On the front burner today is the prosecution or lack thereof of illegal behaviour by public company executives who have altered corporate records in order to defraud company owners. We are told there are about 130 companies involved in what is now referred to as “the options scandal”. More than $5 billion in earnings has been wiped out by restatements and more than 60 senior officers and directors — including 18 CEO’s — have been fired. Eight of them have been criminally charged.

This matter is quite serious; however, I believe our understanding of it to date is merely the tip of the iceberg.

SEC chairman Cox, who recently described the issue as “a pandemic of crooked accounting,” can say all he wants about the problem if in fact he intends to sweep it under the table as appears to be the case.

What got to me today is the headlined article in the Wall Street Journal written by Kara Scannell, “SEC struggling with punishment for backdating”.

“The Securities and Exchange Commission is struggling to answer what it says is a surprisingly tough question: How much were companies and their shareholders hurt when executives' stock options were backdated?

SEC Chairman Christopher Cox and his four fellow commissioners are wrestling with the issue as they try to figure out whether and how harshly to penalize companies where backdating occurred. The behind-the-scenes struggle has delayed a formal commission vote on a proposed $7 million settlement that the agency's staff reached with Brocade Communications Systems Inc. a year ago in one of the first cases dealing solely with backdating.

At first blush, the issue seems simple: Had options not been backdated, executives would have made less money and companies, presumably, would have made more money, thereby benefiting shareholders. But the SEC says figuring out exactly how shareholders were harmed is tricky, and deciding whether to fine the companies is even trickier….”

The avoidance of enforcement in this matter is outrageous. Bank robbers steal $5 billion and Chris Cox has the gall to say he and his law enforcement staff cannot figure exactly how the bank’s stakeholders were harmed and whether or not the robbers ought to be prosecuted? Words cannot describe my contempt for the state of securities regulation under President Bush.

Well, maybe one word: “disgust.”