Six years ago, plaintiff’s attorney William Lerach sat down with CFO magazine to give his view on the cause of the financial meltdowns at Enron, Worldcom, and other companies of the day. As was his wont, Lerach pulled no punches, blaming the Public Securities Litigation Reform Act, which he said was the “License to Lie Act” for corporate executives.
Lerach also had this to say about his own role: “If we can play a role in making those markets healthier, we play a constructive role in society. And if we make a lot of money while we do that, then we are like a lot of other people who contribute positively to society, whether it is a brain surgeon or an entrepreneur or a corporate executive.”
Today, Lerach was sentenced to two years in prison for conspiracy to obstruct justice, a charge to which he pleaded guilty after he admitted to paying off lead witnesses. His actions, he told the Associated Press, were “felony stupid.”
Republished below is “I Told You So”, an interview with Lerach that appeared in the September 2002 issue of CFO magazine:
To controversial securities litigator Bill Lerach, the current wave of corporate fraud scandals was both inevitable and preventable.
Seven years ago, Congress overrode President Bill Clinton’s veto and passed the Private Securities Litigation Reform Act of 1995 (PSLRA). The legislation was hailed as a victory for corporations over lawyers who filed what CEOs regarded as frivolous shareholder lawsuits, or “strike suits,” as some called them. In particular, the act was viewed by many executives as a big thumb in the eye of one notoriously litigious attorney: William S. Lerach.
But the act only briefly stemmed the tide of shareholder litigation. And it hardly put a dent in the caseload of Lerach, a senior partner at the law firm of Milberg Weiss Bershad Hynes & Lerach and the poster boy for securities fraud actions. (In Silicon Valley, to be “Lerached” is slang for being sued.) Today, the PSLRA is being reviled as a catalyst of the accounting scandals plaguing Corporate America, while shareholder complaints resulting from those scandals are stacking up on Bill Lerach’s cluttered desk.
Talk about irony. Of the 303 noninitial public offering allocation class-action securities suits settled in the United States between 1996 and 2001, more than half were brought by Lerach and his colleagues, according to statistics compiled by Cornerstone Research. And this year, he’s leading the plaintiffs’ charge in the two biggest corporate scandals. Last February, Lerach was named lead attorney in the class-action case against Enron, a case he calls the “professional challenge of a lifetime.” And in March, a shareholder case that he insists documented many of the alleged abuses at WorldCom well before the company admitted to more than $7 billion in accounting irregularities was dismissed by a federal district court judge in Mississippi.