And so I'd be spitting tacks at District Court judge James Weir were I one of the many who was burned by Hanover Finance.
Read the Herald and weep.
Mark Hotchin, director of Hanover Finance, and Kerry Finnigan, another director and CEO of Hanover, successfully were granted name suppression of that that they were among the victims of a Ponzi scheme.
Mr Hotchin said in his 2003 affidavit requesting name suppression that he believed if the facts of his having invested in the scams became known:Simply amazing.
- "There would be concern over the investment strategies adopted within the Hanover organisation because of the loss of credibility and damage to my reputation."
- "Investors and third parties with whom Hanover and its entities deal could well come to the conclusion that if one of the directors of Hanover was making inappropriate investment decisions personally then he could well be doing the same for the group. This in turn could cause a lack of investor confidence and support potential for a run on funds, the possible collapse or restructure of the Group with obvious impact on its 600 employees."
...
But there is no indication in the decision by District Court judge James Weir that the judge considered that investors and potential investors were entitled to the information to make a balanced assessment of their capabilities.
Mr Hotchin and Mr Finnigan were prominent figures in finance companies which failed. Together the ventures had a billion dollars of investors' money at risk.
Millions of dollars were invested in Hanover after name suppression was granted and at a time when its advertising was based on claims of prudence, careful strategies and the experience of its managers.
By suppressing an example of poor judgement by a co-owner and director and an executive director, Hanover investors were denied means to measure its claims of prudence and care.
The state can induce market failures, when it tries hard enough.
Just goes to show the unintended effects of discretionary decision making powers granted to the judiciary, as well as the rather limited critical capacity of those endowed with the judicial robes. In this case it was not like there wasn't any indication of such side effects, as Hotchin had in fact argued to obtain a suppression order because of the effect of publicity on the behavior of investors.
ReplyDeleteBez
I'm struggling to understand how the judge read that list of reasons from Hotchin and decided they did anything other than make a solid case for the release of his name. Surely a test of release is whether disclosure of Hotchin's participation would have given a false impression of his ability. Presumably the judge instead limited his attention to consequences, and discounted the likelihood of a disaster: an outcome view of the world, rather than a process view, and a critical mistake in view of the complexity of working out the consequences. Hubris.
ReplyDelete@Matt: It's what you get if you let judges make the balancing exercise between the consequences of publicity on a defendant and the "public good". It's not for nothing that proper justice is always deemed to be open justice.
ReplyDeleteBez
Could have made a better return betting on the Washington Generals. They're due for a win!!
ReplyDelete