... Shareholders Pay For Corporate Settlements. Taxpayers Foot the Bill.
A newspaper report published in The New York Times on Tuesday, August 24, 2010 captures some of the reasons that different Federal Judges in different Courts in different locales in this country are questioning the Federal Government's policy of settling light and easy with corporate fraud Defendants and ignoring many potentially culpable, individual Directors and Officers. See Binyamin Appelbaum, "U.S. Judges, Perceiving Leniency in Bank Settlements, Sound Off" p. B1, col. 2 (New York Times Nat'l ed., "Business Day" Section, Tuesday, August 24, 2010).
The Government's new policy was displayed in posts previously published here on Monday, August 23, 2010, and on Insurance Claims and Issues Web Log on Thursday, August 19, 2010. It was openly questioned in Court by the Federal Judges and in their Opinions which are linked on those posts. It is however not to be found in newspaper reports so far. Not a whisper, not even a hint.
There are two parts to the Federal Government's policy of reaching light and easy settlements with alleged frauds. The first part was laid bare by more than one Federal Judge: Corporate shareholders pay the settlements reached by corporate Defendants with the Government in these fraud cases.
The other part of the Federal Government's policy involves the relative absence of individual Directors and Officers as Defendants in those fraud cases. The absence of individual Directors and Officers removes the possibility of recovering anything from their Director's and Officer's Liability Insurance Coverages. Taxpayers cannot look to those sources for payment. That is more a consequence than an explanation, perhaps. The explanation may lie more in Federal Government officials cultivating friendships with the Directors and Officers of the private businesses who may or will employ them when their government tenure is at an end.
Please Read The Disclaimer.
Comments