Ben Stein blasts Supreme Court for failing to protect shareholders

Ben Stein is my hero of tell-it-like-it-is commentary on all things, and he had some pretty harsh words about the Bush Administration's refusal to file a brief in an extremely important case that is before the Supreme Court. The Supremes will decide whether shareholder can collect damages from investment banks, accounting firms and other companies that "merely aided and abetted" securities fraud. Treasury Secretary Henry Paulson (A frequent target of Mr. Stein's columns) even went so far as to urge the solicitor general at the Justice Department not to file the SEC's amicus brief in the case.

One of the most common arguments against allowing shareholders to recoup damages through class-action lawsuits is that the added risks and costs for the companies make U.S. financial markets less competitive. Mr. Stein trashes that argument pretty effectively:

That same old whining about how poor, poor Wall Street, where high-ranking officials can make only $50 million or $60 million a year and where hedge fund managers can make $1 billion-plus a year, might be hurt if stockholders were actually protected from sneak attacks by investment bankers.

Poor, poor Wall Street, where the Champagne flows like water and the players get billions for helping the rich get richer. We had better protect them instead of the widows and orphans who were wiped out by the fraud at Enron.

Stein's exactly right. These guys are paid way too much money for what they do not to be held financially accountable if they mess up or act in bad faith. And if a judge can sue a dry cleaner for $54 million for losing his pants, shouldn't shareholders be able to seek restitution from investment banks in cases of securities fraud?