Corporate fraud legislation much better than nothing

Posted: Thursday, August 01, 2002

Corporate executives who deceive and defraud investors are now more likely to find themselves behind bars. ...

Congress, in an attempt to help a sinking market find a quick rebound, passed a series of bills over the past 10 days that surely needed more deliberation. Despite the haste, the legislation has enough thoughtful components to have wide-reaching and lasting impact. ...

The basic pieces of the legislation are sound, but how they are used will determine just how effective this reform is over the long term. For example, the board that will oversee the accounting industry will have disciplinary and subpoena powers. If it operates quietly and apolitically, the board will be effective. But it can just as easily be counterproductive if it is overly aggressive and too public, adding to investor anxiety. ...

No package of laws will make dishonest executives suddenly turn honest, nor will this legislation restore decimated retirement accounts. But at least the guarantee of a jail term will serve as a deterrent and new transparency will likely eliminate the more brazen dishonesty.

-- The Greenville (S.C.) News

July 27

The Greenville (S.C.) News, on legislation for regulating corporate accounting:

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