Bloomberg’s Jonathan Weil, who is normally an effective critic of bank chichanery and weak regulatory oversight, may have missed the mark on a key issue in an article last week, “Moral for CEOs Is Choose Your Fraud Carefully“. In it, he criticizes the SEC for failing to attack accounting fraud:
It seems the Securities and Exchange Commission won’t be doing anything to challenge that pretense, either, and that this may be by design. The SEC for years has been bending over backward to avoid accusing major financial institutions of cooking their books, even when it’s obvious they did. So much for upholding financial integrity.
Weil cites a series of object lessons where the SEC has not gone after financial firms executives for accounting fraud: Fannie Mae’s Donald Mudd, Countrywide’s Angelo Mozilo, and three executives at Indy Mac. Weil charges them with “see no accounting evil”.
Let’s be clear: I’m no fan of the SEC’s actions in the wake of the crisis. The regulator has been kept resource starved. Under Arthur Levitt (hardly the most aggressive of SEC chiefs) any effort at enforcement led to threats from Congress of budget cuts (Joe Lieberman was particularly aggressive). Chris Cox was put in charge, as far as I can tell, to make sure the agency did at little as possible. So the SEC only knows how to do insider trading cases, and on any other type of action, it seeks to get a settlement, when a trial in some cases might have more value as a deterrent (plus you don’t get to be good at litigating if you never litigate).
Moreover, the SEC also seems to believe it needs to win pretty much all of its cases to be perceived as a threat. That isn’t true either. Look at the Green Bay Packers, who were correctly the favorites to win the Super Bowl despite having a lousy win/loss record prior to the playoffs. But all those losses had been close, in hard-fought, well-played games. In litigation, embarrassing revelations in discovery or on the stand can also have deterrent value, and can serve as building blocks for future cases.
Let’s deal with the misconstructions in Weil’s article. He argues:
There’s a pattern here. When the SEC in 2009 accused former Countrywide Financial Corp. CEO Angelo Mozilo of securities fraud, it claimed the lender’s management foresaw as early as 2004 that the company would suffer massive credit losses on the home loans it was making. The SEC’s complaint accused Mozilo of “disclosure fraud” for hiding such information from investors.
Later he points out
Yet if the SEC’s allegation were true, it would mean Countrywide had been overstating its earnings for years, by delaying the recognition of losses long past the point when management knew they were probable. That would be an accounting violation. The SEC never made that connection in its complaint, though, and clearly had made a decision not to. Mozilo later paid $67.5 million to settle the suit, without admitting or denying the regulator’s claims.
But this is flat out wrong, that they missed the connection and that they made a decision not to prosecute. As a result he, and just about everyone else, misses a key story.
The SEC did make the connection, clearly and explicitly in the complaint.
Most Countrywide coverage focused on the fact that the agreement settled securities fraud and insider trading charges. What’s missing from the reporting is that the original complaint, which was ready to go to trial, contained three elements, securities fraud, insider trading AND violations by the CEO and CFO of the key element of Sarbanex Oxley law (Section 302). Yet the settlement is silent on the Sarbox charges.
The SEC apparently chose not to wade into the ‘accounting violation’ bog in the Sarbox portion, and instead complained of false of disclosures of the risks in the portfolio. That was a defensible tactical decision if the objective is to go after top executives. Look at Anton Valkas’ detailed discussion of where the thinks “colorable claims” lie in Volume 3 of the Lehman report. Note, for instance, that while CFO Erin Callan was aware of and uncomfortable with Repo 105, Valkas argues that she is liable for breach of duty of care and failure to notify the board of directors; the accounting liability sits with Ernst & Young, for professional malpractice. As law professor Franks Partnoy stressed in his book Infectious Greed, executives can use complicit accounting and law firms as liability shields. Now Weil can argue the the SEC should pursue them in addition to key decision-makers at failed financial firms, but the compliant about accounting seems a little wide of the mark in piece focused on cases against top executives.
There’s no need to go after the consequential accounting violations (which would drag external audit and regulatory forbearance into the mix) when it’s much easier to explain the equally egregious risk disclosures to a jury. The Sarbox penalties are the same, since the violations are equivalent. The obvious strategy would be to choose the risk disclosure violations.
The SEC complaint against Mozilo builds a compelling case that Countrywide was guilty failure to disclose portfolio risks, and that they were non trivial disclosure violations. Weil observation that that the disclosure violations would result in accounting violations is correct but irrelevant to the SEC’s strategy.
So, the question is what went wrong? It’s bad enough that the SEC settled for such a trivial amount but with Mozilo why did the SEC also drop the Sarbox question from the settlement? A Sarbox victory in Countrywide would have opened the door to Sarbox prosecutions for everyone else. I doubt that was lost on anyone involved in the litigation. Indeed, he IndyMac case looks very similar to Countrywide. The glaring difference is that the IndyMac complaint does not include Sarbox violations.
The Freddie litigation is at a much earlier stage; Wells notices have been sent ,so we can’t compare complaints yet, but it’s a safe beet they’ll look more like the IndyMac than the Countrywide complaints
This appears to be the missed smoking gun: the order denying summary judgment:
Order Denying Summary Judgment in S.E.C. v. Mozilo
The germane section:
D. Violation of Rule 13a-14 of the Exchange Act
In the Fourth Claim for Relief, the SEC alleges that Mozilo and Sieracki violated Rule 13a- 14 of the Exchange Act, requiring them to certify that Countrywide’s 2005, 2006, and 2007 Forms 10-K did not contain any material misstatements or omissions.See 17 C.F.R. § 240.13a-14.
Mozilo and Sieracki move for summary judgment, arguing that a violation of Rule 13a-14 of the Exchange Act cannot be pled as an independent claim for relief. The Court agrees with the reasoning of SEC v. Black, 2008 WL 4394981, at *16-17 (N.D. Ill. Sept. 24, 2008), and concludes that a false Sarbanes-Oxley certification does not state an independent violation of the securities laws. Accordingly, the Court GRANTS Mozilo and Sieracki’s Motions for Summary Judgment as to the SEC’s Fourth Claim for Relief
The Fourth Claim for Relief was the Sarbox violation.
Unfortunately, this leaves us in the dark since because the SEC v. Black decision was unreported. Here is portion of the SEC’s brief where they argued that Mozilo’s motion for summary judgment on this issue should not be granted:
H. Violation of Rule 13a-14(b) Is A Stand Alone Cause Of Action In This Circuit
Mozilo and Sieracki argue that they are entitled to summary judgment on the SEC’s Rule 13a-14(b) cause of action because it is not an independent cause of action. Their sole support for this contention is an unreported case from of the Northern District of Illinois, SEC v. Black, 2008 WL 4394891 (N.D. Ill. Sept. 24, 2008). Other courts, including one in this Circuit, have allowed stand alone causes of action for violation of Rule 13a-14(b).SEC v. Sandifur, Fed. Sec. L. Rep. (CCH) P93,728; 2006 U.S. Dist. LEXIS 12243 at *23-25 (W.D. Wash. Mar. 2, 2006) (cause of action for violation of Rule 13a-14(b) pled with sufficient particularity to withstand a motion to dismiss); SEC v. Brady, Fed Sec. L. Rep. (CCH) P93,885; 2006 U.S. Dist. LEXIS 29086 at *17-18 (N.D. Tex. May 12, 2006) (“SEC has adequately pleaded that. . . [defendant] committed a primary violation of Rule 13a-14(b)”). The violation of Rule 13a-14 results from the certification of a periodic report that is false or misleading.SEC v. Kalvex, Inc., 425 F. Supp 310, 316 (S.D.N.Y. 1975) (Section 13(a) embodies the requirement that periodic reports be true and correct, and a failure to comply with such section would result in violations of the securities laws). Mozilo and Sieracki signed Sarbanes-Oxley certifications for each Form 10-Q from Q1 2005 through Q3 2007 and each Form 10-K for the years ended 2005, 2006, and 2007, and signed the Forms 10-K for the years ended 2005, 2006, and 2007. For all of the reasons set forth above, those reports were misleading. Accordingly, Defendants’ motion for summary judgment on this cause of action must be denied.
Now as a non-attorney (but my sources agree on this reading) it appears that the judge was saying that if you argue for SEC violations (which this case did) you don’t get to double dip and add a Sarbox charge. That’s far more significant than it appears. As we argued in an earlier post, the language in Section 302 (civil violations) tracks the language in Section 906 (criminal violations). A win on a Section 302 case would thus set up what would appear to be a slam dunk criminal case.
The judge’s action is what I call a “BS ruling”. The judge does not explain his reasoning, and this is a ruse when a judge does not want his decision challenged. I’m told lawyers might more politely call it “gutless”.
Now does this make Weil wrong and get the SEC off the hook? Hardly. The judge’s negative ruling on a separate Sarbox charge on securities violations does not rule out other types of Sarbox charges, but the SEC incorrectly seems to be reacting this way. Remember, the part of Sarbox that gave a lot of boards fits was that the CEO and the CFO certify the adequacy of internal controls (Section 404). That goes above and beyond traditional SEC representations. As securities lawyer/litigator Bob H argued:
It may be important that the Black and Mozilo claims were all about fraudulent disclosure and not failure to maintain an adequate system of internal controls. The latter was not in play in either case. It’s one thing for a court to say that two claims do not arise when it is alleged a Form 10-K includes a fraudulent statement and then say another claim arises because the SarbOx certification (saying there were no fraudulent statements) was wrong.
However, I don’t think this logic applies with regard to Section 404 of SarbOx. Here the statement made by the certifiers is that a system of internal controls is in place and is adequate. There are two things in play here and they are different. One, it is alleged the document contained a violation of Rule 10b-5 (contained a false or misleading statement or omission). Two, the company’s system of internal controls was other than represented in the certificate (i.e. it was false). In other words, I don’t believe either court would have dismissed the certification claim on summary judgment if it was about the system of internal controls (as opposed to straight out disclosure).
It does not take a lot of imagination to assume that many of the banks that cratered had deficient risk management systems and controls, which in a firm with trading operations is clearly one of the most important control systems. Some readers may believe that putting a case before a jury on risk management deficiencies will simply allow the defense to introduce all sorts of confusing technicalities, and confused juries don’t convict. However, in many cases the risk management systems were obviously, grossly deficient. Lehman was running over 120,000 derivatives positions, on systems that didn’t talk to each other or reconcile nicely; it didn’t even know to within 10,000 how many derivatives positions it was carrying! Similarly, it appears that the banks’ system of internal controls over their mortgage backed positions only went as far as looking at the ratings.
In other words, the SEC looks to be quitting far too easily. It isn’t a reasonable expectation to win cases in new areas on maiden efforts. That’s great if it happens but the more likely result is some stubbed toes and partial victories before perfecting how to argue these issues. But the SEC is no doubt enjoying its high profile thanks to the Galleon case, and is too likely to keep pursuing what it knows how to do than go after how a handful of banks blew up the global economy yet got to keep their winnings, which is a matter of much greater consequence for all of us.
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Yves,
Great article.
I only wish that when you mention the list of thing the SEC did not do you include fail to require adequate disclosure for all structured finance securities.
By aiding and abetting the financial engineers, they contributed more than any of the other regulators to the credit crisis and the subsequent losses. Well over $1 trillion if you just look at the losses on securities issued during and after the time Goldman et al started shorting the market.
Not requiring adequate disclosure was not a function of limited budget, it was a function of looking for an excuse not to regulate – they found it by saying it was not justified by a cost/benefit analysis.
The US needs to do one of two things:
1. Enforce SarbOx against individuals and companies that have violated its provisions to the point of bringing the countriy’s economy to its knees; or
2. Announce that SarbOx has failed at its purpose, thereby penalizing honest, law-abiding executives and companies by increasing costs while failing to rein in dishonest, fraudulent book-keeping.
This is another example of the US quagmire of regulations where we mandate lots of inefficient activity while the purpose of the regulations is not actually being met due to poorly written regulations, conflicts between regulators, or a simple desire not to enforce regulations.
The lack of a social contract on this country on the balance between regulation, enforcement, and efficiency is probably our single biggest impediment to moving forward in the next century. One of the reasons why “socialist” countries can actually do well is because they have developed that social contract over the past few decades. Instead we end up with both the worst of socialism and libertarianism without enough of the benefits.
‘due to poorly written regulations conflicts between regulators, or a simple desire not to enforce regulations.’
Hellooooo Congress, is anyone in there?
Possibly, the lack of social contract causes the country the recent difficulties. It also possible, however, that the distinction between the US and countries such as Germany, the Scandinavian countries and France lies in our lack of solid industry. Somewhere after 1980, we have decided to relinquish traditional industry. Instead, we shifted to finances, semi-information and massive outsourcing of everything in sight (e.g. medical diagnosis, legal document analysis and, of course, traditional manufacturing).
The latter process has developed a super class that is above the law, highly subsidized by the government, politically powerful and despises non-members. This sends Rick Scott to govern Florida instead of jail and Mozilo to lose a Infinitesimal part of his loot instead of spending decades in “Club Med.”
The only ways to escape our misery lies in the elimination of the super class and reindustrialize the country befitting the 21st century. Don’t hold your breath.
One critical clarification: despite much publicity regarding their manufacturing sectors, both Germany and Scandinavia are very heavily dependent on their financial sectors, with both being banking sectors for Europe, and the Eurozone periphery in particular. Their continuing prosperity has as much to do with the misery on the European periphery as it has to do with their domestic operations (for one perfectly clear example, see the concessions Sweden extracted out of the Baltic States regarding exchange rates, which have placed a tremendous burden on the Baltic economies while protecting the profits of the Swedish banks). I find it interesting that there is so much criticism of the financial sector in the U.S. while Germany and Scandinavia are lauded as if they were model economies. If the U.S. financial sector is at the root of many of the problems in the U.S., then precisely the same is true of the German/Scandinavian banking sector in Europe.
Kudos on the work involved herein. SEC enforcement is Kabuki theater. Best approach now would be to hire the mercenaries from Xi and deploy two thousand against Wall Street and remove the targets to undisclosed locations or Guantanamo where the Constitution does not apply. If we cannot have one standard of law for this country, then, at least, let us have some retribution.
Here’s the relevant portion of the Black decision:
In Count VIII, the SEC alleges that Black violated Rule 13a-14(b) which, in accordance with Sarbanes-Oxley, required that Black, as International’s CEO, certify as to the 2002 Form 10-K that: “Based on his or her knowledge, the report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report.” 17 C.F.R. § 240.13a-14(b) (2) (2003). The parties agree that Black signed such a certification for the 2002 Form 10-K.FN20 As previously discussed, it is established that this certification was knowingly false in that Black knew the APC payments and Supplemental Payments were misleadingly reported or omitted.
FN20. The certification requirement was not in effect at the time the 2001 Form 10-K was filed.
Black contends a violation of the certification requirement of Rule 13a-14(b) does not support a separate cause of action. He contends such conduct is only actionable if it violates some other actionable provision of the securities laws. Two district court cases have so held, see In re Intelligroup Sec. Litig., 468 F.Supp.2d 670 706-07 (D.N.J.2006) (no private right of action for violation of certification requirement); In re Silicon Storage Tech., Inc., Sec. Litig., 2007 WL 760535 *17 (N.D.Cal. March 9, 2007) (no independent claim for a false certification), and the SEC so indicated at the time it first proposed Rule 13a-14, see SEC Release No. 8124, 2002 WL 3170215 *9 (Aug. 28, 2002) (“An officer providing a false certification potentially could be subject to Commission action for violating Section 13(a) or 15(d) of the Exchange Act and to both Commission and private actions for violating Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5.”); 67 Fed.Reg. 57,276, 57,280 (Sept. 9, 2002) (same). The SEC contends cases have held that the SEC may base enforcement actions directly on violations of Rule 13a-14. The two cases cited by the SEC, however, hold that sufficient facts are alleged to state the Rule has been violated by a false certification, but neither addresses whether a false certification can stand as an independent claim. See SEC v. Brady, 2006 WL 1310320 *5 (N.D.Tex. May 12, 2006); FN21 SEC v. Sandifur, 2006 WL 538210 *8 (W.D.Wash. March 2, 2006).FN22 Many cases have held that a violation of the certification requirement may be considered in determining whether scienter is adequately alleged or proven, though cases differ as to the weight of such allegations or evidence. See In re Intelligroup Sec. Litig., 527 F.Supp.2d 262, 356-57 (D.N.J.2007); In re Procruest Sec. Litig., 527 F.Supp.2d 728, 742-43 (E.D.Mich.2007); In re BearingPoint, Inc. Sec. Litig., 525 F.Supp.2d 759, 773 (E.D.Va.2007).
FN21. The entire discussion in Brady directly addressing the certification claim is the following. “SEC asserts that Brady and Beecher are directly liable under … SEC Rule 13a-14, 17 C.F.R. § 240.13a-14 (2008).” Brady, 2006 WL 1310320 at *2. “As to the books-and-records claims, SEC has adequately pleaded … that Beecher committed a primary violation of Rule 13a-14.” Id. at *5.
FN22. The entire discussion in Sandifur, 2006 WL 538210 at *8, is: “The tenth claim alleges that Defendant Ness signed a false Sarbanes-Oxley certification that was included in Metropolitan’s 2002 10-K. (Compl.¶ 94.) In addition to this specific allegation, the claim also relies on and incorporates the complaint’s other preceding allegations. As in the first, second and sixth claims, the Court finds that the allegations adding up to the tenth claim provide the who (Defendant Ness), what (false certification), when (filed December 31, 2002), where (in the 2002 10-K), and how (by signing it) necessary to allow Defendant Ness to prepare his defense. Therefore, the tenth claim is pled with sufficient particularity and Defendant Ness’s motion as to this claim is DENIED.”
*17 Consistent with the SEC Release and the two cases that have addressed the issue, it is held that a false Sarbanes-Oxley certification does not state an independent violation of the securities law. Therefore, summary judgment will not be granted as to Count VIII. Instead, Count VIII will be dismissed for failing to state a claim.
Good analysis, very in-depth, and a lot of very good insights.
One distinction I would mention that factors into this is that the SEC’s regulatory efforts are divided into two categories: review of financial statements (10-Ks, 10-Qs etc.); and compliance, which covers everything else (fraud, insider trading, etc.) One key issue is that the law for compliance related issues is much stronger and much easier to prosecute than the law for financial statements, where there are any number of loopholes, such as the timeless “the auditors let us do it so it must be legal”, and so forth. SarbOx was an attempt to equalize that situation by strengthening financial statement law, but SarbOx is new and the SEC may be less inclined to bring action under it based on the weaker legal precedent.
One clarification, however:
@Yves: “But the SEC is no doubt enjoying its high profile thanks to the Galleon case, and is too likely to keep pursuing what it knows how to do than go after how a handful of banks blew up the global economy yet got to keep their winnings, which is a matter of much greater consequence for all of us.”
The banks and their executives were allowed to keep their winnings because the Federal Reserve explicitly ensured not just their survival, but their profitability. The banks would have been closed down and their executives panhandling in front of Penn Station had the Fed not come to the rescue, and we should not forget that.
What Arby said.
And as Hugh and others have pointed out before, who says the SEC is not doing its’ job, exactly as written. Their job consists of performing Kabuki theater for the kleptocracy. Make it appear like there *might* be some kind of regulation going on, like there’s a possibility, any day now, that someone on Wall Street *might* get prosecuted for fraud. Real scary stuff. If not now, then surely next month, or next year, or the year after. If not by 2013, then surely by 2525….
Just watching the corrupt officials of the kleptocracy speak (with the sound muted) is kind of like watching a pig defecate. Reminds me of a Louis-Ferdinand Céline quote: …[Their].. “sentences are hard-put to survive the disaster of their slobbery origins. The mechanical effort of conversation is nastier and more complicated than defecation. That corolla of bloated flesh, the mouth, which screws itself up to whistle, which sucks in breath, contorts itself, discharges all manner of viscous sounds across a fetid barrier of decaying teeth — how revolting!…
“…Yet that is what we are adjured to sublimate into an ideal. It’s not easy.” (Journey to the end of Night)
The SEC has plenty of money to do whatever it wants. It wastes most of its enforcement resources on trivial amounts involving SEC registrants which lack political clout. I think the SEC enforcement division should be closed.
Your argument amounts to nothing more than “crime has gone up, therefore the police department is not doing its job and should be shut down”. It makes absolutely no sense. The bad news is that when essential government services fail, remedying the situation typically requires committing more resources, not fewer, to solving the problem.
“the accounting liability sits with Ernst & Young, for professional malpractice.”
Not exactly – the accounting liability sits with the company accountants, controllers, the Director of SEC Reporting and the CFO / CEO.
Auditing malpractice liability (such as it is after PSLRA) sits with the external auditor. The auditor can be dragged in as a co-conspirator in criminal cases, but the civil and criminal charges against auditors are usually different from the charges against the Company and its Employees.
Just a reminder – de jure if not always de facto, the Company prepares and presents the financial statements, and the external auditor opines on whether management’s financial statements are presented in accordance with GAAP (or equivalent). The auditor doesn’t prepare the Company’s financial statements.
I’m well aware of the fact that companies prepare financial statements. However, ex misleading or withholding information from auditors, having audited financials has the effect of shifting liability for accounting from the company to the auditors. Frank Partnoy discusses the case history at some length in his book Infectious Greed.
There’s a kind of grin and bear that came with all of this, when it was decided saving the banks was, quite arguably, better than the consequences of giving them their due. The moment any ethical official got behind this foul rescue had to be in exchange for a moral obligation to do the right thing later, yet that hasn’t happened. It is interesting to explore the lack of moral contract in these people because everything else, including ideology, is just varnish until we find some.
The SEC is supposed to be the “cop on the beat” protecting investors. It is pretty clear that when the government hired cops, especially under Bush, but continuing under Obama, that they looked for cops who stood no more than 5’4″ tall, and weighed no less than 300 lbs with a fondness for Jelly donuts.
and Porn …..
so sad for the small/med and honest business that get crushed by the compliance requirements and competitive disadvantage to TBTF and corrupt kleptocracy.
The executive branch has become virtual Monarchy or dictatorship choosing winners and losers. The perp walks and handcuffs come from the DOJ not the SEC. The DOJ gets its marching orders from the leader; “Look the other way, let bygones be bygones, Winning the Future (WTF)” OBama. When Obama said he was going to change politics as usual, lobby and big money influence who would have ever thought his motive was to make it worse.
“The judge’s negative ruling on a separate Sarbox charge on securities violations does not rule out other types of Sarbox charges, but the SEC incorrectly seems to be reacting this way.”
That’s a key point. Is the SEC reacting incorrectly or did the ruling shut down SOX 302 prosecutions?
BobH’s analysis sounds optimistic, if there’s a difference between the 404 certification and the broader certification Mozilo signed re the overall financials.
Issuers principal executive and financial officers must certify information contained in the issuer’s quarterly and anunual reports.
It (302) ALSO requires the executives to make the internal controls certification (that’s the 404 stuff)
Would a court make a distinction between the two types of certifications? If not,this ruling would serve as precedent, when it comes time to try a 404 case. No?
Did Judge Walter take SOX out back and shoot it, or does the SEC just need to up its game?
Actually, you guys are doing quite ok.
Over here in Australia, Greg Medcraft, co-founder and ex-chairman of the American Securitization Forum, is about to become the chairman of the ASIC (Australian Securities and Investments Commission).
http://macrobusiness.com.au/2011/03/asics-insider/
What a nightmare!
The elite corporate and banking structure, needed a puppet to provide amnesty. They found one. They bought and paid for him and sold him as some savior to a bunch of dipshits. It is as simple as that. Justice is just a matter of cost.
The SEC was a toothless tiger when I worked there in 1967. I suspect it was a toothless tiger under James Landis (income tax evasion) and Joe Kennedy (crimes too numerous to mention). The mission has always been to pretend to police Wall Street. Those who have never worked there cannot possibly imagine what the place is like. The only time work of any kind gets done is when a call comes in from a Congressman or a Wall Street or Washington law firm. On those occasions the ass kissing and genuflecting and foot shuffling and forelock tugging rivals an episode of celebrity apprentice. Giving the SEC more resources makes as much sense as relecting Obama to improve the condition of working people. It is nice to see others finally recognizing the truth about this Washington sinkhole.
During the financial crisis, the majority of SEC employees, including senior staff, spent most of their time surfing the Internet and looking at porn sites such as naughty.com, skankwire and youporn.
If they were given more money, more resources and staff they would just spend all of it on porn sites that charge by the minute, or they would spend it on phone sex, prostitutes and cocaine.
http://abcnews.go.com/GMA/sec-pornography-employees-spent-hours-surfing-porn-sites/story?id=10452544
Did anyone consider that the SEC didn’t pursue this because of the government position of trying to get every family into the “American Dream” of owning their own home? If they would take this to court and be under public scrutiny it might all come to light that, ultimately, the lenders were doing as they were told and SarbOx is just another failure of governments attempt to control markets