Social Security celebrated its 70th birthday last week.

It also marked 70 years that the Social Security system has failed to carry out one of its godfather’s wishes:

Washington, D.C. - On January 17, 1935, President Franklin Delano Roosevelt explained that, “in the important field of security for old people, it seems necessary to adopt … voluntary contribution annuities by which individual initiative can increase the annual amounts received in old age.”

Larry Kudlow notes where the system should be, actually must be, steered:

Unless Social Security is reformed substantially, by providing for the ownership of personal savings accounts that will permit stock and bond investments to finance benefits rather than tax hikes, the system will continue to deteriorate.

Only through market wealth creation will pension benefits for older Americans be fully financed over the long-term. If the government does not embrace this solution, it will break both hearts and promises as it raises taxes and cuts benefits time and again in the future — just as it has in the past.

Simply, the Social Security system will never be fixed until Congress realizes that President Bush is right: The ownership of market asset wealth — which is also a huge policy incentive to maintain our capitalist, free-market, economic-prosperity-creating machine — is the only solution. Sooner or later Washington will come to this realization.

I part with Kudlow on his certainty as to whether Washington will come around on individual investment accounts. I am hopeful, but recognize the fierceness of the opposition. Those who oppose individual accounts know that if they run out the clock for something like 5-10 years, it will become very difficult financially to pull off the transition. It’s sad but true: These people would rather have the elderly depend on the ability and willingness of future generations finance part or all of their retirement than give them full control over their financial destiny.

The “we knew it all along, we just couldn’t prove it” investigation of the manipulation of shareholder shakedown suits continues.

These are the “it’s management’s fault” lawsuits that have followed, as night follows day, almost any significant drop in a major publicly-held company’s stock.

Only The Wall Street Journal (link requires subscription) seems to care:

Federal prosecutors have stepped up their criminal investigation of Milberg Weiss, the nation’s largest class-action law firm, granting immunity to two former partners as they intensify their scrutiny of a third, prominent litigator William S. Lerach.

A grand jury in Los Angeles heard secret testimony three weeks ago from one of the former partners given immunity, Alan Schulman, lawyers close to the case said. Mr. Schulman’s cooperation is a major development because he worked alongside Mr. Lerach, a former senior partner at Milberg Weiss and one of the nation’s most prominent class-action lawyers.

The four-year investigation is focused on whether secret, illegal payments were made by the New York-based firm to plaintiffs whose names repeatedly appeared on securities class-action lawsuits brought by the firm, according to court documents and lawyers close to the case. Plaintiffs in such suits are not permitted to receive payments beyond those awarded by courts, to avoid conflict between their interests and those of the rest of the class. Often they must testify under oath that they haven’t received undisclosed compensation.

Prosecutors have informed Mr. Lerach and two other former partners, David Bershad and Melvyn Weiss, that they could face indictment for conspiracy, according to lawyers close to the case. The government also is probing payments made by Milberg Weiss to a financial analyst who repeatedly served as an expert witness in the firm’s cases, apparently taking the investigation in a new direction. Additionally, a new round of subpoenas has been sent to at least a half-dozen firms that were co-counsel with Milberg in securities class-action cases reaching back a decade or more.

The investigation is significant — and controversial — because it targets one of the nation’s most aggressive and successful law firms. Milberg Weiss has brought hundreds of securities lawsuits and won tens of billions of dollars in settlements and judgments against companies accused of defrauding investors.

… The outlines of the investigation first surfaced in an indictment handed up by the grand jury in June. The grand jury charged Seymour Lazar, a retired Palm Springs, Calif., lawyer who was a plaintiff in at least 50 Milberg Weiss securities cases, with fraud, conspiracy and money laundering, saying he had secretly been given $2.4 million for taking a leading role in those cases. Mr. Lazar’s attorney denied the charge and said that the payments, which were made by Milberg Weiss to Mr. Lazar’s lawyer, were legal and that no effort was made to conceal them.

… Prosecutors also are probing Milberg payments to John B. Torkelsen, a financial analyst based in Princeton, N.J. He testified as an expert witness in scores of Milberg cases and was paid tens of millions of dollars by the firm over nearly 20 years. Mr. Torkelsen typically testified on shareholder damages, which could influence the size of settlements or court judgments. Expert witnesses are not permitted to testify on a contingent basis or receive undisclosed payments.

This investigation doesn’t fit the media template of “poor, pitiful shareholder bamboozled by lying, greedy management” that is the basis for the (in my opinion) mostly phony suits over stock-price drops. So it’s being ignored, despite the enormous sums at stake and potential discrediting of some of the major “class-action heroes” of the 1980s and 1990s.

Part of the reason for the downplay of the story may be that observers think the partners and others involved are untouchable. We’ll see.

FLASHBACK: Payoffs to Shareholder Suit Plaintiffs Alleged