The current economic conditions have been a stark reminder that the free market system is subject to corrosive and destructive forces. After decades of resistance to oversight and lack of regulation of the mortgage and securities markets, it has become clear that the markets do not police themselves. Deregulation of the economic markets has put investors at serious risk to reckless and sometimes fraudulent conduct on Wall Street and elsewhere.
Former Fed chairman Alan Greenspan has expressed dismay that the markets have shown themselves so catastrophically unable to manage lending and trading practices responsibly. But in the past, Mr. Greenspan also expressed concern that government regulators were no better equipped to impose discipline on Wall Street.
History has shown that relying solely on government regulators to protect consumer interests or safety is risky at best. Trial attorneys have stepped in when corporate responsibility and government regulation have failed, and their efforts are needed today in the financial sector as never before. As we’ve seen in the context of asbestos, big tobacco and elsewhere, trial attorneys are able to uncover fraud and other wrongdoing that industry has kept hidden from regulators. The same skills are being put to work now to uncover the fraud and reckless conduct that has resulted in the current financial situation.
In the current economic environment, corporate executives are under tremendous pressure to maintain the house of cards their bad decisions have built. They are concerned about their decisions being subject to public scrutiny and anxious to protect their own financial interests. These pressures make executives more likely than ever to fail in their duties to shareholders.
Former Fed Chairman Alan Greenspan admitted to the House Committee on Oversight and Government Reform, “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.”
Investing has inherent risks, certainly. You should bear the risk of natural fluctuations in the market, but you should not be at risk to the consequences of corporate fraud. When shareholder loss is due to fraud, shareholders and investors are entitled to recoup those losses.
Baron & Budd has the experience and determination to protect the rights of people and institutions whose portfolios have suffered from corporate misconduct.