Banks Winning When Investors Sue
Professor Joseph Grundfest is quoted in this article on investor lawsuits stemming from the financial crisis. Ashby Jones of the Wall Street Journal filed this story:
Banks are on a winning streak in their battle against investor lawsuits stemming from the financial crisis, a trend that is good news for firms accused of understating the risks of securities that tanked during the financial crisis.
The banks, including major Wall Street players, have won dismissals of lawsuits with variations of a "global financial catastrophe defense," arguing that the blame should be placed on collapsing markets rather than any actions on their part.
"Judges realize that not every massive loss of investor capital is caused by fraud," said Joseph Grundfest, a former SEC commissioner and professor at Stanford Law School. "They're recognizing that while the financial system went astray, and that much should be done to fix it, there are differences between fraud and mistake."