We should not underestimate the aftereffects of the tremors still shaking Wall Street following the recent insider trading scandal. The stock market itself appears to have withstood the disaster. The Dow Jones index topped the once-invulnerable 2,000 barrier barely a month after the initial revelations, and the principle figure in the scandal, Ivan Boesky, will no doubt follow the way of all such white-collar criminals (crime, fame, tell-all book, oblivion). Yet there seems to be more than the usual amount of gnashing of teeth and calls for reform.
Most fascinating is the language being used to describe the crime and the needed reforms. Critics note that this was not a crime of violence, but of “broken trust.” Boesky allegedly developed a surreptitious network of informers to gain knowledge of corporate affairs, giving him illegal advantage in his business of taking over struggling corporations. And reformers calling for sharp restrictions on corporate raiders and insider trading are bandying about words like ethics, faith, and values in prescribing corrections.
Predictably, their solutions are for tighter laws rather than crash courses in the Sermon on the Mount. Tighter laws are not a bad idea. Obviously, existing restrictions are inadequate to control the burgeoning corporate raiding business. Many have suggested ways of abolishing the mysterious-sounding financial practices that corporate raiding has created: “greenmail” on the raider’s part, and “golden parachutes” or “poison pills” for the corporate managers.
Yet increased legislation has never successfully dealt with ethical problems. Indeed, the Boesky case is a symptom of an increasingly dangerous situation that ...1
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