As to Key Lay, I agree that he probably did nothing wrong from a federal tax-law perspective. However, I feel that from an SEC perspective, he (as the embodyment of Enron Management), must have slipped up on some SEC filing.
When I was in business school we studied a number of court cases in a business ethic course, and I remember a CEO going to jail, because the grocery store chain he headed, sold some tainted foods, even though the CEO had policies in place to prevent such a thing happening and the person who was stocking the tained goods was clearly acting by himself and for his own illegal gains, not the benefit of the company. The business ethics leason we were to learn from the case was that if there are laws to hold corporations accountable for their actions, then someone has to be "accountable."
I think that it is time to make companies accountable for their actions beyond just "fines" when the company lies to the SEC and their stockholders. Otherwise we digress into class action stockholder suits that will destroy the stockmarket.
I think that serving on the "Audit Committee" of a corporation's Board of Directors should be viewed as a very "risky" job and one that is not taken lightly. I view the same for being on the Board and an officer of a company. My feeling is that most Board Members and upper management of publicly held corporations are paid way too much money for the level of accountability they now have. If some of the CEO's really "deserve" millions a year in salary & perks, then they should be accountable for the actions of the company.
I personally like the new SEC requirement for CEO's & CFO's to sign and personnally attest to the accuracy of certain documents filed with the SEC. I view that as a step in the right direction. Previously, I feel stockholders assumed that the upper management and the auditors were attesting to the accuracy of financial data in audited annual reports. (Actually, I think that various company management/executives, investment bankers and the accounting profession should both be held liable for a lot of the Enron/WorldCom/Tyco excesses.)
I agree. Well stated.
I got burned pretty badly with Tyco. I had a stop limit order in place at 51 on the day TYC gapped down from 55 to 45. It blew right by the limit and the order went unfilled. Like a fool, I rode it all the way to the bottom and sold out recently at 20.
Normally, I refuse to participate in shareholder lawsuits because they enrich only the parasite lawyers. But I'll join in one against Tyco if there ever is one.
They were booking the full value of long term maintenance contracts in the year they were signed. That's why they were "making" so much money.