:12 +0000 http://allfinancialmatters.com/2007/10/09/question-of-the-day-lawsuits-and-corporate-fraud/#comment-152884 Well, as everyone said - only those that are directly a part of the fraud and scheming should be able to be sued. Most lower level workers wouldn't know about the higher corporate dealings, and most certainly not about any scams going on. Well, as everyone said – only those that are directly a part of the fraud and scheming should be able to be sued. Most lower level workers wouldn’t know about the higher corporate dealings, and most certainly not about any scams going on.

]]> By: yu now who http://allfinancialmatters.com/2007/10/09/question-of-the-day-lawsuits-and-corporate-fraud/comment-page-1/#comment-149769 yu now who Wed, 10 Oct 2007 15:36:37 +0000 http://allfinancialmatters.com/2007/10/09/question-of-the-day-lawsuits-and-corporate-fraud/#comment-149769 Try to get yourself removed from a lawsuit. When a plaintif lawyer files a suit, it if filed on anyone even remotely connected to the company at all. Proving you were not involved and getting removed from the suit is very costly. The plaintif lawyer has nothing to lose so they file against anyone they can. Let the plaintif lawyer have some shin in the game, if an intity is able to be removed from the suit the plaintif lawyer should be responsible for costs incurred to be removed. That is the only way you will ever see sensible and RESPONSIBLE actions by a plaintif attorney. Try to get yourself removed from a lawsuit. When a plaintif lawyer files a suit, it if filed on anyone even remotely connected to the company at all. Proving you were not involved and getting removed from the suit is very costly. The plaintif lawyer has nothing to lose so they file against anyone they can. Let the plaintif lawyer have some shin in the game, if an intity is able to be removed from the suit the plaintif lawyer should be responsible for costs incurred to be removed. That is the only way you will ever see sensible and RESPONSIBLE actions by a plaintif attorney.

]]> By: M http://allfinancialmatters.com/2007/10/09/question-of-the-day-lawsuits-and-corporate-fraud/comment-page-1/#comment-149582 M Wed, 10 Oct 2007 01:06:45 +0000 http://allfinancialmatters.com/2007/10/09/question-of-the-day-lawsuits-and-corporate-fraud/#comment-149582 You should check your facts: the question is whether the advisors can be liable when they *knowingly* participate in sham transactions. Even the Solicitor General, which sides with Wall Street, admits that such conduct is "deceptive" within the meaning of securities law, and admits the plaintiffs alleged it correctly. The question here isn't whether the banks knowingly participated in a fraud on the public. The question is if you can sue them under securities law given technical requirements such as proving you "relied" on the fraud when investing. See this post, with link to the government's brief, for more: http://blawgletter.typepad.com/bbarnett/2007/08/solicitor-gener.html You should check your facts: the question is whether the advisors can be liable when they *knowingly* participate in sham transactions. Even the Solicitor General, which sides with Wall Street, admits that such conduct is “deceptive” within the meaning of securities law, and admits the plaintiffs alleged it correctly.

The question here isn’t whether the banks knowingly participated in a fraud on the public. The question is if you can sue them under securities law given technical requirements such as proving you “relied” on the fraud when investing.

See this post, with link to the government’s brief, for more:
http://blawgletter.typepad.com/bbarnett/2007/08/solicitor-gener.html

]]> By: Mrs. Micah http://allfinancialmatters.com/2007/10/09/question-of-the-day-lawsuits-and-corporate-fraud/comment-page-1/#comment-149543 Mrs. Micah Tue, 09 Oct 2007 22:14:09 +0000 http://allfinancialmatters.com/2007/10/09/question-of-the-day-lawsuits-and-corporate-fraud/#comment-149543 I think anybody should be vulnerable to investigation and, if appropriate, having a grand jury figure out whether the case has merit. But I think it should be very specific, based on probably cause and the like. For example, Anderson Accounting who helped Enron are either contractors, vendors, or accountants of Enron (depending on how you look at it). Direct participation in the fraud, there. But the vendors who, say, furnished Enron's lighting might be investigated (as anybody might) but shouldn't be vulnerable to being tried, since they didn't collaborate in the fraud. Basically, I agree with you. I think anybody should be vulnerable to investigation and, if appropriate, having a grand jury figure out whether the case has merit. But I think it should be very specific, based on probably cause and the like.

For example, Anderson Accounting who helped Enron are either contractors, vendors, or accountants of Enron (depending on how you look at it). Direct participation in the fraud, there. But the vendors who, say, furnished Enron’s lighting might be investigated (as anybody might) but shouldn’t be vulnerable to being tried, since they didn’t collaborate in the fraud.

Basically, I agree with you.

]]> By: Esmo http://allfinancialmatters.com/2007/10/09/question-of-the-day-lawsuits-and-corporate-fraud/comment-page-1/#comment-149522 Esmo Tue, 09 Oct 2007 20:18:48 +0000 http://allfinancialmatters.com/2007/10/09/question-of-the-day-lawsuits-and-corporate-fraud/#comment-149522 I believe this is fine on two conditions. The first condition is that there are strict guidelines set about who can be charged (involvement causing more than $x in damages) and limiting lawsuit payouts to the extent of the estimated value of their contribution (or takeaway). There must be clear evidence that those parties are definitely involved in illegal practices. The second condition is that secondary parties must be sued AFTER the company has been deemed guilty. This is to prevent lengthy proceedings that basically go on forever and pad lawyer pockets. Shareholders will benefit, and so will trial lawyers. The secondary lawsuits of involved parties should be limited so that lawyers do not collect until shareholders collect. The fact that people should be diversified and thus not severely affected by a company's fradulent actions is not grounds for dismissing such a matter; this issue is trying to fully address all guilty parties and deliver more compensation to shareholders. Even if shareholders do not benefit in any way from these extra lawsuits, ALL of the guilty parties (not only the company) are weeded out, and they will be less likely or unable to commit the same illegal actions. I believe this is fine on two conditions. The first condition is that there are strict guidelines set about who can be charged (involvement causing more than $x in damages) and limiting lawsuit payouts to the extent of the estimated value of their contribution (or takeaway). There must be clear evidence that those parties are definitely involved in illegal practices. The second condition is that secondary parties must be sued AFTER the company has been deemed guilty. This is to prevent lengthy proceedings that basically go on forever and pad lawyer pockets.

Shareholders will benefit, and so will trial lawyers. The secondary lawsuits of involved parties should be limited so that lawyers do not collect until shareholders collect.

The fact that people should be diversified and thus not severely affected by a company’s fradulent actions is not grounds for dismissing such a matter; this issue is trying to fully address all guilty parties and deliver more compensation to shareholders. Even if shareholders do not benefit in any way from these extra lawsuits, ALL of the guilty parties (not only the company) are weeded out, and they will be less likely or unable to commit the same illegal actions.

]]> By: Raymond http://allfinancialmatters.com/2007/10/09/question-of-the-day-lawsuits-and-corporate-fraud/comment-page-1/#comment-149512 Raymond Tue, 09 Oct 2007 19:55:33 +0000 http://allfinancialmatters.com/2007/10/09/question-of-the-day-lawsuits-and-corporate-fraud/#comment-149512 I think they should be able to hold every single entity accountable if they can demonstrate that the particular entity's actions or omission amounted to fraud and helped to cause the company's eventual losses. Company's are often not able to commit fraud without the aid of advisers and third parties. Large corporations require accounting firms to overlook or rubber stamp certain practices to be able to commit certain actions. Everyone and every entity who had a hand needs to be held responsible. Of course I'm probably biased on this matter :) I think they should be able to hold every single entity accountable if they can demonstrate that the particular entity’s actions or omission amounted to fraud and helped to cause the company’s eventual losses.

Company’s are often not able to commit fraud without the aid of advisers and third parties. Large corporations require accounting firms to overlook or rubber stamp certain practices to be able to commit certain actions. Everyone and every entity who had a hand needs to be held responsible.

Of course I’m probably biased on this matter :)

]]> By: Jeremy http://allfinancialmatters.com/2007/10/09/question-of-the-day-lawsuits-and-corporate-fraud/comment-page-1/#comment-149475 Jeremy Tue, 09 Oct 2007 17:34:42 +0000 http://allfinancialmatters.com/2007/10/09/question-of-the-day-lawsuits-and-corporate-fraud/#comment-149475 That is crazy. Unless the vendors/advisors/lawyers/etc. of that company knowingly participated in or facilitated in the actual fraud, they should not be held accountable. In most cases, an accountant or lawyer working with the firm would have no clue that this was going on. The company provides them with information, and they process and handle it. It isn't their job to try and detect fraud from the company they are servicing. Sure, if you have an accountant that is helping fudge the numbers with executives to commit such fraud, then by all means, they are a guilty party as well. But unless there is hard evidence showing that these third parties were actively involved with the fraudulent practices, there is no recourse. That is crazy. Unless the vendors/advisors/lawyers/etc. of that company knowingly participated in or facilitated in the actual fraud, they should not be held accountable. In most cases, an accountant or lawyer working with the firm would have no clue that this was going on. The company provides them with information, and they process and handle it. It isn’t their job to try and detect fraud from the company they are servicing.

Sure, if you have an accountant that is helping fudge the numbers with executives to commit such fraud, then by all means, they are a guilty party as well. But unless there is hard evidence showing that these third parties were actively involved with the fraudulent practices, there is no recourse.

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