The Buck Stops Here

            One of the more egregious news stories coming out of Newark Ohio last week had quite an interesting online commentary – former political office holders as well as long time city council attendees (City budget worries lead to union fire staffing concerns City, union: Report has wrong number of firefighters Kent Mallet, Newark Advocate, Feb. 15, 2014). The City of Newark has just recently agreed to a 3 year contract with its firefighters. Much of the negotiations, on both sides, relied on information submitted by a “fact finder”, who worked with information submitted to him (primarily by the city). Turns out he got it wrong, badly. This has all erupted into a he says, she says as well as the high school rivalry of our school/your school (Democrats are to blame, Republicans are to blame). The online commentaries carried this even further by linking it all with the budget now being even more out of whack (since it was based on total miscalculations). One commenter (Nerk Agrivate) got it right by stating that the fact finder has already been “paid for substandard work and faulty recommendations.” As Alfred E. Newman so eloquently put it “What me worry?”  


            That same day the online Motley Fool posted an article by John Maxfield entitled “The Supreme Court May Soon Take Away This Important Right On March 5, the Supreme Court is scheduled to hear oral arguments in a case that could take away a 30-year-old right that Americans have come to rely on.” The case concerns the acquisition of Dresser Industries by Halliburton and statements made in 2001 by the company’s CEO David Lesar regarding its newly acquired liability for Dresser’s outstanding asbestos claims. The claims turned out to be many times more than Lesar’s oft repeated public reassurances that the liability was no biggie. The value of stock plunged and investors filed a class action lawsuit claiming beaucoup financial loss because of the CEO’s misleading statements. Why does this matter? Why is the court being asked to reconsider “the ability to file class-action lawsuits under the Securities Exchange Act of 1934.”?


            “The answer is that it makes a huge difference. This is because Halliburton is asking the court to overturn a legal doctrine known as the “fraud on the market” theory, which creates a rebuttable presumption that investors rely on statements of material fact made publicly by corporate executives. Without this presumption, securities fraud cases would be far too complicated to litigate as class actions, leaving individual investors to fend for themselves against deep-pocketed corporations. The implications of this would be considerable. Most importantly, for nearly three decades, the securities laws have been predicated on both public and private enforcement — the former by the SEC and Justice Department and the latter by private class-action lawsuits. Without the latter, in turn, the market would lose a critical overseer and, one can only assume, be far more susceptible to deceit.” The connection to Newark is found in “investors rely on statements of material fact made publicly by corporate executives.” Should the Supreme Court rule in Halliburton’s favor, corporate executives would no longer be liable for misleading the public (today’s lingo – a person’s “followers”) (with Citizens United the Supreme’s determined corporations as “persons”). Execs could say what they liked to get a product sold, and be held liable for any individual wrong this may cause, but not for any group or “public” error (like yelling “fire” in a theater affects the entire theater, but only individual wrongs would be recognized). The current hegemony within our political economy is that public takes a back seat to the economy – fiscal responsibility, balancing budgets, creating jobs etc. Business is esteemed as exemplary when it comes to doing this and government should follow its lead (if not totally abdicate to business running public affairs). If it doesn’t move, Ohio’s governor will “privatize” it (i.e. JobsOhio or the recent push to get business running education). Not wishing to be out of step, Licking County’s leaders follow this national “ready made” solution. The hegemony of serving “the economy” takes precedence to serving the public (the totality that constitutes membership for a class action). Mallet ends his report with “The mayor, asked if the fact-finder had a clear picture of the city’s financial health, responded: “From our standpoint, he did,” Hall said. “That’s why we scratch our head on how the fact-finder comes up with how there’s money to increase wages.”” Utilizing far fewer words when asked about finding weapons of mass destruction in Iraq, our former president, George W, replied simply “So what?” (OK so it’s not “What me worry?” But it’s close.)


Tags: ,

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: