Corporate Governance

Poll Results Warn Senators: Hold Fraudsters Accountable

By Tamar Weinrib

www.ourfinancialsecurity.org

FOR IMMEDIATE RELEASE                        

CONTACT: 

Lauren Weiner

DATE: May 17, 2010                  

Poll Results Warn Senators: Hold Fraudsters Accountable

 CLICK HERE FOR POLL: MORE THAN TWO-THIRDS OF AMERICANS UNLIKELY TO VOTE FOR SENATORS WHO OPPOSE AMENDMENT TO FINANCIAL REFORM BILL TO HOLD KNOWING FRAUD AIDERS AND ABETTORS ACCOUNTABLE TO INVESTORS 

Specter-Reed Amendment to Senate Financial Reform Bill (S. 3217) Debated Tonight 

Sixty-eight percent of Americans would be less likely to vote for senators who oppose changing the law so investors can sue those who cheat them, according to a Research 2000 poll released today. At issue is an amendment that would restore the right of investors to hold accountable those who knowingly aid and abet securities fraud. This important investor protection and fraud deterrent was stripped by two recent decisions by the U.S. Supreme Court, Central Bank in 1994 and Stoneridge in 2008. The amendment, sponsored by Senators Arlen Specter (D-Penn.) and Jack Reed (D-R.I.), among others, would become part of the financial reform legislation currently being debated on the Senate floor.

?Widespread securities and accounting fraud and abuse, perpetrated by people who knew that there was no downside to ripping off investors, contributed to the financial crisis. Nothing creates moral hazard like providing immunity for knowing and active fraud participants," said Heather Booth, executive director of Americans for Financial Reform.

The Specter-Reed amendment would do much to curtail this activity, without adding to government cost or bureaucracy. Without it, investors will continue to be left holding the bag, while the fraudsters pocket the money.

Under the current law, for example, a court refused to hear claims brought by pension funds and numerous other shareholders and bondholders of bankrupt Refco, Inc. against that derivatives dealers' outside counsel who has been criminally convicted of the very fraud alleged by investors.  Although he is now serving a seven year sentence in federal prison for his role in the fraud, the court followed Stoneridge and Central Bank and found that he was immune from any liability to pay Refco's investors for any of the damages he knowingly caused them. 

Two-thirds (65%) of men and 71% of women surveyed would be less likely to vote to reelect their U.S. Senator if he/she votes against the investor accountability amendment, according to the nationwide telephone survey, which ran from May 15 and May 17.

The results were similar regardless of the respondents party affiliation, with 72 percent of Democrats, 61 percent of Republicans and 70 percent of Independents surveyed less likely to vote to reelect their U.S. Senator if he/she votes against legislation which would hold bankers, corporations, lawyers and accountants liable for knowingly aiding and abet securities fraud.

Full post as published by PomTalk on May 24, 2010 (boomark / email).