I ?decided it would be a good idea to visit Wall Street. I wanted to see firsthand what the hullabaloo was about.
Leaving the Brooks Brothers behind, my apparel de guerre allowed me to freely move through the streets, receiving invitations to the General Assembly Meeting at Washington Square Park. It was a relief to be counted among the
99 percent!
The 1 percent apparently were huddled in their clubs, waiting for the storm to pass.
Tim Terry
Zuccotti Park was occupied, and even the right of sanctuary at Trinity Church was questionable for them.
Standing in the relative quiet of Trinity, I reflected on the financial mess that has given rise to this movement. Nine years ago the Sarbanes-Oxley Act (SOX) promised to reform Wall Street.
The question as to its effectiveness is a matter of much discussion. What is not up for debate is the disenfranchisement felt by millions.
To their way of thinking, Wall Street has been engaged in high-stakes shenanigans and the 99 percent are paying the price.
Perception is a funny thing. There are undoubtedly abuses, but the economic crisis is a creature of its own making.
The economy is a mess, and it will take time to make it right. The new normal may not look normal to many, especially investors.
And guess what ? the promise of financial reform introduced by SOX appears to be empty.
Not surprisingly, many of the titans of Wall Street are viewing this as an opportunity to dismantle or at least dismember SOX.
The conventional argument goes like this: It is a financial burden which is creating a lack of competitiveness for U.S. companies at a time when they need to have everything going for them.
These are the same folk who are advocating allowing tax-planning profits parked offshore to be repatriated with little or no taxes.
Investors: caveat emptor! Those of us who have good memories of the financial shenanigans that gave rise to SOX are loath to consider any changes that alter better transparency and accountability.
While this Act certainly put a burden on public companies, it also raised the ante for CEOs and CFOs by requiring them to certify and approve the integrity of their company?s financial reports on a quarterly basis.
This is a big deal because they must now take personal responsibility for accurate financial reports. As these reports are the lifeblood of our financial exchanges, their integrity is critical to our capital system.
As someone who has been advising investors for more than 30 years, I tend to look at life before and after SOX.
Prior to 2002 some of us were skeptical of the financial reporting. We knew many companies routinely ?groomed? earnings to meet Wall Street expectations.
The challenge was to identify that stock before it found its way into our portfolios.
That said, even the most cynical among us was shocked to learn a CPA by the name of Scotty Sullivan had engineered an $11 billion dollar financial fraud at WorldCom. The quick additions of Enron and Tyco to the list created a tidal wave of reform that resulted in a near unanimous vote by the Senate and House to usher in SOX?s passage.
Observing the proceedings in Zuccotti Park, I thought it remarkable, in the face of these protests, that pressure is mounting to repeal the provisions of SOX requiring executives to swear to the accuracy of their financial reports.
I was drawn back to Euripides? line from Hippolytus: ?My tongue swore, but my mind was still unpledged.? How little human nature has changed since 428 BC.
Source: http://business380.com/2011/11/20/finance-transparency-accountability-still-to-be-valued/
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