Tuesday, October 9, 2007

Have You No Sense of Decency Sir?

The Wall Street Journal printed a long article titled, "Big-Money Battle Pits Business vs. Trial Bar", 9 October. I find the headline deceptive. It's businesses joining fraudulent schemes vs. defrauded shareholders. "Stoneridge also sued Motorola Inc. and Scientific-Atlanta. ... Both vendors agreed to charge artificially high prices for cable boxes they sold to Charter. Then they used the extra money to 'buy' advertising from Charter--money Charter used to inflate its bottom line".

Does the WSJ believe Motorola and Scientific-Atlanta didn't know why they were asked to agree to such terms, not in the normal course of business? These transactions had "badges of fraud" all over them. Why weren't these companies prosecuted under the wire and mail fraud statutes, 18 USC 1343 and 1341? Where was the Justice Department? Harvey Pitt, former SEC Chairman, filed an amicus brief in favor of the defendants.

On 9 June 1954, during the Army-McCarthy hearings, Joseph Welch said to Joe McCarthy, "Have you no sense of decency sir ... ? Have you left no sense of decency"? That a former SEC Chairman could file an amicus brief in favor of the defendants shows why we can't trust the SEC to protect investors. The 9 October WSJ also had an op-ed by Paul Atkins, a current SEC Commissioner in favor of the defendants. Amazing.


Anonymous said...

I don't feel that enough people have examined the corporate ties between Scientific Atlanta and Charter in depth yet. According to research, both companies had some fairly strong ties http://www.newsvisual.com/newsvisual/2007/10/scientific-atla.html . The basis of this alleged fraud probably began somewhere here.

Independent Accountant said...

"Examining the corporate ties" is the SEC's job. It strikes me that the SEC is too busy worrying about insignificant insider trading cases, among other things, to do its job., i.e., protect the investing public