September 19, 2008
I think every reader can understand and agree with what I am going to put here, for public consumption, Congress and Supreme Court included. I hope others respond.
We live in the computer age. This technology changes certain things about fraud, courts, laws and statutes. It makes things more efficient if we use computers to our advantage. Computers also represent a perfect memory, more reliable than human memory. Examples? 4 billion people can eventually read this. When and where else in history could we accomplish this feat? With computers, we can examine DNA in a grave placed there 100 years ago and draw valid conclusions and that too, is mostly computer driven.
Point made? Good.
Statutes of Limitations for securities fraud should not exist. That these exist at all, encourages public companies and crooked people on wall street to commit fraud and do all they can to conceal it afterwards. Then, they can grapple and snooker, use the stolen money to hire super lawyers and for that matter, have several to try to get to those statutes to help get them off the hook.
Open the gates and let the Judicial decide, case by case. Do not reward wrong doers for their actions.
For those not completely familiar with statutes of limitations, the legal argument at least in part is, after time passes, some things become less and less certain, like human memory. So courts like to think that age matters as to validity of a case, and time passing is a shield and bar as to dismissing a case, not for validity but for age. It literally is, a technical form of age discrimination.
With computers (and data bases/networks), we can find and prove a fraud done a year ago, or perhaps 2 or even 10 or 20 years. And this kind of evidence can be utterly perfect, even to the point where the Defendant has to agree. If you do find such a fraud as a well concealed "10 year variety", as it stands today, you are not rewarded for trying to make yourself whole. You are punished and the wrong doer is rewarded.
This provokes thought as to what a statute of limitations is, and what it was intended to do? The law has to come first. And the idea of what changes over time, is challanged by hard computer derived evidence versus human memory. I think everyone can understand the importance of evidence that can be trusted and how computers, networks and data bases change this.
Technology is something we trust, because it continues to work, even though it can be quite old. Internal combustion is an example, the engines in your car which have not really changed much in 140 years+- We still need them and rely on them as much as we did in 1939. Wars were won and lost based on technology.
If the SEC thinks about it, it can ask Congress to repeal statutes of limitations for securities matters and further, make it retroactive. Oxley Sarbanes tried to do this, and after all the bickering when it was released, it's now about to be tossed out completely. Those defrauded wanted it and those who committed the fraud did not want it. Congress did not write it with the intent of not seeing it made into law.
This time, the right changes need to be posed and passed into law as a retroactive amendment to the constitution.
Then, wrong doers will not try to kill the changes through their lobbiests etc... with the argument that the change is not constitutional.
Congress decides what is constitutional and perhaps by amending the Constitution itself, the legal argument can no longer be made to try to redo what Congress does. I certainly hope this would be the case.
The constitution says we have a right to property. Well? Stock is not stock if you sell a zillion fake copies of it to devalue the one I have.
Do people understand what retroactive means? It means, if you thought you could get away with it before, we are going back and holding you accountable for what you did. yesterday, we could not do this due to the law, but today, we can. Retroactive simply means here, we will investigate these naked short selling and securities fraud matters, and time will not longer be a shield in the face of hard, indelible evidence.
Congress would unanimously agree and admit, creating and selling stock that never existed is counterfeitting and counterfeitting was never legal. Lying to investors was never legal. So, to let victims recover, Congress has to repeal all statutes of limitations, make it retroactive and let the victims bring forth their claims. In my mind, the more computer-based evidence you can generate, the further you should be able to go back in time and try a fraud case.
Who shares this belief? Speak up. This is a moment for positive change. You can have it with the right changes to the Constitution, because Oxley Sarbanes failed, and Congress read and voted on that, yet, it failed. It's even getting tossed.
Is Congress Congress?
Do people realize and recognize that Oxley Sarbanes changed the statute of limitations, making them longer? Congress knew what it was thinking and in the back of its mind, it knew Statutes of Limitations are wrong for securities fraud, so as not to encourage a long lasting fraud like a ZZZZon or a WWWWWom. (Names changed to protect the innocent)
Congress however, did not fix the problem at all.
Oxley Sarbanes is going to be reversed and killed by an argument that it is unconstitutional? Is everyone aware of this? I am sure Congress actually meant it to stick and to last. We do not want more fraud? We want none, if that can be accomplished.
I stand by my observations and suggestions.
Repeal the statute of limitations for securities matters, make the repeal retroactive with an amendment to the Constitution.
Repeal the PSLRA in its entirity.
Caution both sides, Plaintiff and Defendant, about perjury and add mandatory sanctions and penalties to those who raise false claims or make false statements.
Everything will shake out with these changes. Damaged Plaintiffs, Securities Lawyers and innocent Public Companies, institutions and other securities related organizations subject to these laws, can then present their claims in court.
Judges can penalize severely if either side cheats during prosecution of the claims. That disuedes frivelous actions. It also disuedes the big public company with more money and several sets of lawyers from telling lies to the Court until a meatball sticks to the wall. Disbar. Detain and incarcerate. Do not cry about too many class actions...police them and keep both sides honest.
We either have the right to sue one another for securities related fraud, or not. And the way it stands, in securities matters it's "not". No matter how fancy the language, or how much argument is made about this issue, it keeps coming back to a simple issue.
Fraud cannot and must not be legal. Private actions do a great job policing the fraud. Institutionalizing the concept of surveillance and corrective action, utterly fails.
We are here, tasting that failure together.
Rather than grapple and re-grapple with this issue, do what I say above and give the Judicial a few extra instructions about those who bring false claims or those who commit perjury or make false evidence on either side of the argument.
The minutia sorts itself out in Court, where it belongs. Judges can be Judges once again, and they can be feared if you cross them with a fraud in their court. What ever happened to that notion?
It's in the hands of Congress now. Many who read this may not grasp why these fixes actually deals with counterfeitting of stock, or public companies who somehow became involved in the hedge fund manipulation or tell lies on purpose to their investors.
If PSLRA did no exist, statutes for these securities matters did not exist or were broadened to 10 years and allowance was made for really bad frauds to remove all statutes, if this is done retroactively with clear language and all done as an amendment to the Constitution itself, to protect our property, all the other noise is for trial, for Court, for expert witnesses and the Judicial.
Hey, the old system works. What happened to it?