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Clear Thoughts
Good from Guilt
| Justice does not seem harsh when it fits the crime. |
Right now many people around the country feel that they are finally seeing justice done, as the verdicts of Enron CEO Ken Lay and CFO Jeff Skilling were handed down. And we mean down: the smartest guys in the room are likely heading to jail, perhaps for 20 years or so, courtesy of us taxpayers.
Some say justice delayed is justice denied. From the point of view of our firm, this is one of those times where we would like to congratulate the government for a job well done. From where we sit, and from where all of you, who we manage money for or who follow our portfolios sit, the government acted swiftly and uniformly.
Sarbanes-Oxley was passed in 2002, much of it in response to Enron. Essentially, Sarbanes-Oxley is about three things: better and more consistent disclosure, stronger internal controls and a line of responsibility to those who sign off on the information.
Two years earlier the government passed Reg FD, for fair disclosure. This means that individual investors, Wall Street analysts and Clear Asset Management all receive material information such as earnings and news from public companies all at the same time.
Taken together, these two powerful acts provide us with better, consistent data, which corporate CEOs, along with their auditors, sign their names to verify. We receive this data simultaneously with Wall Street and have our computers crunch the numbers through our proprietary algorithms. This is a key part of how Clear Asset Management has access to the over 6,800 data points from over 10,000 public companies we analyze every market day. We believe this is far too much information for any human to process.
On the down side, the legacy of Enron lives on, in the billions lost in California utilities, money lost by investors and the greed shown to this country. It appears that justice is being served to at least some of those responsible.
It all comes down to what we learned as a country about corporate greed and arrogance. The eventual silver lining from this corporate tragedy is the passing of regulations that may prevent another Enron, and firms like Clear Asset Management that can create investor wealth, responsibly, through the enforcement of these fair disclosure regulations.
We hope that this country has a long memory when it comes to these issues and that Sarbanes-Oxley and Reg FD are not relaxed.
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