Something terrible happened last week in terms of legal protections for stockholders. The terrible thing came out of the present administration, and I simply cannot understand how it could have gotten it so wrong, except on the basis of the machinations of one of our favorite subjects, Henry M. Paulson Jr., the Treasury secretary.
The loyal reader will recall that a few months ago, I wrote in this space about a stunning decision by the Fifth Circuit Court of Appeals involving Enron. In that decision, the judges reversed a federal district court and threw out a case against the investment banks that are accused of helping to make the Enron fraud possible.
The Fifth Circuit did not deny that the Enron fraud took place with the aid of many large investment banks. And the Fifth Circuit did not deny that Enron fraud was made possible by investment banks not just helping out when Enron asked for questionable accounting schemes, but also coming forward to help obscure the truth about Enron’s parlous situation and therefore badly misleading investors.
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