The backlash against Sarbanes-Oxley never ceases to amaze me. On the eve of the trial of Jeff Skilling, Ken Lay and Richard Causey, the calls are coming out to rein in prosecutors who are doing their job and to wind back Sarbanes-Oxley. It's hard to reconcile that with the fraud that destroyed jobs, careers, investments and retirement plans and which at the time, created the biggest bankruptcy in US history. Still, the trial is by no means a slam dunk. The case rests on proving a fraud based on hellishly complex systems that go beyond Cooking The Books 101 or fiddling the till.
In the meantime, commentators say that the acquittal of former HealthSouth chief Richard Scrushy on the $2.7 billion accounting fraud is by no means a reflection of the effectiveness of Sarbanes-Oxley. HealthSouth was regarded as a SOX test case. Truth is it's too early to say. We have to wait the outcome of Scrushy's civil trial in 2007 until we know know the answer.
Undeterred, Scrushy is suing his old company for severance pay.
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