Wednesday, January 27, 2010
While Judge Rakoff is a close second, Judge Jack Weinstein remains the most refreshingly blunt, "tell it like he sees it" trial judge in the Second Circuit. The Jan. 22, 2010 sentencing statement(Download Butler3) in U.S. v. Butler illustrates this. Eric Butler was convicted of three counts of securities and wire fraud for his role in a $ 1 billion auction rate securities fraud. In sentencing him to five years imprisonment and a $5 million fine, Judge Weinstein took the occasion to castigate "the pernicious and pervasive culture of corruption in the financial services industry." He goes on to say:
The blame for this condition is shared not only by individual defendants like Butler, but also by the institutions that employ them, those who carelessly invest, and those who fail to regulate. Supervision is seriously negligent; greed and short-term gain are so enormous that fraud and arrogant disregard of others' rights and of ethics almost encourage criminal activities such as defendant's.
Besides elaborating on these themes, Judge Weinstein identifies the need "to reconsider how compensation is calculated and investment products are marketed by the financial industry" and concludes that:
Systemic reform is needed; mere '[c]ompetition in product and capital markets can't be counted on to solve the problem." (quoting from the dissent from denial of reh'g en banc in Jones v. Harris Assoc.)