By Maxine Shapiro, KERA 90.1 business commentator
Dallas, TX – Sometimes a society is quick to forgive and forget. Wall Street has basked in the light of that mercy for a very long time. Not any more. I'm Maxine Shapiro with KERA Marketplace Midday.
Oh sure, there were the Michael Milkens of the world. The crime was big and they paid the price. But for the most part, Wall Street was in charge of regulating itself. A slap on the wrist here, a fine there - and life went on. In truth, after last month's settlement, I thought we'd see the end of the investigative times. Wall Street was hungry to get the little guy back in the market and so was President Bush. Isn't that what the dividend tax cut was all about? The total settlement was $1.4 billion. Steep by our standards, but it barely put a dent in the ten investment banks that shared the fine.
Critics called the settlement weak. And I bet you anything it would have been left at that. But then, one of the stupidest moves I've ever seen - Morgan Stanley CEO Philip Purcell had the nerve to play down the SEC charges. Yeah, so the securities firm misled investors with stock research. Talking to a group of institutional investors, Purcell didn't see anything in the settlement that should concern the retail investor - you and me. Well, SEC chairman William Donaldson was outraged by Purcell basically thumbing his nose at this scandal.
And today, it was made public that the SEC, the National Association of Securities Dealers and the New York Stock Exchange have subpoenaed documents and e-mails from nearly every major Wall Street CEO. Remember, analysts were accused of touting stocks that their firm had a vested interest in. Now everyone wants to know how much knowledge the CEO had of these conflicts of interest. Was there a failure to supervise? Or even worse?
If anyone is guilty here, I suspect it's going to be more than just a fine. For KERA Marketplace Midday, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m.
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