Tommy Denton

Recent columns

• Gifts for sharpening rhetorical swords
• Bush is feeding China's worst instincts
• Heroism in the face of stupidity, and worse
• Treating oil addiction with a dose of harm

• Column archive

All those poor innocents out there who still believe that federal agencies stand at the ready to defend the public interest should lower their center of gravity and start watching the mischief about to unfold before the Supreme Court in a couple of weeks.

On Feb. 9, lawyers for the Securities and Exchange Commission demolished any lingering doubts about the Bush administration's unrepentant devotion to granting immunity from legal accountability for corporate predation.

With the Supreme Court about to hear a civil case on March 28 claiming fraud against a corporation's investors, guess which side the government of the people, by the people and for the people is taking.

You guest 'er, Chester: The Bush administration SEC is advancing the cause of Tellabs Inc., accused in an Enron-like lawsuit of ripping off its investors. Those investors have alleged that, among other things, managers falsified sales transactions, spun and reported fictional revenues, and lied to prop up the stock price as they sold their own shares.

Sound familiar from the trials of the Enron, Tyco and WorldCom perpetrators? The big difference is that SEC attorneys, whose only statutory reason for being is to protect the integrity of the American financial system, have filed a brief effectively taking sides with the alleged perps.

They're not even disputing the facts in the case. The administration's amicus brief urges the justices to deny a jury trial to the investors and dismiss their claims because "inferences" about the Tellabs managers' "state of mind" and possible "nonculpable" explanations for misbehavior, the government lawyers insist, should override the acts of wrongdoing in securities fraud class-action lawsuits.

In other words, the inability to read the minds and intentions of miscreants should trump consideration of any evidence clearly pointing to the damaging consequences of their judgments, decisions and actions. Nobody's really at fault. You know, none of the defendants actually wrote a memo to a future jury that explicitly said, "Let's see how much we can stiff the stockholders and purloin the loot for deposit in those offshore accounts."

Short of such transparent self-incrimination, under the SEC's perverse, Orwellian legal doctrine, persons who may have been defrauded of their assets by those entrusted with fiduciary responsibility could not sue the miscreants -- even those already convicted under criminal laws -- to recover their financial losses.

And lawyers wonder why they're so often the brunt of jokes.

Except that this most recent SEC venture on behalf of corporate consolation is no laughing matter, coming as it does so closely on the heels of considering a similar petition just four days before last Christmas -- on behalf of Enron defendants in another civil fraud-recovery case in Houston.

Fortunately, a beam of light from media exposure led to second thoughts in the higher councils of the SEC. But now they're back, this time before the Supreme Court.

All of these distasteful interventions could be dismissed as nothing more than obliging protection for corporate excesses by sycophantic minions of a servile administration. While that's true, the more troubling part of this abandonment of the public interest is that Congress has played an enabling part in encouraging it, whether witting or unwitting.

One of the lingering bulwarks of Newt Gingrich's Contract on America, the Private Securities Litigation Reform Act, created the statutory framework for corporate evasions of public accountability that SEC lawyers now hope the Supreme Court will secure judicially.

When Congress overrode President Clinton's veto of the law in 1995, knowledgeable experts warned that weakening Depression-era protections for investors would fairly invite corporate frauds and scandals.

As the late Mr. Rogers might ask: Can you say "Enron," "Tyco," "WorldCom," "Arthur Andersen," "Ken Lay," "Jeffrey Skilling" and "Bernie Ebbers," boys and girls? Sure.

If hindsight is 20-20, Congress has had plenty of time to realize its blunder and should have been placing a torch under what properly would have been titled the Private Securities Litigation Deform Act. Now the SEC is asking the Supreme Court to effectively deny class-action legal recourse to recover financial loss from fraud -- historically America's primary legal source of protection for investors.

The corporate paladins of plunder have been aided and abetted far too much as it is.

Denton's column appears in the Sunday and Tuesday editions of The Roanoke Times.