This is a rush transcript from "On the Record," August 5, 2009. This copy may not be in its final form and may be updated.
GRETA VAN SUSTEREN, FOX NEWS HOST: When will it stop? Last night it was Bank of America. Tonight it is General Electric. They must think we are all big fools! Listen to this and ask yourself if this is fair or right. The SEC just slapped GE with a $50 million fine. Why? The SEC says GE misled investors by reporting false financial results.
Misled? Are you kidding? It's lying! It's wrong! Keep in mind nobody in GE is getting charged criminally for lying. This is just a civil penalty. But guess who pays that $50 million fine for that lying? The people at the top who actually did the lying? No, of course not. The shareholders pick up the tab for the liars. The little guys pay for the fat cats' lies.
Joining us live is Steve Moore, senior economic writer for The Wall Street Journal editorial page. It is so -- this one enrages me.
VAN SUSTEREN: Last night, Bank of America...
STEPHEN MOORE, WALL STREET JOURNAL, "THE END OF PROSPERITY" CO- AUTHOR: Right.
VAN SUSTEREN: Fifty million dollars (INAUDIBLE) pay a fine, and the liars and the cheats...
VAN SUSTEREN: ... don't pay it.
MOORE: The reason you should be enraged and people -- every shareholder in GE should be enraged is that the people who were defrauded here were the investors. They were the people who were cheated by this faulty information.
VAN SUSTEREN: And they're paying for it.
VAN SUSTEREN: They're paying for their own defrauding!
MOORE: The people who were cheated are the ones who have to pay for the crime. And you're right, that's -- that's outrageous. I agree with you. I think that the people who should pay these fines are the actual people, the accountants and the directors and the CEO, who were responsible for these faulty -- if they knew, if they knew about the information.
VAN SUSTEREN: Well, it was described as intentional. It's not like an accidental mistake but intentional, this...
VAN SUSTEREN: ... these sort of...
MOORE: ... they intentionally misled.
VAN SUSTEREN: Yes, but where is our Justice Department? I mean -- I mean, what are they doing -- I mean, if I -- if I lie and I run a 7-Eleven, I'm going to jail.
MOORE: But we don't know yet whether the SEC criminal division will go after the people who are responsible.
VAN SUSTEREN: You don't think -- you don't think that's part of the deal, it said that and part of the settlement is that GE neither denies nor admits...
VAN SUSTEREN: ... any civil responsibility.
MOORE: I don't know -- I don't -- I wasn't -- I'm not aware of whether this basically forestalls any further, you know, going after the people who conducted the misdeeds. But the main point to understand here is when these suits are brought and when there's a misdeed...
VAN SUSTEREN: Civil suits.
MOORE: ... the people who end up paying are the people who were defrauded in the first place, which is the investors, which is completely unfair and makes no sense. And why isn't this -- why aren't they going after the accountants who defrauded the shareholders?
VAN SUSTEREN: And the conduct is usually over years. And this -- it gets even worse. A $50 million penalty that they defrauded shareholders are now having to pay themselves from what the high-ups did -- but it gets even worse. According to one newspaper account, that in order to try to hide what they did, they hired lawyers, of course -- and I'm a lawyer -- and they paid...
MOORE: Two hundred million.
VAN SUSTEREN: ... $200 million!
VAN SUSTEREN: So now those who were defrauded...
VAN SUSTEREN: ... they're going to -- they were the defrauded. They're going to pay their own penalty for defrauded themselves, plus $200 million to just hide it.
MOORE: Well, but here's the thing about this case, though. We don't...
MOORE: We don't know whether GE was really guilty. I mean, in a lot of these cases...
VAN SUSTEREN: So they're just throwing away $50 million?
MOORE: Well, in a lot of cases, the legal cost gets so high that the company just says, Look, settle the case because...
VAN SUSTEREN: You know what? You know what? That's...
MOORE: ... you have $200 million...
VAN SUSTEREN: Steve, I've done that myself, but that's when it's chump change.
VAN SUSTEREN: To get rid of a nuisance suit.
VAN SUSTEREN: That's chump change. Fifty million dollars is not chump change.
MOORE: Well, it's not chump change, but when you've got -- when you've already racked up $200 million in legal bills -- and you know, maybe they just thought there was no way...
VAN SUSTEREN: Well, then they're incompetent?
MOORE: ... they could win the case.
VAN SUSTEREN: Is that the story?
MOORE: You know, here's the problem. Let me -- let me take their side in this for one minute.
VAN SUSTEREN: OK.
MOORE: You've got the SEC that has an unlimited budget. They can spend whatever they want in terms of going after these companies, and so, you know, you've got one side that has an unlimited budget, and GE might have been looking out for their shareholders. But look, the bottom line here is we've got to change the way these lawsuits are being paid up. The people who should pay the -- are the people who did the crime. You do the crime, you do the time. And that's just not happening right now.
VAN SUSTEREN: I don't know. There's something about when some -- when these rich people at the very top mislead, it's just called misleading, it's not called lying.
VAN SUSTEREN: They have civil penalties. They don't go to jail. And I don't know if they should go to jail or not, but at least I would hope that there'd be an aggressive investigation to see whether or not (INAUDIBLE)
MOORE: Well, especially when you consider some of these people have made hundreds of millions of dollars in salary.
VAN SUSTEREN: We haven't even gotten to bonuses.
VAN SUSTEREN: I mean, it's, like, I don't know if there any bonuses there, but it really -- in this day and age, is that, you know -- I mean, it's -- it's terrible, all this money being just thrown away.
MOORE: And it's terrible because it's a double penalty for the shareholders.
VAN SUSTEREN: Indeed. Steve, thank you.
MOORE: Thank you.
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