The Latest Threat To Investors
Some economic pundits are blaming some of the latest market problems on the jettisoning of several Depression era protections for investors, such as the repeal of the Glass-Steagal Act, which used to separate commercial banks from investment broker/dealers and the repeal of the Uptick Rule on short sales that may be contributing to the wave of short-selling.
Now, a more recent law protecting investors is under attack. Jane Bryant Quinn, the well-known financial columnist, warned of the latest threat to investors in her column in the Sunday, July 20, 2008 Washington Post. The Sarbanes-Oxley Act (“SOX”) was passed in 2002 after the Enron and WorldCom frauds and other accounting abuses came to light. Before SOX, the accounting industry was supposed to be regulating itself for both audit quality and integrity. In practice, accountants were turning a blind eye to several serious accounting misdeeds in exchange for large fees for their consulting practices.
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