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Monday, February 11. 2008
Re Enron and Sarbanes-Oxley, from Criminalizing Capitalism in City Journal:
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What an unmitigated pile of horse shit. Nicole Gelinas use of Enron as an example of a business that made accounting errors and complex business deals and then got penalized by the government unfairly is dung.
I'm not going to take the time to critique an article as long and as full of crap as his but I can point the MF people to the fabulous work of then Wall Street Journal writer Charles Gasparino.
Reviews of the book by almost all the major business publications were glowing:
"Blood on the Street is a riveting account of the Wall Street scam in which ordinary investors lost literally billions of dollars -- in many cases their life savings -- in one of the greatest deceptions ever, by the crack reporter who broke the original story. In one of the most outrageous examples of dirty dealing in the history of Wall Street, hundreds of millions of dollars in illicit profits were made during the booming 1990s as a result of research analysts issuing positive stock ratings on companies that kicked back investment banking business. Now, for the first time, award-winning journalist Charles Gasparino reveals the whole fascinating story of greed, arrogance, and corruption. It was Gasparino's front-page reporting in The Wall Street Journal that brought the story to national attention and spurred New York State attorney general Eliot Spitzer to launch an official probe. Now, Gasparino goes behind his own headlines to tell the inside story of this spectacular swindle -- with revelations from his unprecedented access to never-before-published depositions and documents, including e-mail exchanges leading all the way up to Citigroup CEO Sanford Weill. Drawing on his research and interviews with industry insiders, Gasparino takes readers into the back rooms of Wall Street's top investment firms and captures the outsize personalities of three key players: Salomon Smith Barney's Jack Grubman, a braggart with one of the largest salaries on Wall Street; Merrill Lynch's Henry Blodget, the Yale graduate who hyped his way to the top of the research pyramid; and Morgan Stanley's Mary Meeker, the ""Queen of the Internet,"" who foresaw the market catastrophe but gave in to the pressures Blood on the Street shows how regulators, like former SEC chairman Arthur Levitt, allowed the deceptive practices to fester and grow during the 1990s bubble, leaving the door open for a then- little-known attorney general from New York State to step in and make his mark by holding Wall Street accountable. Gasparino provides the first major account of Spitzer's rise to prominence, detailing how the attorney general pursued key players to build his case against Wall Street, including his shifting allegiance to the powerful New York Stock Exchange chairman Richard Grasso. A fast-paced narrative rich in sharp insights, Blood on the Street is the definitive book on the financial debacle that affected millions of Americans. "
The above description doesn't even begin to get into Enron traders manipulation of the California energy market and the billions they extorted from that state. It's all on tape folks and listening to the traders laughing about taking down power stations on false pretexts' so they could then drive the price of energy up is as cold blooded as it gets.
It doesn't mention the analysts being pressured to give great due diligence reports in order to get more business.
Enron was a scam and Ken Lay is worm food and good riddance, Skilling and Fastow are doing time but not nearly enough for the damage they did.
No Enron wasn't anywhere close to capitalism, it was fraud.
P.T. Barnum's in pin-stripped suits...
But come on Habu... you've the experience to venture a possible solution, what is it?
Enron doesn't bother me - most of the guilty parties were prosecuted without the SOX laws.
I've been through SOX audits - what a pointless waste of millions of dollars.
Enron doesn't bother you and the sole reason you offer is that the guilty were punished?
I guess then Buchenwald, Bergen-Belsen, Dachau,Auschwitz-Birkenau didn't bother you because the guilt were punished.
Are you saying that out and out fraud that ruined hundreds of thousands of peoples lives doesn't bother you? Would it have been OK if the guilty had gotten away with their crimes? WOW.
It's like a shooting that takes place in a "gun-free" zone. More gun laws won't prevent the next one. Corrupt businessmen are more logical than deranged shooters, so yes - lengthy jail terms are a deterrent.
The SOX audits I have witnessed were in the wrong areas and looking at the wrong things. Their sole effect was to slow down business processes and eat up the time of highly educated professionals.
Responsible, ethical managers and business leaders prevent "Enrons" - not intrusive legislation.
People need to get over the brain washing machine that is Wall Street. It's your money. Lose it in a stupid investment it's your fault. Retail investment advice offered by the street is usually just plain old dumb. The business model is unique: you take the risk, we make the money. The ignorance and naivetie of some wealthy folks is hard to believe. Without it, a large chunk of the revenue generated by some of the firms wouldn't exist. Before you invest, please understand what you're doing and don't blame the other guy for your bad decisions. Buyer beware is a good rule of thumb when buying anything, even Enron, WorldCom or mortgage backed bonds. More regulation won't improve investor intelligence or protect them from their biggest enemy: themselves.