Cutbacks Lead to Fewer Stock Fraud Prosecutions by SEC
In a year that’s been rocked by some of the biggest, and most devastating investment fraud, mortgage backed securities fraud and other scams, there's new evidence that the Securities Exchange Commission (SEC) has been lax in its policing efforts throughout the Bush administration. According to the International Herald Tribune, prosecutions for stock fraud fell sharply over the past eight years, as the outgoing administration reduced the SEC to essentially, a toothless tiger.
The number of prosecutions for stock fraud this year is expected to be the lowest since 1991. So far, there have been 133 prosecutions for securities fraud in 2008, compared to 437 prosecutions in 2000. The number of SEC investigations that led to prosecution by the Justice Department fell drastically from 69 in 2000 to just 9 in 2007.
According to the report, cutbacks in federal resources is one of the factors to blame for the increasing perception of the SEC as a spineless body that's more interested in protecting Wall Street than innocent investors. The SEC for instance, has had considerable staffing cutbacks, while the FBI has been forced to shift massive resources to the war against terror. Apart from staffing shortages, the SEC has seen some changes in policy that have weakened investigators' authority to probe cases on their own. Many officers have left for cushy jobs with the firms that they once investigated. As the year ends with the Bernard Madoff scandal stunning everyone in the business, and securities fraud attorneys asking why the SEC was so blind to all the signs of the fraud that Madoff was operating, the SEC Chairman has ordered an investigation into the failure to stop Madoff. Many say it's too late. After all, the biggest fear right now is not the extent of Madoff's fraud, but the very likely possibility that there are more such audacious Madoff-like scams yet to be discovered.
Wall Street Investor Fraud in 2008 Rocked the Country
2008 was to the American investor what 1992 was to Queen Elizabeth II - an annus horribilis. As one financial institution after another collapsed – entirely due to its own greed and shortsightedness – million of investors were looking at the possibility of foregoing any chance of a dignified retirement. The lucky ones could look forward to spending another decade in the workforce to begin saving again, after Wall Street's unchecked gluttony ruined their hopes for an early office farewell party. The fact these firms lobbied to ensure that they would be protected from liability when their scams went bust is proof of the fact that they knew all along that this is where it would end.
Business litigation against well established and powerfully backed financial firms is not an easy task. It involves going up against billion dollar companies who have well connected people defending their interests. Having the expertise of a professional and specialized securities fraud attorney can however help you build the solid case you need in order to recover any of your hard earned money.
If you've lost money as a result of investor fraud, contact a securities attorney at Arnold & Itkin LLP for a free evaluation of your case.
