Sheep talk regulators vs acting justices

[Cees Binkhorst]

REPLY TO: D66 at nic.surfnet.nl

Een vorm van 'double double talk' zoals de rechthebbenden met de materie
omgaan ;)

Maar sommigen doen daar gelukkig niet aan mee.
En daarmee blijkt dat alleen rechters 'free speech' hebben in de USA.
Go, go, go SCJ Sotomayor!

Groet / Cees

PS. USLaw: “It is perhaps dismaying that participants in a fraudulent
scheme who may even have committed criminal acts are not answerable in
damages to the victims of the fraud”

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a5wZ95KdSuJQ#
Judges Punish Wall Street as Regulators Just Talk About Reform
 Sept. 8 (Bloomberg) -- As the White House and Congress debate how to
regulate financial firms to avoid another economic crisis, judges have
assumed the point position in punishing Wall Street for causing the worst
recession since the 1930s.

The executive and legislative branches have been discussing reforms such
as more regulation of hedge funds and transparency for derivatives as a
response to the financial crisis that began a year ago. As that battle
with a reluctant Wall Street inches forward about how to prevent another
disaster, judges are taking the first steps toward the same goal,
punishing executives and issuing rulings with national impact.

Last week, U.S. District Judge Shira Scheindlin threw out a key
free-speech defense that credit raters had used for years to thwart
investors’ fraud suits, knocking $1.5 billion off the market value of
Moody’s Investors Service Inc. and the parent of Standard & Poor’s LLC.

“Judges have lifetime appointments and are freer to act on their
conscience than regulators,” said Charles Elson, chair of the University
of Delaware’s corporate-governance center. Judges can act more decisively
than regulators or politicians because they’re “insulated from the
political process,” he said.

Free from the pressures of lobbyists, judges typically refrain from
showing emotion or expressing opinions during court proceedings to appear
impartial. During sentencings in criminal cases, they sometimes let their
hair down about their feelings about the damage Wall Street firms or their
executives did.

In sentencing imprisoned con man Bernard Madoff June 29 to the maximum
penalty of 150 years in prison, U.S. District Judge Denny Chin described
Madoff’s crimes as “extraordinarily evil.” He made the sentences of
Madoff’s various offenses run consecutively, rather than the more common
concurrent method.

Six Times Longer

The sentence was six times longer than those of the chief executives of
Enron Corp. and WorldCom Inc. after they were convicted of fraud.

“This was not merely a bloodless financial crime that occurred on paper
but one that took a staggering toll,” Chin told Madoff in a courtroom
filled with victims who spoke before his sentencing. “The breach of trust
here was massive.”

Frank DiPascali, Madoff’s chief financial officer, got harsh treatment too
even though he was helping prosecutors incriminate Madoff’s other
co-conspirators. After pleading guilty in August to helping his boss carry
out a $65 billion Ponzi scheme, he was immediately sent to jail as a
flight risk by U.S. District Judge Richard Sullivan. The judge ignored a
request by prosecutors to grant DiPascali bail to make it easier for him
to cooperate than if behind bars.

‘Completely Dwarfed’

The proposed bail was “completely dwarfed by the amount of restitution and
forfeiture in this case,” the judge said at an Aug. 12 hearing. “It would
seem that a $2.5 million bond package thrown on top of that mountain
doesn’t count for much.”

Former Monster Worldwide Inc. Chief Operating Officer James Treacy, who
had proposed no prison time for what his lawyer called a “technical”
crime, was sentenced to two years in jail for improperly accounting for
backdated stock options.

U.S. District Judge Jed Rakoff called Treacy’s conduct, which prosecutors
said earned him at least $14.5 million, “appalling.”

“It is disgusting that this practice went on,” Rakoff said at a Sept. 3
hearing in Manhattan.

Tough sentences like those for Madoff and Treacy “are going to be the way
for a while,” said James Cox, a professor of law at Duke University in
Durham, North Carolina.

“If we’re serious about protecting investors and consumers, we have to
understand it’s individuals not entities who commit violations and should
be hung out to dry,” he said.

‘Culture of Corruption’

After a jury found Eric Butler, a former Credit Suisse Group AG broker,
guilty of securities fraud on Aug. 18, U.S. District Judge Jack Weinstein
in Brooklyn told lawyers on both sides that, in their sentencing briefs,
they should put Butler’s acts in the context of “how pernicious and
pervasive was the culture of corruption” on Wall Street that “brought our
financial system to its knees.”

Judges are also demanding more accountability from regulators and are
urging rule changes to punish wrongdoers.

Rakoff last month refused to sign off on Bank of America Corp.’s $33
million settlement with the U.S. Securities and Exchange Commission over
bonus disclosures. After an initial explanation that the executives in
question relied on lawyers’ advice in not disclosing bonus information,
Rakoff demanded a fuller explanation of the deal by Sept. 9.

$3.6 Billion in Bonuses

The settlement would resolve claims that Bank of America didn’t tell
investors it had agreed to let Merrill Lynch & Co. pay as much as $3.6
billion in employee bonuses and incentives.

Rakoff asked whether the lawyers who made “decisions that resulted in a
false proxy statement” should be “held legally responsible.”

Calls to Scheindlin’s and Rakoff’s chambers seeking comment were not
returned.

U.S. District Judge Gerald Lynch urged Congress in a recent ruling in
Manhattan to revisit a 1995 rule that authorizes the SEC -- but not
private parties -- to sue those who aided or abetted a fraud. Under
current law, he said he was forced to dismiss a lawsuit in March that was
filed by investors seeking to recoup losses from Joseph Collins, a former
lawyer for Refco Inc. The futures trader firm went bankrupt after hundreds
of millions in hidden debt was found.

“It is perhaps dismaying that participants in a fraudulent scheme who may
even have committed criminal acts are not answerable in damages to the
victims of the fraud,” Lynch said.

No Lobbyists

Judges aren’t targeted by lobbyists to influence their rulings the way the
other branches of government are. They aren’t paid much either compared
with the defendants who come before them. The Chief Justice of the United
States makes $223,500 -- about the same as a junior lawyer at a large New
York law firm -- and all other U.S. judges make less.

Judges in Ohio and Pennsylvania have taken unprecedented actions to slow
or prevent foreclosures by Wall Street banks as the impact of the
recession, including loss of jobs, made it impossible for homeowners to
make mortgage payments -- sometimes on homes whose values dropped to less
than the amount borrowed.

U.S. District Judge Christopher Boyko kicked off the trend of no longer
rubber-stamping big banks’ foreclosure requests. In Cleveland in October
2007, he ruled that Deutsche Bank AG couldn’t foreclose on 14 properties
because it couldn’t come up with the paperwork to prove it owned the
delinquent loans, which had been pooled for a securitization.

On the Hot Seat

More recently, in August, U.S. Bankruptcy Judge Randolph Haines summoned a
Wells Fargo & Co. executive to Phoenix so a bankrupt homeowner could
cross-examine him about why his bank had taken months to respond to her
request to modify her loan.

The homeowner, Bobbi Jean Giguere, wrote the judge after the bank refused
to talk with her unless she hired a lawyer, an expense she said she
couldn’t afford. She said the bank told her “to abandon her home.”

“I can’t do this mentally, emotionally or financially at the time,” she
wrote the judge, according to a court filing. “It is and has been my goal
to save the home. But I am getting nowhere with Wells Fargo.”

After the cross-examination, the judge blocked any foreclosure while
authorizing a modification of her mortgage.

http://www.thebigmoney.com/articles/daily-intel/2009/09/10/meet-new-york-judges-charge-smacking-down-wall-street
Meet the New York Judges in Charge of Smacking Down Wall Street
Since the White House and Congress are still working out how to regulate
financial firms to avoid another economic crisis, the punishing of Wall
Street criminals has fallen largely to federal judges, Bloomberg observes.
Not surprisingly, the feistiest of them are here in New York. Let's meet
them!

U.S. District Judge Denny Chin, Manhattan
What He's Been Up To Since the Recession Began: Lots, but the 150-year
sentence he imposed on Bernie Madoff kind of overshadows it.
Before That: Born in Hong Kong, grew up in Hell’s Kitchen, was appointed a
U.S. District Court judge in 1994. Following the Madoff decision, the
White House is expected to promote him to the United States Court of
Appeals for the Second Circuit.
Best Burn From the Bench: Chin called Madoff's crimes "extraordinarily
evil." "The message must be sent that in a society governed by the rule of
law, Mr. Madoff will get what he deserves, and that he will be punished
according to his moral culpability."

U.S. District Judge Jed Rakoff, Manhattan
What He's Been Up To Since the Recession Began: Sentenced Marc Dreier to
twenty years for fraud, sentenced former Monster Worldwide, Inc. COO James
Treacy for improperly accounting for backdated stock options, calling it
"appalling" and "disgusting," refused to sign off on Bank of America's
(BAC) $33 million settlement with the SEC over bonus disclosures.
Best Burn From the Bench: The judge was an equal-opportunity offender in
SEC v. Merrill: “You filed a rather uninformative, bare-bones complaint,”
he told the government agency. And as for you, Merrill Lynch: “Do Wall
Street people expect to be paid large bonuses in years when their company
lost $27 billion? Was there some sort of ghost that performed those
actions?”

U.S. District Judge Jack Weinstein, Brooklyn
What He's Been Up To Since the Recession Began: While overseeing the trial
of Credit Suisse banker Eric Butler, who was was found guilty of
securities fraud last month, the judge bemoaned the “pernicious and
pervasive culture of corruption, lack of regulation,” and “serious
negligence in the financial services industry.”
Bio: Weinstein has been a federal judge in the Eastern District of New
York since he was appointed by President Lyndon Johnson in 1967 and was
profiled by New York in 1999.

State Supreme Court Judge Arthur Schack, Brooklyn
What He's Been Up To Since the Recession Began: Stymieing big banks'
overeager attempts at foreclosure, loving obscure Bruce Willis films.
Bio: Brooklyn-born, high-school social studies teacher turned Brooklyn
Supreme Court Justice.
Best Burn From the Bench: “The court,” the judge wrote in a decision
chastising Wells Fargo (WFC) for filing error-riddled papers, "reminds
Wells Fargo of Cassius’s advice to Brutus in Act 1, Scene 2 of William
Shakespeare’s ‘Julius Caesar’: ‘The fault, dear Brutus, is not in our
stars, but in ourselves.’ ”

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