If mutual funds want to lie, the Supreme Court’s conservatives have given them a way to do it.

[Derechos]

So No One’s Responsible?

Published: June 14, 2011

snip

The court ruled that the only entity that can be held liable in a private lawsuit for “any untrue statement of a material fact” is the one whose name the statement is presented under. That’s so even if the entity presenting the statement is a business trust — basically a dummy corporation — with no assets, while its owner has the cash.

The facts of Janus Capital Group v. First Derivative Traders are outrageous. Janus Capital Group created and manages the Janus mutual funds through a business trust. For years, Janus Capital Group, through the Janus funds, worked with at least 10 hedge funds to “market time” — letting them trade rapidly in and out of Janus funds to benefit from delays in updates of asset prices and enjoy guaranteed profits. In 2004, Janus Capital Group admitted its wrongdoing and made a $225 million settlement.

While Janus Capital Group engaged in this improper trading through the Janus funds, the funds’ prospectuses assured that they had policies to prevent market timing. When a complaint from the New York State attorney general became public, the price of Janus Capital Group’s stock dropped by 23 percent. Some shareholders sued Janus Capital Group and Janus Capital Management, which oversees the business trust and funds, for making false statements that led to the drop.

Justice Thomas’s opinion is short and, from the mutual fund industry’s perspective, very sweet: Janus Capital Group and Janus Capital Management were heavily involved in preparing the prospectuses, but they didn’t “make” the statements so they can’t be held liable. Only the business trust set up to hold the funds can be held liable, though it has no assets of its own to compensate plaintiffs in the lawsuit. Which means that there is no one to sue for the misleading prospectuses.

http://www.nytimes.com/2011/06/15/opinion/15wed2.html?ref=opinion

[notesdev]

1. Kind of a moot point

Who would bother to prosecute?

[RandomThoughts]

2. "no one is responsible is a delusion"

"She can't take you any way you don't already know how to go"

Eagles - Peaceful Easy Feeling
http://www.youtube.com/watch?v=44A9iDQNrss

Boots on the ground. And another knife also.

:loveya:


Brothers in Arms - Dire Straits
http://www.youtube.com/watch?v=k5JkHBC5lDs

Bonnie Raitt - I Can't Make You Love Me
http://www.youtube.com/watch?v=nW9Cu6GYqxo

Bonnie Raitt - Nick Of Time
http://www.123video.nl/playvideos.asp?MovieID=407128

Dire Straits - Walk of Life
http://www.youtube.com/watch?v=vZxVC0GB838



Constantine - Bring me to life (Evanescence)
http://www.youtube.com/watch?v=dx8d3K_hngw



:loveya:

[Angry Dragon]

3. If no assets then the plantiff should then own the trust

sounds fair..............

[Turbineguy]

4. It would get rid of retail investors and small day traders.

They're a pain in the ass anyway. Since the taxpayer is on the hook for losses, money to prime the pump from widows and orphans is no longer needed.