On Wall Street, things are a bit grimmer. The past year's two big
corporate scandals -- the downfalls of Enron Corp. and WorldCom Inc. --
along with the seemingly endless parade of comparatively small corporate
blowups (Global Crossing Holdings Ltd.'s bankruptcy, KPNQwest NV's
shutdown, the seemingly imminent convictions of former top executives at
Tyco International Ltd., Adelphia Communications Corp. and ImClone
Systems Inc., and so on) have left the stock market in freefall and a
significant swath of the business world suffering collateral damage.
And on the streets, the mood is turning nasty. Literally.
At the most recent court appearance of two WorldCom executives now
charged with numerous fraudulent acts, I was waiting outside the
courthouse with the usual mob of reporters and photographers, prepared
to pounce on former WorldCom financial chief Scott Sullivan to record
the details of his post- indictment departure. A passer-by stopped to
inquire about the crowd. When I explained what we were waiting for, he
joined the throng.
"This I gotta see. This is history in the making. When was the last time
they actually threw one of these white-collar bastards in jail?" he
remarked.
New York magazine is offering odds on that now, actually: A recent
article handicapped the chances of several accused executive scofflaws
of serving time. (Odds on Sullivan: 3-2. Odds on domestic doyenne and
suspected inside-trader Martha Stewart: 15-1.)
The usually breezy city chronicle of gossip and conspicuous consumption
has had to adjust its formula a bit to reflect its readership's changing
concerns. Last month, it offered a detailed guide on what to expect
while staying at "Club Fed", a federal prison for white-collar workers.
A week later, the New York Times checked in with its own take on the
subject. Treat it as a sabbatical, recommended one former inmate: "Or
look on it as a monastery, though without the Gregorian chants."
If action follows public sentiment, dozens of executives will soon be
embarking on enforced sabbaticals. Or, at minimum, paying hefty fines to
refund some of their allegedly ill-gotten gains. Class-action suits are
flying, not only against firms with "accounting irregularities" but also
aimed at the analysts who touted them. The National Association of
Securities Dealers is readying charges against former telecommunication
stocks enthusiast Jack Grubman, while New York Attorney General Elliot
Spitzer sharpens his subpoenas for a case against Grubman's former
employer, Salomon Smith Barney Inc.
August was a relatively quiet month on the corporate-scandals front --
even the U.S. Securities and Exchange Commission's deadline for top
corporate officers to personally swear to the accuracy of their
companies' books passed with little incident -- but fresh shockwaves
could be on the way. Several tech companies remain under active
investigation by federal regulators, including AOL Time Warner Inc. and
Computer Associates International Inc.
I had never been to Manhattan's federal courthouse until August, when I
went to cover the arraignment of a pair of WorldCom officials. As I
joined the queue waiting to pass through the entrance security
checkpoint and metal detector, I asked a guard for directions around the
building. I hadn't been inside before, I said, explaining that I usually
cover tech and business issues, not legal ones.
"Business reporter, eh?," he commented. "We'll be seeing a lot of you in
the future, then."
Three years ago, I spent much of my working time writing about the
initial public offerings of fledgling dot-coms, stories that came
packaged with images of joyous executives ringing the opening bell at
the Nasdaq or New York Stock Exchange. These days, it does seem likely
I'll be regularly spending time a few blocks away, at the cluster of
courthouses that sits at the uptown edge of Manhattan's financial
district.
