The antonymous U.S. Public Interest Research Group (USPIRG) is a reliable indicator of the purest, most distilled form of anti-business, anti-market, anti-responsibility, pro-MORE-GOVERNMENT point of view on pretty much every issue, so we were interested to see what the group had say about the Stoneridge case.
Plaintiffs in this case, to be heard in October by the Supreme Court, want to rewrite securities law to allow investors injured by fraud to go after third parties who were only tangentially — if that — associated with the alleged criminal fraud. The NAM’s concern is that manufacturers who merely sold a product to a company will wind up being sued over that company’s alleged stock fraud. Litigation will explode as lawyers pursue deep pockets — any pockets, for that matter. (NAM’s news release is here.)
Yep. What we expected from USPIRG.
U.S. opposes own SEC, sells out investors
Yesterday, the Solicitor General of the United States ignored the SEC and filed a Supreme Court amicus brief urging the court to protect powerful corporations against investors in the case Stoneridge Investment Partners v. Scientific-Atlanta. The case concerns when powerful professional advisors — such as banks, lawyers and accountants — can be held liable for participation in schemes to defraud investors. In May (previous post), the SEC (an independent expert agency) had voted unanimously to file a brief on behalf of investors in the case, but it appears that this president and his political advisors have forgotten all the lessons of Enron. Along with AARP and the Consumer Federation of America, we filed a brief on behalf of investors as have House Financial Services Chairman Barney Frank (D-MA) and Judiciary Chairman John Conyers (D-MI) (their release with link to brief).
Yeah, the Solicitor General just ignored the SEC. Didn’t even read their arguments. Blew ’em off.
As for the Conyers-Frank amicus, it represents two elected officials, members of Congress, using taxpayer dollars to file a brief asking the court to achieve what is in effect a policy goal, that is, the normal purview of the legislative body. Conyers and Frank are admitting they cannot accomplish the statutory goal of rewriting securities law, so they want the judicial branch to achieve the same thing. It’s a rare legislator who so undermines his own branch of government.
The Wall Street Journal noted another revealing aspect of the Conyers-Frank filing — the real authors of their brief. In an August 9th editorial (subscription required), the Journal reported:
[According] to a footnote, the Frank-Conyers brief was written by lawyers from Cuneo, Gilbert & LaDuca. And according to disclosure records, that firm’s lawyers have since 1998 been lobbyists for the National Association of Securities and Commercial Law Attorneys, an outfit set up by Mr. Lerach.
The tort baron has also served as co-counsel with two Cuneo partners who helped write the Stoneridge brief — Jonathan Cuneo and Michael Lenett. Meanwhile, Mr. Cuneo and a third lawyer who also assisted on the brief are registered as lobbyists for the American Association for Justice, the new, euphemistic name for what was formerly known as the Association of Trial Lawyers of America.
We trust the Supreme Court Justices, who are due to hear Stoneridge arguments as early as October, will notice the provenance of Mr. Frank’s legal wisdom.
Wonder how often that connection will be included in stories about Stoneridge.
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