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Senator Spector's New Fraud Bill

Now, Senator Arlen Spector of Pennsylvania introduces a bill that would make brokers, accountants, lawyers, and others that assist companies in fraud potentially liable for their roles. 

Such suits for "derivative liability" had earlier been blocked by the Supreme Court.quite reasonably, perhaps on the grounds that they were not the purview of the judicial system. The bill introduction places this issue where it belongs, with the legislature.

It appears to be a fairly weak bill that places caps on damages. Moreover, it does not impose "whistleblower" duties on third parties. The only requirement is that these third parties refrain from actively providing "substantial assistance" in a fraud.

Even so, it cuts some of the ground under fraudsters' feet. Most frauds need the cooperation, or at least complicity of several parties, including "outside" parties. Providing a disincentive to such outside parties to participate will at least make in harder, though by no means impossible, for scamsters to perpetuate their frauds.