Friday, June 10, 2005
The pendulum swings - "Late Trading" Practitioner Innocent
Last week, we wrote about the Supreme Court overturning the verdict which undid Arthur Andersen and put its people out of work. Sadly, Andersen and its people will not get much from this vindication.
On a slightly brighter note, and without need for appeal, a fellow named Theodore Sihpol was acquitted of wrongdoing by a jury yesterday in a case which highlights some of Eliot Spitzer's most abusive prosecutorial zeal and indiscretion. Though only available by subscription, I would direct you to today's Wall Street Journal editorial page for a concise and well written explanation of the case.
In sum, the jury found that, for all the fabulous press Spitzer got for exposing the "abuses" of late trading, Sihpol's practice of it was not illegal. Far from it, as the rules made clear. Sihpol, a broker with Bank of America, and his defense team didn't even need to call witnesses. The late trading activity with which he was involved, and which he did openly in front of his superiors, was perfectly, legitimately, within the rules as defined by the Investment Company Act. I guess all the jury had to do was agree the facts about what Sihpol did on behalf of his clients, and then read the rules. Gee. Novel idea. Of course, Sihpol's clients had already caved and paid Spitzer off. I doubt they'll get a refund, huh? And the poor schmo even had to sue his employer to pay his legal fees. So basically everybody hung him out to dry. I bet he felt kinda lonely for awhile.
Why have all these other guys just settled their cases? Fear of unpredictable jury trials, the ease with which a fine can be paid to avoid adverse publicity. Let's face it - you pay a fine and the pain stops. Any lawyer will tell you that, especially if you fear that an adverse result will destroy your company, itself a creature of confidence. This "little guy" Sihpol believed he didn't do anything wrong and furthermore, as a little guy, didn't have the capital to avoid the pain. And he suffered it. They threatened him with 30 years in jail.
Perhaps this begins to expose Spitzer for what he is - a politically motivated PR hound and legal hack, who uses his prosecutorial power indiscriminately, and occasionally without much regard for the law, to procure attention (and shake people and companies down) and advance toward his goal of becoming the Governor of New York. It will be similarly interesting to see how Spitzer does in court when he takes on Richard Grasso, the former CEO of the New York Stock Exchange and Ken Langone, the NYSE Board Member and former Comp Committee chairman at the NYSE. Spitzer's great at scaring companies and boards into capitulation and fine-paying, but it's becoming less clear as to whether he's much good at law.
On a slightly brighter note, and without need for appeal, a fellow named Theodore Sihpol was acquitted of wrongdoing by a jury yesterday in a case which highlights some of Eliot Spitzer's most abusive prosecutorial zeal and indiscretion. Though only available by subscription, I would direct you to today's Wall Street Journal editorial page for a concise and well written explanation of the case.
In sum, the jury found that, for all the fabulous press Spitzer got for exposing the "abuses" of late trading, Sihpol's practice of it was not illegal. Far from it, as the rules made clear. Sihpol, a broker with Bank of America, and his defense team didn't even need to call witnesses. The late trading activity with which he was involved, and which he did openly in front of his superiors, was perfectly, legitimately, within the rules as defined by the Investment Company Act. I guess all the jury had to do was agree the facts about what Sihpol did on behalf of his clients, and then read the rules. Gee. Novel idea. Of course, Sihpol's clients had already caved and paid Spitzer off. I doubt they'll get a refund, huh? And the poor schmo even had to sue his employer to pay his legal fees. So basically everybody hung him out to dry. I bet he felt kinda lonely for awhile.
Why have all these other guys just settled their cases? Fear of unpredictable jury trials, the ease with which a fine can be paid to avoid adverse publicity. Let's face it - you pay a fine and the pain stops. Any lawyer will tell you that, especially if you fear that an adverse result will destroy your company, itself a creature of confidence. This "little guy" Sihpol believed he didn't do anything wrong and furthermore, as a little guy, didn't have the capital to avoid the pain. And he suffered it. They threatened him with 30 years in jail.
Perhaps this begins to expose Spitzer for what he is - a politically motivated PR hound and legal hack, who uses his prosecutorial power indiscriminately, and occasionally without much regard for the law, to procure attention (and shake people and companies down) and advance toward his goal of becoming the Governor of New York. It will be similarly interesting to see how Spitzer does in court when he takes on Richard Grasso, the former CEO of the New York Stock Exchange and Ken Langone, the NYSE Board Member and former Comp Committee chairman at the NYSE. Spitzer's great at scaring companies and boards into capitulation and fine-paying, but it's becoming less clear as to whether he's much good at law.
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