Yesterday morning, the headline to this Kurt Eichenwald/NY Times article was the following:
“Reversal of Andersen Conviction Not a Declaration of Innocence.”
That headline prompted this yesterday morning post.
Today, the same Times article has the following headline:
“Analysis: Reversal of Andersen Conviction”
H’mm. Coincidence? ;^)
This NY Times article reports that former Credit Suisse banker Frank Quattrone, who was convicted of obstruction of justice last year for sending out an email regarding the bank’s document retention policy, is raising new issues on his appeal based on the U.S. Supreme Court’s decision earlier this week in the Arthur Andersen case.
Apparently, the jury instructions used in the Quattrone trial were similar to those used in the Andersen trial. Inasmuch as Quattrone was not charged with any other crime, those jury instructions appear to have become the key issue in his appeal.
Although the Stros (20-32) just won their second series in a row, the club is clearly not a contender for a playoff spot this season. Thus, Houston Chronicle sportswriter and fellow blogger Richard Justice and I have been corresponding regarding the mistakes that Stros management made that resulted in this season’s currently last place club. Our friendly exchange is generating some interesting observations.
I initiated the exchange by making the following point in response to one of Richard’s recent posts that seemed to blame the club’s failure this season on Stros management’s failure to sign free agents Jeff Kent and Carlos Beltran during this past off-season:
[A]lthough you and I agree on most things related to the Stros (particularly that they need more hitting), the statistics do not back up your assertion that the Stros should have signed both Kent and Beltran. Even with them this season, this Stros club would be among the worst hitting teams in MLB. Here’s a recent post on my blog that discusses this point.
The reality is that the Stros were not a particularly good hitting team last season even with Kent and Beltran, but the late season surge made most folks overlook the problem. The lack of development of hitters such as Lane, Everett, and Burke — coupled with the downturn of Bags and management’s unwillingness to replace such poor hitters as Ausmus, Chavez, Bruntlett and Viz — has had a much greater impact on the Stros than losing Kent and Beltran.
Here is Richard’s response to my post.
Meanwhile, Brian Goff over at the Sports Economist chimes in with this insightful post in which he points out that it takes a balanced team effort — and not just big stars — for a club to be successful:
Houston offers a dramatic illustration of the fact that to excel in team sports requires a team — not a high-priced superstar or two chewing up the team bankroll (basketball the possible exception with so few players). Clemens ($18M), Bagwell ($18M), and Andy Pettite ($8.5M) make up about 65 percent of the team’s payroll — an amount nearly equal to the Rangers’ entire payroll. Besides Beltran, this $44 million would go a long way in providing another strong position player or two (catcher or SS being big needs) along with pitcher or two. Clemens is a great pitcher but very expensive for a player being used every 5th game. Bagwell’s salary is commensurate with his career peak, not the form of the last three years. Pettite’s salary exceeds Oswalt’s by $2.5 million even though Pettite’s career numbers are not in his league. Once again, I will push the theme that it’s not just the amount of money available that matters but how they spend it.
Although Brian’s argument is valid, I would point out that the situation with the Stros is not as dire as it seems in the thros of a probable last place season. Bags is probably done as a player, so the financial drain of his contract will likely be offset at least to some extent by proceeds from disability insurance. Clemens’ deal — which the Stros entered into only after Beltran signed with the Mets — is for only this season, which leaves only Pettitte’s contract as the Stros’ last big obligation to an aging veteran. As a result, the Stros are in a financial position to begin making the free agent acquisitions and trades necessary to regain contender status. Berkman, Oswalt and Lidge — along with emerging solid players such as Backe and Ensberg — is not a bad nucleus to build around.
By the way, this Newsday report indicates that the Yankees may have some competition for Clemens if he elects to allow the Stros to trade him to a contender.
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 the bursting of the stock market bubble in the early part of this decade. Here is the SEC press release on the resignation and an earlier post from late last year on concerns that business interests were expressing over Mr. Donaldson’s performance.
President Bush intends to nominate Republican California Congressman Christopher Cox to replace Mr. Donaldson. Representative Cox was a White House counsel during the Reagan administration and a corporate finance attorney with the law firm of Latham & Watkins. He is in Washington for being one of the Congressional leaders advocating repeal of inheritance and estate taxes.
Mr. Donaldson clearly alienated business interests during his two and a half years at the Commission. He was an advocate of hefty fines for corporate wrongdoers, registration of hedge fund advisers and a requirement that stock marketplaces always give investors the best possible price. Although it was enacted before he was appointed, Mr. Donaldson was the first SEC chairman who was required to deal with enforcement of the landmark Sarbanes-Oxley corporate reform law, which has been no picnic. Most business leaders have criticized the law as another costly governmental regulation of business. Finally, Mr. Donaldson was often at odds with his two fellow Republican commissioners as he increasingly sided with the commission’s two Democrat commissioners in pushing through controversial proposals.
However, the straw that broke the camel’s back was probably the disclosure last week of the Commission’s $48 million budget shortfall stemming from real-estate costs relating to its sparkling new building in Washington and a GAO audit report that found that the agency had failed to institute some of the same financial controls that it requires of public companies. Oops!
Update: Professor Oesterle over at the Business Law Prof Blog notes in this interesting post that the SEC’s abysmal handling of the increased costs resulting from Sarbanes-Oxley was the more than enough to justify Mr. Donaldson’s exit.