- COLORADO SPRINGS,
Colo. (Reuters) - The accounting scandals in corporate America that have
erased billions of dollars from investors' portfolios represent one of
the greatest financial frauds in decades, a lawyer representing shareholders
who lost millions when Enron Corp. ENRNQ.PK went bankrupt, said on Saturday.
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- "We're in the greatest upsurge of financial fraud
since the 1920s," William Lerach told a group of investors who focus
on socially responsible investing.
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- He later said it was difficult to tell where the next
scandal would crop up. "It's too mixed up right now," he said.
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- Lerach's law firm, Milberg Weiss Bershad Hynes &
Lerach, has sued dozens of corporations on behalf of shareholders, but
its most famous case may be the one against Enron and a number of financial
institutions who did business with the energy company. The rapid failure
of Enron, the shock waves of which have smashed into every corner of corporate
America, started with a disastrous third-quarter earnings release on Oct.
16, 2001, and lead to a bankruptcy filing in December.
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- Lerach said he could see the current scandal coming years
ago when stocks prices were riding high and corporate earnings were inflated.
The picture disintegrated when companies had to restate their financial
results to show they had either earned much less or even had lost money.
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- Lerach said part of the problem that caused the bubble
of the 1990s was what he called lax monitoring by government agencies and
others who had responsibilities to shareholders.
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- "Fraud of this size could not have been perpetrated
by a few corporate executives ... it took complicity and assistance of
other corporate actors," Lerach told the annual Socially Responsible
Investors in the Rockies Conference.
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- Socially responsible investors screen their stock purchases,
typically avoiding companies that produce alcohol or tobacco products,
guns or goods sold to the military.
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- Lerach's law firm has also sued Nike, the sporting goods
manufacturer, for alleged misrepresentations about its overseas clothing
manufacturing operations, claiming the company ran sweatshops and won in
a California court. Nike has asked the U.S. Supreme Court to review the
decision.
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