Supporting roles in fraud just as liable?
TEXT OF STORY
Scott Jagow: The Supreme Court hears arguments today in one of the most contentious business cases on this year’s docket. At issue is whether bankers and lawyers and accountants who help a company rip off shareholders can be sued by investors.
This case is really a proxy battle for much bigger lawsuits to come. Here’s John Dimsdale.
John Dimsdale: The issue is whether shareholders who were fleeced when Charter Communications reported bogus profits can sue Motorola and Scientific Atlanta, who allegedly helped Charter carry out the scam.
Attorney Robert Gassaway agrees with lower court rulings that Charter’s helpers are not liable.
Robert Gassaway: I can see no indication whatsoever that anybody in management of Motorola or Scientific Atlanta had any interest, however broadly defined, in the success or failure of that fraud.
But Louis Bograd with the Center for Constitutional Litigation says those who help companies commit fraud should bear responsibility.
Louis Bograd: Economics 101 says that we want to place the incentive on the investors of the companies engaging in fraud to police their executives and make sure that their executives engage in proper behavior.
Hanging in the balance of the court’s decision in this case: billions of dollars worth of lawsuits from the shareholders of bankrupt Enron, who are hoping to hold that company’s dealmakers accountable.
In Washington, I’m John Dimsdale for Marketplace.
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