Business Magazine

Bear Stearns: Why Civil Action, Not Criminal?

Posted on the 03 October 2012 by Wallstlawblog @Wallstlawblog

The easiest explanation is a really short one - O.J. Simpson.


Translation: To very loosely paraphrase James Carville -  Its the burden of proof, stupid.




Here's why the first real mortgage-backed-securities fraud case will be a civil action rather than a criminal prosecution:

In a civil action, a plaintiff (there is no prosecutor in the civil case) must meet the preponderance of the evidence standard in order to win.  What is a preponderance of the evidence? 51%.  The AG has, in other words, a pretty big margin of error.
In a criminal case, the burden of proof is the impossible to define, and very hard to meet, "beyond a reasonable doubt" standard.   Or, as re-christened by the late, great Johnny Cochran,  "if it does fit, you must acquit..."



Thus, in a criminal case, the prosecutor has a very, very small margin for error. 

To sum up: New York Attorney General Eric Schneiderman is no dummy.  He wants to win.

By Brett Sherman

Managing Attorney

The Sherman Law Firm

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