November 2, 2006
The Delphi prosecution is a classic illustration of the effects of "coerced cooperation." Although not a criminal case (and thus not involving the controversial policies of the Thompson memo), the effect is similar. Delphi settled with the SEC, did not admit to any illegality nor pay a fine, and helped the SEC gather information on its own employees. The SEC filed civil fraud charges against nine former executives.
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This could be a function of the fact that Delphi is in bankruptcy. Shareholders have already lost everything and there isn't going to be anything left for them no matter how high the fine may be. So, rather than harming one class of SEC protected investors (bondholders) to help another (shareholders), the SEC is expanding the size of the pie.
There might very well have been a joint prosecution if Delphi wasn't bankrupt, but there are rarely securities lawsuits arising out of companies that are more successful than claimed.
Posted by: ohwilleke | Nov 6, 2006 11:42:06 AM