Securities and Exchange Committee Chairman Christopher Cox could lose the confidence of investors, and quite possibly, Congress, if he and the other appointed commissioners continue to pursue their chosen path of action.
The SEC has taken steps to reduce the chances of lawsuits being filed against auditing firms, corporations, and their executives, says the New York Times. The commission filed an amicus brief with the Supreme Court last week. In the brief, the SEC argued for an interpretation of the Private Securities Litigation Reform Act of 1995 that would make it more difficult for shareholder fraud suits to be successfully litigated.
While an appeals court has said that investors only have to show that “a reasonable person” could infer from the accusations (if proven true) that the executives named in a fraud suit acted with the intent to commit fraud, the SEC’s interpretation wants there to be evidence that there was a “high likelihood” of a defendant meaning to break the law.
It is the SEC’s main purpose to protect shareholders and maintain the financial markets’ integrity. Yet, actions such as this one indicate that the SEC is favoring top executives and corporations instead. One wonders if these steps are intended for the purpose of creating policies that are important to the Bush Administration, as well as the current lineup of SEC commissioners, in the event that a Democrat becomes the next U.S. president in 2008.
It also appears that the SEC is trying to protect big accounting firms from large lawsuits filed by companies and investors. Because there are just four major accounting companies, SEC officers appear to be worried that losing a huge lawsuit could lead to one of the big accounting firms shutting down-which would not necessarily be good for the accounting industry or for auditing practices. While this is an important concern, the SEC has to find a way to help the accounting firms stay in operation while protecting shareholders.
At Shepherd Smith and Edwards, we are committed to helping investors recover their losses in investment fraud cases. Merely filing a report with the SEC will not help you recover what’s been wrongfully taken from you. Over the years, we have helped thousands of investment clients recoup their losses by filing lawsuits on their behalf. Contact Shepherd Smith and Edwards today, and your initial consultation with us is free.
The SEC’s Allegiance is Put in Doubt, Investment News, February 19, 2007
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