The U.S. Supreme Court gave us more evidence earlier this week of what people in the stock market already knew: This is no time to be an investor.
People who buy shares in companies that defraud them can't sue those who may have helped in an illegal deed, the court said. Money lost because Smith Co. and Jones Co. lent a hand while Acme Co. cooked the books? The court says tough luck unless Smith and Jones somehow led you to buy Acme's stock.
This judicial gift came via the Jan. 15 decision in Stoneridge Investment Partners LLC versus Scientific-Atlanta Inc. and Motorola Inc. Stoneridge, a Malvern, Pennsylvania, money manager, alleged that the two cable-television box-makers helped pull off an accounting fraud that let Charter Communications Inc. show more revenue than it really had. The court ruled on whether Stoneridge could sue so-called abettors, not on whether the allegations were true.
If the investing public had any doubt that its status has sunk to rock bottom, consider this. The court wrote that to allow suits against abettors could raise the cost of doing business. It could get so bad, in fact, that the cost of being a publicly traded company could rise, the court said, which might ``shift securities offerings away from domestic capital markets.'' Is this the highest court in the U.S. or the Chamber of Commerce?
Maybe the court hasn't noticed that the scariest thing happening in the domestic capital markets is that the U.S. is groveling for money overseas. If the Supreme Court is going to be in the business of protecting U.S. markets, it might consider championing the excellence that results when corporations are held responsible for their actions.