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Criminalizing Capitalism
If I didn't know better, I'd say that Nicole Gelinas has been reading (H/T Professor Bainbridge) my blog over the past several years: [I]n the end, Sarbanes-Oxley has just made it easier for ambitious government attorneys to criminalize bad business...
The faux Enron whistleblowers
First, it was Sherron Watkins portraying herself for profit on the rubber-chicken circuit as a whistleblower of wrongdoing at Enron when, in fact, she was no such thing. Now, this USA Today article raises substantial questions regarding the credibility and...
Legal problem of the day
An employee of a client of yours comes to you with a problem. He has been downloading child pornography on his computer. He has not distributed it and has no information that he is under investigation. However, he is quite...
Dissecting the expanding realm of white collar prosecutions
Over at Point of Law.com, Moin Yahya, Assistant Professor of Law Faculty of Law at the University of Alberta, is dissecting the prosecution against Conrad Black (earlier posts here) in a series of posts, the first two of which are...
Bainbridge on Sarbanes-Oxley
Given how much this blog addresses issues relating to the Sarbanes-Oxley Act, the following announcement is timely: [Stephen Bainbridge's] Complete Guide to Sarbanes-Oxley is now shipping from Amazon. Amazon's Product Description: Congress passed the Sarbanes-Oxley Act in response to major...
The court of investor opinion
Alex Pollock has an interesting idea to help decide the debate over the true effects of the Sarbanes-Oxley Act on the U.S. securities markets: [I]f Sarbanes-Oxley 404 were voluntary, would investors differentiate among American companies and pay a premium for...
The politics of destruction
In this International Herald Tribune article, Michael Oxley -- the "Oxley" of the Sarbanes-Oxley corporate governance statute -- confirms the vacuous nature of the politicians who passed that destructive law and encouraged the destruction of Arthur Andersen and various Enron...
Some of the reasons why Crane is taking EGL private
Channeling one of the dynamics involved in the increasing cost of public equity, Henry G. Manne (prior post here) provides this excellent Wall Street Journal ($) op-ed (available free here for the next 7 days) in which he systematically disassembles...
The Committee on Capital Markets Regulation Report
As expected, the report of the Committee on Capital Market Regulation issued today is calling for represents arguably the most high-profile effort to date to present in the public forum the case that excessive business regulation -- much of it...
Mayor Bloomberg, save your money
This short WSJ ($) article left me shaking my head: New York City Mayor Michael Bloomberg appointed consulting firm McKinsey & Co. yesterday to examine why more international companies are choosing to raise money outside of New York. The two-month,...
Why bother with being a public company?
Following up on thoughts expressed in this post on the Kinder Morgan leveraged buyout from earlier this week, this Opinion Journal editorial (and related WSJ ($) article) note that the trend toward private equity financing is a direct result of...
SEC rejects meaningful SOX reform
The Securities and Exchange Commission has chickened out on reforming implementation of one of the most costly and misdirected forms of business regulation in recent memory, the Sarbanes-Oxley legislation. The SEC press release is here and previous posts on SOX...
The Great Waste
As noted earlier here, I was able to attend the Lay-Skilling trial for several hours on a couple of afternoons this past week. As I watched Jeff Skilling defend himself against criminal charges amidst the overwhelming societal bias that exists...
GM's Enronesque experience continues
This Floyd Norris/NY Times article reports that General Motors' descent toward what is increasingly looking like an inevitable reorganization is looking absolutely Enronesque: There was a time when General Motors was seen as the paragon of financial quality. Its bonds...
Thinking about SOX
The Free Enterprise Fund's Mallory Factor observes in this WSJ ($) op-ed today that even notorious anti-business politicians such as House Democrat Nancy Pelosi and the Lord of Regulation are starting to question the over-reaction that is the Sarbanes-Oxley legislation....
The Bush Administration's pro-business ruse
Earlier posts here, here, and here -- among others -- question the conventional wisdom that the Bush Administration is particularly pro-business in its orientation. Consistent with that theme, Larry Ribstein notes that the Bush Administration's stance on Sarbanes-Oxley has reflected...
Railing against the capitalist roaders
Most of the time, The New York Times does a reasonably good job of covering business matters, but there are still days when the paper resembles the People's Daily of New York. Yesterday was one of those days. First, Times...
Bainbridge on the SOX lawsuit
In this TCS Daily op-ed, the inimitable Professor Bainbridge takes up the lawsuit filed in Washington last week in which an activist think tank asserts that that the Sarbones-Oxley Act's Public Company Accounting Oversight Board (nicknamed the "Peekaboo board") is...
The difference between theory and reality in regard to SOX
When I first saw this Washington Post article earlier today that assessing the overall effect of Sarbanes-Oxley on corporate governance in the post-Enron era, I thought about posting a piece on it, particularly given that SOX does not really deter...
Look out, General Counsel
John over at the Wired GC provides this timely and informative post about the troubling implications of the criminal case against Ellen Roth, the 61-year-old former in-house lawyer at a U.S. subsidiary of German electronics-maker Siemens. As Peter Lattman noted...
Bainbridge disassembles Nocera on SOX
The New York Times' Joseph Nocera has written a couple of real doozy op-eds recently, one extolling the "lofty standards" of New York AG Eliot Spitzer and another one defending the virtues of the Sarbanes-Oxley Act, the latter of which...
Criminalizing everything
George Melloan, the deputy editor, international, of The Wall Street Journal, has recently written two columns (here and here) in which he has addressed a common topic on this blog -- i.e., the increasing criminalization in American society of ordinary...
What really happened at Refco?
Those of us who have been following the Refco case are familiar with the allegations that have brought the big securities trader to its knees in bankruptcy -- Refco's former CEO, Phillip R. Bennett, hid ties to the bad debt...
It's a small world in auditing
As accounting firm Grant Thornton, LLP reviews its liability insurance limits in connection with its audits of Refco, a couple of interesting facts are emerging. Turns out that Refco hired Grant Thornton in 2002 to replace Arthur Andersen as the...
The effect of Sarbanes-Oxley on Krispy Kreme
This post from earlier this week addressed the wide-ranging negative effects of the Sarbanes-Oxley legislation that was supposed to curb and correct the corporate fraud that supposedly prompted the bursting of the stock market bubble earlier in the decade. Meanwhile,...
The SOX drain
The Sarbanes-Oxley legislation (pdf) is an example of government at its worst -- a knee-jerk reaction that addressed a relatively small problem (i.e., crooked businesspeople) that had little to do with the circumstances (i.e., the bursting of a stock market...
Scrushy is acquitted
Former HealthSouth Corp. CEO Richard M. Scrushy was found not guilty today by the jury in the trial over over his alleged participation in a $2.7 billion accounting fraud at the huge health services company. Along with the sentencings in...
Will the Scrushy jury deliberations take longer than the Scrushy trial?
U.S. District Judge Karon O. Bowdre today appointed an alternate juror to replace a male juror suffering from "recurring health problems" during jury deliberations in the corporate-fraud trial of former HealthSouth Corp. CEO Richard M. Scrushy (a previous post on...
The effects of criminalizing auditors
This Wall Street Journal ($) article picks up on the theme of this post from late last year -- i.e., that the government's regulation of accounting firms through criminalization of their services is contributing to the shortage of accounting firms...
George Melloan on the Andersen decision
George Melloan is deputy editor of The Wall Street Journal, where he is responsible for the editorial pages of The Wall Street Journal Europe and The Asian Wall Street Journal and writing a weekly column called Global View. Mr. Melloan...
The Donaldson resignation
Securities and Exchange Commission Chairman William H. Donaldson announced yesterday that he will resign at the end of the month. President Bush appointed Mr. Donaldson in 2003 in reaction to the wave of hyper-publicized corporate scandals that resulted from...
"And those legacy airlines are doing just great, too"
Federal Reserve chairman Alan Greenspan gave the commencement address at Wharton yesterday and was quoted as saying the following: "I am surprised that the Sarbanes-Oxley Act, so rapidly developed and enacted, has functioned as well as it has." H'mm. This...
It continues to get worse for AIG
Following on this progression of damaging public disclosures over the past several months, American International Group Inc. announced yesterday, as this NY Times article reports, that the company has decided to delay for a third time the publication of its...
More on the negative impact of Sarbanes-Oxley
William J. Carney is the Charles Howard Chandler Professor of Law at Emory Law School, where he specializes in business associations, securities regulation and corporate law. In this new SSRN paper, The Costs of Being Public After Sarbanes-Oxley: The Irony...
The lagging reform movement in corporate governance
The NY Times' Kurt Eichenwald, who has been covering the Enron scandal and other post-Dotcom business busts over the past several years, reviews in this NY times article the current status of the lagging government reform movement in regard to...
WorldCom outside directors settlement
10 of the 12 former outside directors of WorldCom Inc. have agreed in principle to pay $18 million out of their own pockets as a part of a $54 million settlement of the class-action lawsuit that WorldCom bondholders and shareholders...
An annuity for auditors
Don't miss Holman Jenkins, Jr.'s Business World column this week in the Wall Street Journal ($) in which he reviews the rather remarkable effects of the Sarbanes-Oxley legislation, which was Congress' knee-jerk public relations reaction to the WorldCom and Enron...
More business crime? Or just more prosecutions?
Readers of this blog know that I am critical of several recent "popular" prosecutions of business executives, and this NY Times article reports on the opinions of several experts who agree with my view: "It is exaggerated to say that...
The very big business of private equity
William J. Holstein is the editor of Chief Executive magazine and, in this NY Times piece, interviews Donald J. Gogel, the chief executive of Clayton, Dubilier & Rice, one of the oldest private-equity firms in the world. The entire interview...
SOX Pox
As noted in this earlier post, the legislative reaction to the corporate scandals over the past few years has had unintended consequences--i.e., exorbitant compliance costs. In this article, UCLA corporate law professor Stephen Bainbridge decries the lack of legislative cost-benefit...
The Law of Unintended Consequences
In the aftermath of Enron's demise, Congressmen fell over themselves in self-righteous indignation proposing legislation that would ensure that such a debacle would never occur again. Not only does the nature of man ensure that another Enron debacle will occur,...
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