New York Times Fails to Disclose Expert’s Democratic Ties
In examining Christopher Cox’s nomination for the Securities and Exchange Commission, the New York Times provides the following expert quotation:
William Lerach, a prominent shareholder lawyer in San Diego who a decade ago found himself on the losing end of the political battle over investor lawsuits, agreed that the Republicans on the commission will now be more unified. But as a result, he argued, the policies it sets could be devastating for investors.
“I would expect that Cox will use his authority for an across-the-board assault on investor protection,” Mr. Lerach said. “In my experience with him, I found him to be virulently anti-investor and unrestrained in his desire to gut the securities laws. It’s hard to think of a worse choice for the S.E.C. This is a world-class payback to the corporate world.”
Mr. Lerach recalled that the final legislation Congress adopted to restrict investor lawsuits, the Private Securities Litigation Reform Act of 1995, was much milder than the legislation Mr. Cox first proposed. That bill had significantly raised the standard of proof for investors and had included a provision forcing the losing party in such lawsuits to pay legal fees, a provision that some experts said would have effectively killed most investor lawsuits.
Unfortunately, the Times leaves out one significant fact: Lerach is highly active in Democratic politics. Since the 2002 election cycle, he’s donated over $500,000 to the likes of the DNC/Building Fund, Tom Daschle, Barbara Boxer, Dick Gephardt, Ted Kennedy, and Rahm Emanuel. He made similar donations in the 1990s, thereby earning the designation of “#2 Power Suit” from Mother Jones. Indeed, when the Securities Litigation Reform Act faced presidential opposition, the magazine noted that “Clinton’s veto seems to have been a ‘good faith’ gesture to Lerach.”
To be sure, he’s an authority on securities issues; he can no doubt shed light on the policy challenges facing the SEC. But the Times consults him not just for substantive matters but for political ones as well. Accordingly, his background is relevant to helping readers understand his positions. They should have been mentioned in the article.