In what seems like a premise for erotic fan fiction starring Bernie Sanders and Elizabeth Warren, the Supreme Court has opened the door for banks to be sued under Racketeer Influenced and Corrupt Organizations Act statutes.
In a unanimous ruling Monday, the Supreme Court sided with investors who sued Bank of America Corp.’s Merrill Lynch and other brokerage firms. At issue was whether the plaintiffs, who alleged they lost money because of the brokers’ involvement in illegal short selling, could use New Jersey state court to sue over their losses -- even if the litigation cited federal laws.
The ruling forces Merrill Lynch, Bank of America’s corporate and investment banking division, and other firms to mount a defense in New Jersey state court. The plaintiffs in the case are using the state’s RICO statute as part of their complaint.
Yeah, the same RICO made famous in every mafia movie or TV show ever made.
In fact, RICO was written and passed as a tool to go after the mob, and it is now being applied to BofA Merrill because the Supreme Court has ruled that naked shorts are legally comparable to walking into a dry cleaner and saying "Nice shop you got here...be a shame if anything happened to it."
In the suit, filed four years ago, investors in Spectrum Group International Inc. -- a dealer of precious metals and collectibles formerly known as Escala Group Inc. -- blame Merrill Lynch and other brokerages for helping to drive down the company’s market capitalization by $800 million over 11 months by aiding naked short sellers whose bets against the company pushed down the value of its shares.
Okay, so BofA is actually walking into the dry cleaner and saying "We'd actually love it if something happened to this place because we're invested in an Uber for dry cleaning, so we're going to tell our friends that you ruin our clothes all the time. But the best part is that we're not even going to give you any actual business. HaHa."
And that's just an awesome prank.
Regardless of your stance on naked shorts and their legal standing, you've got to appreciate a a situation that allows for BofA to be hit with a RICO rap, if only for a potential future in which Brian Moyhnihan is brought before Congress to spill the beans but clams up after his brother from Sicily is brought into the chamber wearing a very elaborate shirt.
It was between the brothers, Kay. Jamie Dimon had nothing do with it.