St. Petersburg Accident Blog

Limiting Access to the Courts Backfires

Pretty funny column in the New York Times today.  It is about rather complicated investments that fell apart during the financial crisis when the auction-rate securities market failed.  I don't even know what those are, but American business corporations strongly supported a 1995 law that they thought would help prevent "frivolous" lawsuits.  That law says that when a case is filed in court for securities fraud, it must be very specific as to the facts describing what fraud has occurred, or else the court will dismiss it immediately.  Since most people bringing a fraud case against a securities firm do not have inside information, they can't be specific, so the case gets thrown out before they can find out what really happened.  Now that the financial crisis has occurred on Wall street, many corporations want to sue the securities firms, but the 1995 law is preventing it.  Remember the old saying, "Be careful what you ask for.  You just might get it".  Well, Corporate America got the law they wanted limiting access to the courts, and now Corporate America can't file the lawsuits it wants to. Those same corporations that cheered when the 1995 law passed are not cheering now, as they find it keeps them from recovering their losses.