As we’re quickly learning these days–in case you weren’t already aware of it after witnessing the ongoing evisceration of Dodd-Frank financial reform legislation and/or dealing with the aftermath of the corporatocracy’s new “insurance policy,” a/k/a the SCOTUS’ Citizens United v. Federal Election Commission decision–when everything’s said and done in Washington D.C., one way or the other, the status quo’s bought-and-paid-for minions on Capitol Hill and on the U.S. Supreme Court are taking Main Street to the cleaners.
But, perhaps even more outrageous (or at least as brutal, in terms of its immediate impact upon most Americans dealing with our country's mortgage/foreclosure fraud crisis) than either of these two events are the virtually immediate implications of a decision announced last week by the SCOTUS regarding Janus Capital Group, Inc. v. First Derivative Traders.
This past week, three Kossacks posted especially good, if not somewhat underappreciated, diaries about the implications and direct effects of this decision: “The Politics Of Securities Fraud,” by Armando (6/15/11); “How did SCOTUS Screw Mutual Fund Investors To Benefit Wall Street? I'll Tell You How,” by Steven D (6/16/11); and, “Thomas rules that If you Outsource your Lies, you're not Liable,” by jamess (6/17/11).
Today, we’re now learning, thanks to Andrew Leonard over at Salon and Steve Waldman at Interfluidity, that Janus Capital Group, Inc. v. First Derivative Traders has pretty much provided Wall Street with a get-out-of-jail free card as it relates to our nation’s mortgage/foreclosure fraud meltdown, too.
You see, as much as it pains me to say this, these days, everyone on “the Street” knows that it’s not the revenge of the fraudulently foreclosed, unwashed masses that poses the greatest threat to undermining the charade we know of as Wall Street’s obfuscated, ongoing insolvency. What’s still keeping some too-big-to-fail CEOs up at night (granted, I’m only talking about the few, if any, of them that still have some semblance of a social conscience, or at least microfragments thereof) are the rapidly-mounting investor fraud lawsuits from all of those moneyed fatcats that bought into the bond market to support Wall Street’s mortgage bubble in the first place.
But, not to worry vampire squids and squidettes! In one fell swoop, led by none other than ethically-challenged Justice Clarence Thomas, last week in the Janus Capital Group, Inc. v. First Derivative Traders decision, it is now dawning upon us peasants that, in addition to good old-fashioned, commercial investor fraud now being legalized when it comes to your garden-variety mutual fund investor on Main Street, this SCOTUS decision will also protect the “too-big-to-fail” banks when it comes to the more than $100 billion (ultimately projected) in bond investors’ pending mortgage securitization fraud claims/lawsuits against those Wall Street behemoths, too.
Put another way, as Andrew Leonard noted (in easy-to-understand lay speak) just last night, over at Salon, right before our very eyes: thanks to last week’s SCOTUS decision on Janus Capital Group, Inc. v. First Derivative Traders, Wall Street’s megabanks’ few remaining “worries” about having to issue any formal declarations of insolvency due to the mortgage meltdown/mortgage fraud fiasco have just been washed away in that corrupt sewer of greed and underregulated slime we’ve come to know as our deeply captured judicial branch.
The Supreme Court's get-out-of-jail-free card for Wall Street
Andrew Leonard
Salon.com
Monday, Jun 20, 2011 18:37 ET
The highest court of the land just made securities fraud a whole lot easier
Let's hope that the current Supreme Court is remembered by posterity as the absolute peak high point in judicial willingness to kowtow to corporate interests. Because if it gets any worse than now, it's hard to see any way forward for such antiquated concepts as democracy or level playing fields or simple justice.
Case in point: Last week's decision to absolve the management of an investment fund, Janus Capital Group, for any legal responsibility for misleading information contained in prospectuses for mutual funds created under the supervision of Janus.
The fund industry is cheering, and rightly so. The best explanation for what's at stake is provided by Steve Waldman at interfluidity.com but the essential point is simple. The Supreme Court just made it much, much harder for shareholders in mutual funds to sue the operators of those funds for exactly the kind of misrepresentations and malfeasances that were at the heart of the mortgage lending securitization fiasco that blew up the financial system and crashed the economy.
And, then Leonard points us in the direction of Steve Waldman…
A license to lie, backdated
Steve Waldman
Interfluidity.com
June 20th, 2011 4:14AM
In a party-line, 5 to 4 split, the Supreme Court last week severely curtailed investors’ practical ability to hold financial intermediaries accountable for fraud. The case, Janus Capital Group, Inc. v. First Derivative Traders, seems arcane. But for perpetrators of fraudulent securitizations, it is a jubilee. The Supreme Court has eliminated the danger of their being investigated and sued by the people whom they fleeced…
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…When an ordinary firm issues securities, the firm itself is the “person” who makes the statements that appear in prospectuses and other disclosures. But with dedicated investment vehicles, things are more complicated. Investment vehicles — mutual funds and ETFs, but also securitizations like RMBS and CDOs — segregate the management and operation of the fund from the legal entity whose securities investors hold…
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…The Supreme Court's decision in Janus is a license to lie. And it is backdated. The statute of limitations on Rule 10b-5 actions is five years. Perhaps naively, I had hoped that some of the egregious fraud of the securitization boom would be punished by investors, despite the "let's look forward," see-no-evil attitude of the regulatory community. Thanks to Janus, lawsuits-in-progress may be disappearing as we speak. Lawsuits regarding the particularly rancid 2006 / 2007 vintage of securitizations may never be filed…If you have a say in how a pension fund or endowment or bank invests its money, I can't imagine why you'd permit investment in any sort of securitization while you have no meaningful assurance that what is being sold to you is actually what you are buying, even or perhaps especially if the deal is being offered by a big, famous, "deep-pocketed" bank.
This speaks for itself.
At the moment, I have nothing more to say.