When Do the Lawyers Get Disbarred?

I have always pondered this question. I ponder it seemingly every week when I listen to the news. No matter how large of a crime a lawyer participates in, it seems they never get disbarred. Let’s take a story most of you have been familiar with.

Back in 2005 we started seeing articles like the summary posted here:

http://www.trinity.edu/rjensen/fraud093005.htm

(search for Navistar once you get to the page.)

In a 2006 Business Wire press release we read the following:

As part of the review of accounting issues, the company’s audit committee has completed an independent investigation into the propriety of accounting and auditing confirmation matters relating to vendor rebates in fiscal year 2005. T he investigation was conducted by an independent law firm and found no evidence of fraud or intentional misconduct.

You can find the article here:

http://ir.navistar.com/ReleaseDetail.cfm?ReleaseID=199251

Not long after this, October of 2007 in fact, we started seeing articles which contained the following:

The independent investigation also identified instances of intentional misconduct that resulted in some of the company’s smaller, but in some cases material, restatement adjustments. “ Most of the individuals who were involved in instances of misconduct are no longer employed by the company,” Navistar said.

http://www.cfo.com/article.cfm/10045683/c_10023908

In October of 2009 we started seeing articles like the following:

http://finance.yahoo.com/news/Navistar-SEC-settle-apf-2643276182.html?x=0&.v=2

One cannot follow this progression without asking why did the SEC not disbar all of the attorneys involved in the 2006 statement. It’s rather obvious they were either willing participates in a cover up, or simply saying what they were paid to say without performing much (if any) of an investigation. The timing of the 2006 article made it appear as a rather obvious attempt to stop investors from bailing on the stock. It soon became obvious nobody was buying the bullshit, hence the back peddling in 2007.

My concern here isn’t with the sear sizzled books fresh from the barbecue, nor with the “deal” the SEC did on our behalf allowing the company to not admit any wrong doing (even after the company issued a statement saying evidence of it had been found.) No, My issue here is that the SEC didn’t serve the public interest by forcing disbarment of all lawyers involved in the 2006 release. We are never going to stop corporate fry cooks (accountants) from serving up mouth watering financial statements which have no basis in fact until we make it a death penalty offense. That is simply a given. We cannot begin to hope such frauds will be uncovered if the offenders can simply pay lawyers to say things which have no basis in fact in order to continue duping investors. At a minimum, the SEC settlement should have demanded disbarment for all.