Right and Wrong Shouldn’t Be Guesswork
What if ... what if, these corporate buccaneers are right, or half-right, when they say they never meant wrong? What if prosecutors cannot prove otherwise, beyond reasonable doubt?
If you are attentive, there are words of caution buried parenthetically in news accounts of the now-routine criminal roundup of alleged corporate racketeers: Obtaining convictions isn’t going to be easy.
“These are some of the most intricate, complex facts I’ve ever run into,” said Rep. Billy Tauzin (R-La.). He was speaking of the fraud-plus case against silver-haired corporate wonder boy Andrew Fastow, ex-CFO at Enron. But he could just as well have been speaking of the whole mess left over from the boom of the 1990s.
Therein hangs the meat of the problem.
I’ll pick a number out of the air and dare you to prove me wrong: Our public securities laws and regulations are a hundred times too complex. Unfathomably so. And in the vast terrain of this “gray area,” sewer rats feed.
As business scandals continue to unfold, how many times have we heard an expert say something like this: Well, it may have been immoral, certainly it was improper, but it may not have been illegal.
I’ve taken a dozen stabs myself at trying to plow through the layers of laws and regulations that are supposed to ensure investors a fair shake in the free-market investment system. The result? Pity the poor souls who are going to be yanked out of their jobs or called back from vacations to sit on juries in these free-market malfeasance cases. Is someone like Martha Stewart an inside trader of stocks? Well, it depends. Some of those in the know say that if her brokerage tipped her to the fact that some ImClone insiders were dumping their holdings or trying to, she may be nothing but a conscientious investor. But if she was also tipped as to why other insiders were selling off, that may be different.
I think what the experts mean is that you can try to turn a profit on gossip so long as the gossip isn’t too good. Then it becomes insider dope.
What to do? In the hullabaloo to restore confidence in the system, regulators, Congress and the president have overlooked the one thing that might actually succeed. How about a wholesale and very public simplification of business law?
More than half of the country has now been dragged into the investment markets through changes in pension systems. When the futures of that many of us are involved, we shouldn’t have to wonder why something can be wrong and legal at the same time, and why a system that is supposed to be wide open for everyone almost never is.
Naturally, it is beyond the capacity of Congress or the White House to undertake such a daunting reform. Lobbyists exert too much control in Washington, and politicians are too beholden for campaign contributions. But from time to time in our history, we have entrusted important matters to study by appointed blue-ribbon commissions. You know the kind I mean, a panel of experts with unimpeachable reputations and a willingness to serve the larger interests of their country, a diminishing breed of American, perhaps, but not yet extinct.
Let them go back and affirm the original purpose of laws that govern business in the public interest. Investors are supposed to be able to understand the basic finances, the bottom line, of companies that offer stock for sale, period. Those people who advise and conclude these sales should be straightforward in their loyalties and motives. Entrepreneurial creativity should not include accounting or offshore post office boxes.
Why are there off-the-books business activities anyway? Or why must companies account for stock options on taxes but not in their annual reports? Why do we permit brokers to hand out IPO shares the same way auto mechanics pass out calendars to customers?
Give this appointed commission time to devise new codes to govern corporations and Wall Street and then have Congress vote the package up or down without tinkering by lobbyists.
The result would be good for business and good for the country. Vast thickets of regulation would be mowed down. Perhaps even Wall Street could gain some lost respect under a more logical and comprehensible framework of rules. The rest of us would wind up with what we presumed we had all along: laws to ensure us a fair shake when we invest our labors and our earnings in American enterprise.
No, you cannot stop wrongdoing. But we shouldn’t have to guess what it is, either.
