Cox Promises Vigorous Enforcement

According to press reports, Christopher Cox has pledged "continuity, clarity, and consistency in the commission's rule-making and enforcement responsibilities," in written remarks prepared for his Senate Banking Committee confirmation hearing.

That is all well and good, and something that all market participants are looking for - in particular the clarity part.

But then he took a turn and called the Sarbanes-Oxley Act "a pillar of our securities regulatory charter."

That may simply be a politican's sound bite, and let's hope it is. While Sarbanes-Oxley is certainly a significant piece of legislation, it was a hodge-podge of knee jerk reactons, and political pandering that needs to be sorted out and amended. One can only hope that such a piece of legislation is not truly the pillar of the country's regulatory charter.

Phony Fax Stock Scam

: "SEC CHARGES STOCK PROMOTERS IN PHONY FAX SCAM"

I am truly amazed that people are still taken in by this sort of thing. The SEC has filed charges against a group of individuals who sent a hand written fax to over a million people. The fax appeared to be from a broker to a client, advising the "client" that a stock was going to triple. The volume on the stock increased by three thousand percent the next day, and according to the SEC press release, the defendants made over $300,000.

Who runs out and buys stock based on a mis-delivered fax? Even if you knew it was a scam and were hoping to get in before all of the other fools, someone got stuck for a lot of money.

Ebbers Gets 25 Years - Have we lost our minds?

Ex-WorldCom CEO Ebbers sentenced to 25 yrs - Yahoo! News: "Bernard Ebbers, the folksy entrepreneur who built WorldCom Inc. into a telecommunications giant, was sentenced on Wednesday to 25 years in prison for his role in the business fraud that led to the largest U.S. corporate bankruptcy."

Given the fact that Mr. Ebbers is 63 years old, that is a life sentence.

Last month John Rigas, the 80 year old founder of Adelphia received a 15 year sentence, again the equivalent of life.

While no one is condoning the actions of either of these men, there is something seriously wrong with our penal system when we are giving the heads of major corporations life sentences for their misconduct. Putting aside the lesser sentences given to violent criminals in our society, are we serving anyone's interest by sending business leaders (and these men were business leaders) to prison to rot for the rest of their lives?

Wouldn't society be better served if they were given a short sentence, a significant fine, and a requirement to work for Head Start or some charity that is helping startup corporations? Can't we even be a little bit creative in our punishments so that society can salvage something from these men?

Legal scholars are asking the same questions, but is anyone paying attention?

SEC to pursue Richard Scrushy in civil court

According to the Washington Post, now that federal prosecutors lost their criminal case against Richard Scrushy, the Securities and Exchange Commission is taking a crack at him.

There of course is nothing legally wrong with the SEC going after someone before, or after, a criminal prosecution, but it sure does seem to be a bit...unseemly. Some will surely see this as an abusive series of prosecutions against Mr. Scrushy, but my money is on a quick settlement of such charges where the SEC takes a paper, and meaningless, "victory" complete with a huge press release.

Stay tuned.