From the wet lowlands of the Cajun country of Louisiana, a Congressman named Billy Tauzin came to Washington in 1981. Lately, he has been vigorously pushing H.R. 417– a bill that would further shield corporate financial criminals and fraud artists from law and order.
You see, Billy Tauzin specializes in being soft on that corporate crime and deception which loots small investors, savers, shareholders, and other Americans who place their trust in legislators like Billy Tauzin.
Consider the context of the financial corporate crime wave that has swept away hundreds of billions of dollars owned by working Americans since he was elected. Again and again, The Wall Street Journal has reported on the Savings and Loan debacle, the insider trading deals, the loading of wild risks on the money of small savers and pensioners that destroyed their financial security.
A run of the mill swindle, for example, involved the Tower Financial Corporation which reportedly bilked small business and investors out of $460 million since 1987. Duff and Phelps Credit Rating Co. rated Tower bonds “AA” and higher and did not withdraw the last of its ratings until three days after the Securities and Exchange Commission (SEC) sued Tower for fraud.
Two accounting firms vouched for Towers’ books, even though most of its accounting records were nonexistent or in disarray. In the past two years, the Big Six accounting firms have been
settling their gross derelictions of professional duty and competence (known as looking the other way while cashing the megachecks from their clients) for hundreds of millions of dollars.
As might be expected in a society dominated by Big Business, corporate crime waves invite restrictions on their victim’s rights. And the Supreme Court has obliged. In several decisions, the Court has made it more difficult for the fleeced to sue accounting and law firms for “aiding and abetting” their fleecing clients. It has increased the standards of proof for holding defendants culpable and shortened the time limits on filing suit, called the statutes of limitations, thereby handicapping people who could not discover the secret, complex in ripe offtime.
These trends shielding the perpetrators from responsibility for their crimes and misdeeds are not enough for Billy Tauzin. He weeps with sympathy for the accounting firms and the financial institution executives who are named as defendants in private suits by the defrauded. He and his financial backers want H.R. 417 to pass Congress.
Tauzin’s bill itself is constructed on fraudulent statements in its proposed findings, to wit: “excessive securities litigations is a serious burden on the national economy, diverting limited capital resources to less productive areas,” or “meritless lawsuits filed under Federal securities law are making it harder for American companies to raise capital and attract experienced members to serve on their boards.”
In a hearing on August 10, 1994 before the House Subcommittee on Telecommunications and Finance, all but ignored by the national press, half a dozen of the nation’s eminent specialists on securities fraud and legal accountability devastated Tauzin’s assumptions and proposals. They included Professor Arthur Miller of Harvard Law School, Professor Joel Seligman of Michigan Law School, Professor John Coffee Jr. of Columbia Law School, and accounting scholar and author, the legendary Abraham Briloff.
Tauzin heard his proposals to make it superhard for the customers and beneficiaries of financial fraud generators to sue the latter in our courts denounced as unjust, unnecessary and extremely over-reaching.
Arthur Miller declared that there was no “explosion of securities fraud litigation” and that the courts had ample tools to control any abuses.
Listening to these witnesses, I could see that the problem -with this epidemic of securities and other financial fraud was not too many lawsuits but too few. That reflects just how hard it already is to win them, under such adverse rules that now favor the alleged wrongdoers, without putting more hurdles ala Tauzin’s draconian legislation.
Instead of Congress considering how to crack down tougher on these crimes in the suites, the wrongdoer’s lobby is swarming all over Capital Hill, replete with campaign money, trying to weaken the corporate criminal laws. And few are the members of Congress who are standing up to them.
Fortunate are the people that the Chairman of the House Subcommittee is Representative Ed Markey (D-Mass) who believes that law and order applies to corporations too. As for Billy Tauzin, he is still shilling for the perpetrators, unfazed by the criticism his bill received that day.