A daily look at legal news and the business of law:
The Forces Arrayed Against Massey
Many Americans are deeply cynical about government these days, but a confluence of potent forces suggests that if there's any truth to the rumors that Massey Energy bribed coal mine inspectors to look the other way, convictions will come, the government will get cleaner, and miners will be safer.
First, Massey Energy (MEE) is an attractive target, politically speaking. It's big, makes lots of money, its CEO has been accused of buying a West Virginia Supreme Court justice (who, by the way, is now running for Congress to "defend the coal industry"), and worst of all, Massey has a horrible safety record compared to its neighbors, as was exemplified by the deaths of 29 miners at its Upper Big Branch mine last month.
Second, the Federal Bureau of Investigations has made public corruption its No. 1 criminal priority, meaning the resources and leadership commitment necessary for a solid investigation and prosecution should be available.
Third, President Obama's assistant secretary of labor for mine safety and health, Joe Main, is a former union safety expert with over 30 years of experience working to make mines safer. That's a 180-degree turnabout from President George W. Bush's mine safety chief, Richard Stickler, a man with a record so poor on mine safety that the Senate twice refused to confirm his appointment; Bush eventually installed Stickler via a recess appointment. Main undoubtedly will force his department to fully cooperate with the FBI to root out any corrupt inspectors.
Finally, public corruption cases are heavily dependent on witnesses. With all that has happened, and with all the seriousness of purpose being displayed on the government side, I'm betting that the FBI won't have too hard a time finding West Virginians so sick of Massey that they're willing to come forward, if such witnesses exist.
A Few Notes on the Goldman Sachs Fraud Probes
As I noted in a column on DailyFinance last week, one of the biggest risks for Goldman Sachs (GS) at last week's congressional hearings was that its executives would be testifying under oath. Now, Mother Jones has found at least one apparently false statement by witness Dan Sparks, formerly the head of Goldman's mortgage department. In response to questions about certain collateralized debt obligations which Goldman created and sold that quickly tanked, Sparks testified that, "At the time we did those deals, we expected those deals to perform." The Mother Jones piece gathers emails and other records to show that Goldman thought the underlying securities were junk. Given that, how could Sparks claim Goldman thought the securities would perform? While I don't see a perjury prosecution coming, the article does a better job than the senators' questions did of showing Goldman's attitude toward the mortgage market at the time.
Similarly, The Wall Street Journal has an article that does a better job than the senators did at laying out how the CDO market turned relatively small amounts of toxic debt into huge bets that were big enough to crash the financial system. Finally, The Washington Post notes that the Department of Justice's criminal probe of Goldman isn't as narrowly focused as the Securities and Exchange Commission's case. Maybe the criminal probe is a fishing expedition, or maybe the Department of Justice is pursuing a different theory of fraud.
Blagojevich Fails to Cause Problems for President Obama
A judge just denied ex-Governor Rod Blagojevich's effort to subpoena President Obama, at least for now. Given all the policy battles the President is fighting, and with the 2010 elections looming, he must be relieved not to have the distraction of being pulled into Blagojevich's federal corruption case right now.
And in the Business of Law...
• A Texas judge faces a record fine for incompletely disclosing her financial statements.
• Chadbourne & Parke LLP picks up a new partner, starts an emerging company and venture capital team.
• The top 10 family-friendly law firms list is out, and only four firms repeated from last year.
What Is Your Risk Tolerance?
Answer the question "What type of investor am I?".View Course »