Barely Legally

Confessions of a Moot Court Bailiff

The Number One Threat: Bear (Stearns)

One of the largest investment banks in the world was a company by the name of Bear Stearns (seen here with their stock prices in complete free-fall). I say “was” because they were throwing money into the sub-prime mortgage market. That was the cause of some very noteworthy short-term success: investors love to hear about bold new acquisitions and investments. But nothing that stupid can last.

I can aimlessly wander around a discussion of sub-prime mortgages and securities in general, and why it’s a really bad idea to overload your portfolio with sub-prime mortgages, and so on. But I’m fairly certain that the internet is about 70-80% “poorly informed ramble” by volume, and I can’t in good conscience add drops of water to that particular bucket.

The real story that I’m interested in discussing is called “Prosecutors build Bear Stearns case on e-mails.” This is noteworthy because it was newsworthy. Allow me to start from the beginning.

Discovery is the process by which one party can compel another party’s disclosure of information related to litigation. If I were to sue my doctor for not giving me a lollipop after my checkup, during discovery, I could force the doctor to show me how many lollipops he buys a month, and thereby prove that he must be giving them to all his other patients. And assuming there were some kind of egalitarian legal principle regarding lollipop distribution, I might even win.

(I don’t take Evidence until the fall, so that may well be horribly backwards. This is in addition to the really strange hypothetical that I came up with.)

Now, there’s this new thing called “E-Discovery.” It seems that at some point, compelling disclosure of electronic media became legally viable under the rules of discovery. The big thing that everyone wants to know about is your email. For certain specialized cases, this could include spreadsheets and text messages.

(The latter is actually a really bad example, because the mayor actually signed a directive stating that electronic communications sent on city equipment were not considered either personal or private.)

Anyway, getting back to the Bear Stearns bit, the International Herald Tribune writes:

Yet, despite the drama, there is no guarantee that cases that rely on e-mail exchanges and unclear states of mind result in jail time. In one prominent case involving e-mail exchanges, for example, charges were ultimately dropped against Frank Quattrone, the high-level Credit Suisse banker accused of interfering with a government investigation.

Despite the publicity surrounding the Enron scandal, some high-profile cases, which like this one were based on e-mail exchanges and complicated financial arrangements, were successfully challenged.

Essentially, the two guys who just got indicted lied to their investors, and then chronicled their misgivings about said lies in a series of emails. One of them allegedly took steps to hide their correspondence. I’m kind of excited to be a gigantic nerd heading into the practice of law at this point. I mean, who wouldn’t want to be the guy at the meeting that asks, “why don’t we subpoena their emails?” If you know how to sift through a computer, and where to look for potentially incriminating evidence, it seems like a great time to be a lawyer.

Personally, I’m surprised this is still newsworthy. People these days may be smart enough to not leave behind physical evidence (letters, credit card trails, et cetera) when they’re up to no good. But the world is full of people who leave red paint all over their mouse: there are so many ways to figure out what someone’s been up to. The value of e-discovery is immeasurable. At least until people take a more vested interest in computer privacy, to the extent that’s possible.