Sunday, October 08, 2006

The Battle for the Soul of American Capitalism

I can see the day in the not too distant future when Sarbanes Oxley “reform” passes the Congress for approval and is ready to be signed by the President in office at that time. On that day many will crowd around the cameras as the new legislation is ready to be signed into law. They will herald it as a step forward for our great capitalist economic system. They will say that the new reforms will free companies from unnecessary regulatory burdens and increase capital formation. They will claim that investors will be protected.

Imagine then that Sam E. Antar is there too with them at the signing of this new "reform."

Imagine me who has said the following:

“I was the worst of the worst, the scum of the scum” (1)

And who openly admits as a criminal that:

“I broke and corrupted the sacred trust that was put upon me by the shareholders, the employees and the vendors and the public. I corrupted the main pillar of the free market system—the integrity of our financial statements—by committing fraud” (2)

- standing there with the chorus of supporters for this new “monumental reform.”

Imagine that the CFO of Crazy Eddie who helped mastermind one of the largest securities frauds of its time changing his mind and now saying that these "reformers" are right. We do not require stronger internal controls, we do not require that internal controls be evaluated by external independent auditors, and it does not affect the independence of accounting firms if they give consulting services to the firms that they audit, and so on. Imagine me saying that the new reforms will help investors, creditors, and increase the integrity of our financial markets. Imagine that I say that Sarbanes Oxley in its present form can be watered down and that investors and the capital markets need not worry.

I would say to the press at this gathering as this new reform legislation is passed that I am convinced that despite my previous criminality that investors and others do not require strong protections as required by Sarbanes Oxley in its present form.

Maybe then people would take notice to the destruction of American capitalism (the greatest economic machine ever known) by those who say they champion it.

Maybe by endorsing the arguments of the reformers (however well intentioned they may be but still wrong) I can be more effective in stopping this sort of lunacy than anything I can say intelligently on this subject.

It would be an equivalent to when President Bush hugged Senator Lieberman and as a result it was a rallying cry to those who helped the Senator lose his Democratic nomination. (Don’t get me wrong I voted for Bush and supported Lieberman and still continue to support them on most issues).

Therefore, I am personally considering endorsing any critic who is looking to water down Sarbanes Oxley rather that to look for ways to strengthen it as “the kind of SEC Chairman” I wish were around during my days at Crazy Eddie.


In the words of Michael Corleone, “We are both part of the same hypocrisy.”

That goes for the "reds" the "blues" and the "black holes" of American free market capitalism like criminals such as me (or was).

(1) The Boston Herald in a column entitled "Crazy, maybe, but listen to this crook" by Brett Arends published on October 2, 2006

(2) Compliance Week, Q & A Interview by Melissa Aguilar with Sam E. Antar on May 16, 2006

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