Sunday, April 15, 2007

Finally Someone Fights Back

I've observed over the last decade or so that business failure has been criminalized by the federal government.

As a lawyer representing businesses, I often encourage business owners to think very hard about going public because of the criminal and civil penalties of the Sarbanes-Oxley act. It is my opinion that the internal systems needed to give comfort to a CEO or CFO that information in the required documents is true are usually cost prohibitive. And if it isn't true, it is the CEO or CFO that is charged criminally for the alleged fraud in the documents.

The result is that public corporations are quickly going private, and private businesses are staying private. The unintended consequence is that there is now less information out there about businesses because Sarbanes-Oxley encourages them to be private. How ironic since one of the arguments for the promoters of Sarbanes-Oxley was it would force CEO's and CFO's of public companies to be even more responsible for the information and protect investors. Those promoters didn't tell us that it would reduce information substantially that is available to investors because there would no longer be public companies.

However, David Stockman has been indicted. And unlike others who have been involved in failed companies, he's fighting back. There is a big difference between a failed business and fraud. Perhaps he'll teach the feds about this.

We shouldn't be surprised about this. The Socialists have won. Being a business owner is not a criminal act except to Socialists, who are now in charge in the United States (I don't care if they call themselves Republicans or Democrats, a Socialist is a Socialist despite their self annointed labels).

If Stockman has engaged in common law fraud, he should be sued and some amount of jail may be appropriate. But as an attorney and what I'm seeing in the trenches in the white collar criminal arena, I'm not holding my breath that there is any fraud.

I hope we don't see a Stalinist show trial. I hope there is a good judge, good defense attorneys and good US attorneys involved, and that reason and the rule of law prevail.

2 comments: said...

"unintended consequence" seems to be the mainstay of extra-constitutional government programs.

Rex Bell said...

Too bad some enterprising young attorney from Indianapolis doesn't use Sarbanes-Oxley to bring charges against congress for bankrupting the country.