Lawyers thinking about mass tort policy and legal issues inevitably end up thinking and talking about private claimants and their propensity to claim. A growing topic today is the federal government’s propensity to claim.
During the Bush II years, much of corporate America had little fear regarding civil or criminal claims from the US government. Now, however, that is changing, and one might well wonder about the larger implications for tort and other claims. Look for example at the federal government’s activities this week, and consider the implications for future civil claims.
On Monday, the SEC continued its assault on the business methods of subprime mortgage lenders. It charged “three former top officers of New Century Financial Corporation with securities fraud for misleading investors as New Century’s subprime mortgage business was collapsing in 2006. At the time of the fraud, New Century was one of the largest subprime lenders in the nation.” The SEC’s press release and teh charges are here.
On Tuesday, as reported here by Ben Hallman from AmLAw, the goverment made plain that it has problem with the business model for “a lot of hedge funds.” Specifically, a securities litigation conference included the following comments by David Rosenfeld, the associate regional director of the SEC’s New York office:
Rosenfeld said that insider trading, after a downturn over the past two decades, “has come back in force.” Rosenfeld described what his agency was seeing as more than one-off, opportunistic activity, but a “determined business” based upon collecting information from corporate insiders. He said his agency is “aggressively pursuing” these bad actors, and he specifically singled out hedge funds. “A lot of hedge funds have been making huge returns because they were cheating,” he said. (emphasis added)
How many future civil suits will result from these charges and investigations? I’m sure I don’t know. I’m also sure that I would be looking afresh at my litigation and regulatory risks if I were a general counsel working in those industries.