There is one class of people who are almost untouchable when they commit economic crimes while at the helm of their companies: I am referring to Chief Executive Officers (CEOs), to which I might also add Chief Financial Officers (CFOs) and Chief Operating Officers (COOs). To date, there has been no major prosecutions of the bank and securities firms CEOs who were responsible for the Great Recession of 2008—despite the fact that they, in many cases, knowingly put together subprime mortgage securities backed (essentially) by hope and pixie dust.
There have been cases of CEOs who have served time (or are serving time). These include:
- Jeff Skilling, Enron
- Martha Stewart, Martha Stewart Living Omnimedia
- Sanjay Kumar, Computer Associates
- Dennis Kozlowski, Tyco
- John Rigas, Adelphia
- Martin L. Grass, Rite-Aid
- Joseph Nacchio, Qwest
- Walter Forbes, Cendant
- Richard Scrushy, HealthSouth
- Bernie Ebbers, WorldCom
Ken Lay of Enron would have joined that list, but he died of a heart attack before sentencing. For more information about the above, click here.
There are class action suits, but these have a way of punishing the innocent and leaving the guilty scot-free. For one thing, it is the shareholders who suffer, not the executives. In many cases, it is the shareholders who have initiated the cases and suffer from the resulting devaluation of their securities. And probably the biggest beneficiaries are law firms specializing in class action cases. These boys make out like bandits.
Whether CEOs wind up doing the perp walk is not the main point. I would be happy to see blame ascribed and large fines levied.