This commentary came from the fellow who sent this to me. I think it is spot-on.
I thought you might be interested in reading the actual opinion of the In Re Sentinel Group case, which I have attached in PDF. It was very hard to find for some reason, and I had to access my Westlaw account in order to get it. I think it would be well worth your time to read it, as I am afraid that it appears to confirm what you have been saying.
The entire case reads like an after-the-fact rationalization of a predetermined conclusion. Years ago when I was with a different firm, I worked on numerous major institutional fraud and auditing cases, and I cannot recall a ruling even remotely similar - let alone from a federal court of appeals.
Please pay particular attention to the section on equitable subordination, on pages 6 through 8. Unbelievably, the court acknowledged in that section that even though some of the bankers lied under oath during the trial, that fact did not prove "sufficiently egregious" actions on the part of the bank.
I will quote the opinion: "Instead of finding that their testimony [i.e. their lies] justified a finding of egregious bank behavior, the district court essentially found that the bank officials were such artless liars that they couldn't have been concealing deliberate wrongdoing." See page 7, column 2.
So in other words, a U.S. Court of Appeals has found that if a banker lies under oath during a trial, that fact proves that the bank was innocent of any misconduct with respect to the subject matter of those lies. Did we get transported to bizarro world without knowing it?