Harvey Pitt, the SEC chairman, is requiring the chief executives of the nations 1000 largest publicly owned companies to re-file their financial statements. He said they need to make sure the new statements are accurate, because if they aren't they will go to jail.
hooooboy. that has the potential of bringing on capitulation.... but, God bless him, he cuts to the <i>quick</i>. (do I hear the sound of shredders?)
Does Pitt work for George W.? He's sure Johnny-On-The-Spot all of a sudden? If the responsibility for truthfulness, which is required by law for good reasons, is put on the companies leaders, where it belongs, I'll bet that the public, the stockholders, will get a clearer picture of the true financial conditions of these companies, and for many of them I suspect that the truth will not be pretty. I wonder if there is a deadline set and if they will all wait until the deadline to re-file. It would be best if it happened in bits and pieces over a month or two so as to minimize the shock effect which could cause a panic.
It'll take a while. Pitt came in with the new administration. He was interviewed in Barrons. He seems like a good chap.
There has to be accountability (pun intended). These ideas of "everybodys doing it" and "it just happened, it's nobodys fault" just don't cut it. They will lead to ruin.
Yea, if you live in Thailand you might expect this kind of crap, but this is the USA. The strong accounting and reporting requirements we have, are what is supposed to make our markets the best in the world. The SEC needs to scare the living crap out of anyone remotely involved in these scandals. For example: there is no way that JP Morgan didn't know that Enron was going down, they were partners in most of the off book partnerships. The net needs to be cast very wide (if for no other reason than to scare anyone else thinking they might want to do this in the future). Additionally, no one man can do that much damage alone (Hitler didn't kill 6,000,000 Jews all by himself). Finally, I don't want to here about Andy Fastow going to prison for 5 years like Michael Milken. Fastow and all the rest of the cheaters should go away for a long long time (25 years plus). Hell if I knew I could steal a billion dollars in exchange for 5 years in a Cadillac prison, I might do it too.
If markets were efficient and totaly transparent, there would be no volatility and no opportunity to make money from trading, and without opportunity to make money, there would be no speculation, and without speculation markets become efficient etc - a self reinforcing circle Just watch over the next couple of years as market volatiility dies and so do the markets! See you 10 - 20- years later when it might pick up These cycles always repeat - and forcing CEOs to do all this stuff now is after the horse has bolted - all this stuff is coming out now since that is part of the cycle - boom, bust, recriminations, stagnancy, before it all starts again We have had to business people ruling the roost, and now it is time for bureaucrats to step in and try to take all the publicity - its all about bucks and ego
I completely disagree, if companies were "totally transparent" then there would be way too much information for a person or a group of people to digest. Total transparency would mean that investors would not only know where all the money is and where it's going, but would also know all the sales deals, all the potential sales deals, all the law suits, all the potential law suits, employee turnover etc. etc. . Providing this level of information obviously becomes very difficult in a short amount of time (and even more difficult to place a value on the company giving out such information). Even if that was possible on some level then there would be people speculating on weather a company was going to win a big sale or lose a prize employee. There would still be plenty of volatility to go around. The real issue here (as rigel alluded to earlier) is credit from the outside world. Prior to this fallout, the world abroad would prefer to invest in our markets because it appeared to be a safe haven (less risky). For example: When Lithuania was trying to become a country in the early 90's, they had to offer 40% return on their bonds in order to get investment, why? because it's a much riskier bet than the U.S.. People don't want to put their money there because they don't think they'll get it back. When people perceive that our markets are risky, they make industries pay for it through higher interest rates. Likewise higher interest rates (as we all should know) seriously hinder growth. There is the potential for a devastating effect down the road, if we don't right this ship quickly.
This I agree with. It is a cycle. The last time we had corruption on this level the US went through the most drastic changes in business history (although there have been a few minor confidence crisis since then). More Accounting theory and standards were developed from 1933 to 1945 than at any other time in history. The SEC was created as well as the major securities acts of 1933 and 1934. To the credit of that effort, I think the laws of those days have kept our country from repeating the total lack of confidence that succeeded the 1929 crash. Now I think we've learned that we have to develop a whole new wave of securities regulation which as stevet says will probably only last for 60-70 years until we make a whole new batch of regulation.