Thursday, May 10, 2007

Another loophole by lawyers for lawyers

The Securities and Exchange Commission (SEC) characterized as crucial to the "pump-and-dump" fraud a lawyers opinion that newly issued stock could be traded immediately, despite a general rule that bars such trading of unregistered shares. source: Norris, Floyd; the International Herald Tribune; May 3, 2007

The SEC described letters proffering such an opinion provided by David Stocker, a Phoenix securities lawyer, for 4 companies as a pretext for issuing millions of shares of purportedly unrestricted stock.

The shares were sold for millions of dollars to suckers who received spam e-mails touting the companies. Stephen Luscko of Sarasota, Florida, and Gregory Alphonse Neu, of Boca Raton, Florida, used the legal opinions to generate stock sales. Each has been sentenced to 5 years in prison.

As if that were not upsetting enough, it appears that the only instances in which the SEC brings civil cases against lawyers providing bogus opinions comes if such lawyers profit directly from sales of unregistered shares (as opposed to from legal fees collected up front). No cases have been brought against lawyers who simply issued such opinions.

Action against lawyers who issue bogus opinions but do not trade shares is very difficult. Don't forget, most state legislatures are highly populated by trial lawyers, who make the laws this way. In the U.S. Congress (House and Senate) the status is much the same with lawyers comprising upwards of 33% and over 50%, respectively. Want to take this problem to the Supreme Court? Of course, there you will encounter 100% lawyers called Justices.

One more thing; "white collar" crime statutes and collegiality among lawyers assures that convicted lawyers usually receive light sentences for major thefts. Very, very convenient for lawyers, yet nonconspiratorial. The Mafia wishes they were above the law, also.