Jul 162002
Authors: Ben Koerselman

As I write this, a potentially dark day on Wall Street has been averted. After falling almost 440 points early Monday the Dow rallied late in the day for a loss of 45.34, closing at 8,639.19. This drop follows four days of triple-digit losses last week, and depending on what Federal Reserve Chairman Alan Greenspan said in his testimony before Congress on Tuesday, further losses in the Dow may be forthcoming.

Meanwhile Monday, the U.S. Senate unanimously passed a bill to reform the accounting industry and offer stiffer punishments for executives convicted of corporate fraud and abuse. The bill would create an independent accounting board to police the accountants and prohibit accounting firms from also offering consulting advice, as was the case at Arthur Anderson with its client Enron.

The bill also incorporates some of the suggestions made by Pres. Bush in a speech delivered on Wall Street last week, and goes further than a similar House bill passed in April to reform the accounting industry and punish those responsible for the abuses. Bush wants a final bill on his desk for him to sign by next month.

Anyone who has bore witness to the steady decline of the stock market these past few weeks, or heard the stories of employees at Enron and WorldCom who have lost a large part of their retirement savings (some from Enron made a portion of it back by posing for Playboy and a Playgirl issue, along with more corporate-scandal-themed issues of Playboy, are on the way), or seen the endless parade of corporate execs taking the fifth in front of Congress, has to agree that quick and decisive action is necessary to help rebuild investor confidence. Hopefully, these bills will have the desired affect.

For now, it appears that the list of disgraced companies will only continue to grow. Colorado’s own Qwest is currently under investigation by the Securities and Exchange Commission for allegedly overstating revenues the past couple of years. Qwest stock is now trading below junk status, so if you want to buy it for cheap now is the time. Even the President and Vice President, both former businessmen, have come under fire of late for supposed misconduct during their tenures at Harken Energy and Halliburton respectively.

In light of all of these scandals, I, like many Americans, have decided to stay out of the stock market for the time being.

My one and only previous investing experience, in a relatively safe mutual fund, came right at the height of the Internet boom of the late 90s. I had watched my brother nearly double his investment in the same mutual fund over the preceding year, but, of course, the second I jumped in the Internet bubble burst and I watched my paltry investment drop rapidly rather than climb.

The one thing the experience taught me (other than that I have notoriously bad luck when it comes to money matters) was that “there ain’t no such thing as a free lunch,” which incidentally is a favorite expression of my dad’s.

What I see as the purpose of the recently debated bills in Congress, is teaching this lesson on a much grander scale to corporate executives and accounting firms. If you choose to move numbers around the balance sheet in an effort to inflate corporate profits, thereby increasing the money you are making on stock options and allowing you to buy that fifth piece of property in Aspen (you know for when the in-laws come to stay), you will pay the price in jail time and increased fines.

I only regret that if convicted these disgraced former corporate officers won’t be spending time with the rest of the petty thieves, frauds, swindlers and burglars in a maximum-security prison. The ex-employees and investors who lost everything betting on the stocks of Enron, WorldCom and others deserve at least that much.

-Ben Koerselman is the editor in chief of the Collegian. He can be reached at bkoersel@aol.com

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