This decision is a disaster for investors who are victims of fraud: Zamansky

Return to Videos

Transcript

Interviewer: Why do you disagree with this decision?

Jake: This decision is a disaster for investors who are victims of fraud and Ponzi schemes like Madoff. The message the court is sending is duck the SEC for five years, you're out in the clear, you can keep you ill-gotten gains. It's bad policy and bad law.

Interviewer: Mark, you agree with the decision, why?

Mark: Well first of all, you know, let's keep in mind that when the SEC goes for disgorgement which is what this case deals with, it really is saying that we're gonna return money that's somehow was obtained by you improperly. And the money that Jake was just suggesting would not be available to the victims is not the case. A lotta times in many many cases, that money goes into the U.S. treasury. So it's not the victims that are getting this money. The reason why I totally agree with this decision and why I'm glad the Supreme Court has reigned in the SEC within the last five years now for the second time, is that we need to get the SEC to bring its cases sooner. We need to have them bring cases within five years. We need to have them bring cases where people can sleep at night after a period of time and feel that the government is not gonna come after them 20 years later. This case that was brought was for activity going all the way back from 1995 and it wasn't brought until 2009. There should be some obligation upon the government to bring actions more quickly.

Interviewer: Jake, responsd to Mark's comments.

Jake: Yeah, he wants people like Madoff to be able to sleep at night. What these guys do is it takes years to find the fraud. They hide the money offshore, Madoff, people like that are very good at hiding the money and disguising the fraud. The Trump administration has gutted the SEC, there are fewer enforcement attorneys, fewer resources, they're not gonna be able to catch any of this. This is a decision helping the bad guys. Things have to change, somebody has to look out for investors. They're gutting investor protection, it's wrong, and it should be reversed.

Interviewer: Mark?

Mark: That's just not the case at all. Look, I'm a former SEC enforcement attorney, so I have nothing but respect for that organization, and I do care about going after wrongdoers. But at the same time, even Justice Sotomayor who we can consider a liberal Supreme Court Justice, says that even wrongdoers have a right to believe that they could sleep at night and that their sins may be forgotten. And that is just justice and that statute which basically found that disgorgement is a kind of remedy that the SEC created and is now seeking, is something in a form of a penalty and a statute that's on the books for almost two centuries says that the government may not go after people for civil fine, penalties, or forfeiture, and that's what this decision is about. It's not about hurting investors, it's about doing the right thing and what's just for the government and how it proceeds. Let the SEC...

[Crosstalk]

Interviewer: Okay, hey guys, you guys both made your points. Jake, I'd like you to bring us back to our audience, people that are not, you know, SEC attorneys. Why do they care, how might this impact the CNBC viewer?

Jake: Right now a CNBC viewer could be a victim of fraud by a corperation, they could be in a stock where there's a fraud, we can only go back five years, they can have a financial advisor. Many of the people that come to me have financial advisors who have been hiding, stealing, putting things in outside accounts. People have to look at their monthly statements, if they see there's a problem, do something, call an attorney. What this is saying is after five years they're off the hook, you can't go after these people, it's really a bad decision.

Mark: That's not at all what this Supreme Court decision is finding, Ron, [SP] if I just may. This Supreme Court decision is limited to cases by the SEC or government itself. It has no effect upon class actions, it has no effect upon private party plaintiff law suits such as the people that Jake Gainley [SP] represents.

Interviewer: Guys, this is what lawyers do. It was a very polite, a very well grounded disagreement. We need more of this in the country. You guys are very polite to each other, we appreciate that, Jake and Mark, thank you guys.