Jon Markman of MSN Investor is often a good read. An extract from his latest column:
In a perverse twist of fate, an unexpected beneficiary of the September terrorist attacks on New York and Washington may turn out to be the financial extremists who ransacked the U.S. stock market over the past four years.
For it turns out that with the nation focused on seeking military revenge abroad, the public is unlikely to have an equal appetite to hound corporate executives, board members and brokerages responsible for ripping off trustful shareholders during the Nasdaq boom and bust. New Securities & Exchange Commission chief Harvey Pitt confirmed this development, telling reporters late last month that he believes the securities industry should be responsible for regulating analysts, and that Congress should back away.
More's the pity, since we were just starting to make progress, with brokerages changing their rules on disclosure of stock holdings by analysts and the federal officials beginning to pry open the insanely greedy practices of investment bankers in initial public offerings.
The latest luck-out in this new era of good feelings is At Home (ATHM, news, msgs), a flagship Internet bomb that sought bankruptcy protection on Friday night. Few if any newspapers put this story on their front pages, and it wasn't the topic of any financial talk shows that I witnessed.
Yet here is a company that had a market capitalization at its peak of $40 billion but is now worth less than $70 million. Its original media-industry executives, once celebrated for their success at forging alliances between warring cable systems to offer high-speed data services, actually spent $6.7 billion for the Excite Web portal that had little if any prospect of becoming profitable. They also spent $1 billion for Bluemountain.com, a greeting card Web site that never even professed an ambition to make money. All shareholder money. All now turned to dust. (Or, in some cases, into the pockets of executives savvy enough to sell at full gallop, such as AtHome senior vice president Donald Hutchison, who unloaded 1.7 million shares worth $15.2 million from April 1998 to November 1999, according to SEC documents.)
There are no words to express the sheer temerity of their acts, and almost no precedent for this level of folly in U.S. economic history. Their misdeeds are sure to leave long-lasting scars on the capital markets of the world. But where is the outrage? To be sure, there have been class-action lawsuits, but by now there are precious few assets with which to pay off litigants. And in any case, civil courts are too bland a venue to hear arguments for and against these men and women who have given avarice a bad name.
There should be something worse, such as the old British custom of debtor's prison -- or at least public pillories. Brokerage analysts have taken the rap for recommending these stocks to customers, but it seems unconscionable that leaders of these firms themselves should escape opprobrium. How about lifetime bans from business for anyone above the rank of executive vice president at these companies, or a couple of years of charity work on behalf of retirees who trusted them with long-term commitments of funds and were repaid with scorn? |
