Summary
Do Shareholder Class-Action Suits fix the problem?
Analysis
Many lawsuits simply follow the money trail. For all to long, law suits have mainly been about recouping losses & not fixing the problem. Shareholder class action suits pretty much follow the same pattern. They are generally intended to seek restitution, but do little by the way of setting up a better system to prevent the fraud & potential injustice in the first place! After all, it is what most do on a daily basis, address the immediacy of the issue, but don't spend the time to figure out why it happened in the first place to minimize it happening again! What a novel theory! Charges in shareholder class actions are pursued vigorously, but generally just to recoup losses. Why not look to trying to set up a system to prevent it in the first place. Many are of the opinion that if you sting a defendant with an adverse award this will act as the necessary deterrent. If that were the case, why do we still have such a high incidence of shareholder class actions. Maybe there has to be more teeth in the regulations or at least greater potential sanctions? One thing is for sure, pure greed & a willingness to go into gray areas is on the rise! The Rakoff/SEC/Bank of America/Merrill Lynch situation is a classic example.http://blogs.wsj.com/law/2009/09/17/with-subpoenas-cuomo-throws-himself-in-bacmer-imbroglio/
One thing is for sure, if we simple address the damages the cause will never get fixed!
Martin Alpert consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
