Chairman Frank on the Rights of Investors

June 14, 2007
Frank Critical Of Bush On Suits

Carrie Johnson, Washington Post - June 14, 2007

The chairman of the House Financial Services Committee yesterday said he was "troubled" by disclosures that President Bush had expressed policy views that prompted administration lawyers not to file court briefs supporting investors.

Rep. Barney Frank (D-Mass.) said the Bush administration was wrong to allow concerns about class-action lawsuits to override efforts this week by the Securities and Exchange Commission to file a brief in an upcoming Supreme Court case.

"You've got the president making economic arguments," Frank said in an interview yesterday. "Those aren't legal arguments. . . . I think they're setting a bad precedent."

U.S. Solicitor General Paul D. Clement rejected a plea from the SEC, an independent agency led by three Republicans and two Democrats, to support investors who sue third parties for helping clients commit fraud but who do not make false statements in the process.

SEC Chairman Christopher Cox, a former member of the Republican House leadership, sided with agency Democrats in a 3 to 2 vote to support plaintiffs in the case. But the SEC lacks the authority to share its position directly with the Supreme Court. The federal government speaks with one voice, through the solicitor general.

In April, the House passed the Shareholder Vote on Executive Compensation Act, which was introduced by Chairman Frank and would allow shareholders a non-binding vote on executive compensation plans and new "golden parachute" arrangements.