Washington, DC— President Bush betrayed investors and damaged American markets by pressuring Solicitor General Paul Clement to steer clear of a pending U.S. Supreme Court case that may still provide shareholders with enhanced tools to hold negligent CEOs accountable for misconduct.
“This outrage is a presidential pardon for corporate wrongdoers,” said Jon Haber, chief executive officer of the American Association for Justice. “It clearly establishes beyond any doubt that President Bush has no regard for small investors and will do everything within his broad powers to ride to the rescue of his corporate cronies.”
The case, Stoneridge Investment v. Scientific-Atlanta, turns on the question of whether investors can pursue lawsuits to recover investment losses from investment banks, attorneys, accountants and other parties believed to have been involved in a fraudulent scheme involving their corporate clients. The Supreme Court is expected to consider the case during its next term. The outcome could determine whether victims of the Enron scandal can proceed with a $40 billion lawsuit against investment banks that dealt with Enron.
The Securities and Exchange Commission, which regulates the markets and is led by former Republican Congressman Christopher Cox, urged the solicitor general, who represents the administration’s views before the Supreme Court, to file a brief in support of investors. Clement declined, after receiving word the president was opposed. Now the administration has 30 days to decide whether to support the defendant corporations or not participate at all.
“The SEC did the right thing in this case – it moved to protect investors from scams like Enron,’’ Haber said. “But the president has decided to place the profits of corporate CEOs ahead of the interests of the American people.”