What a Week: Ghost Busting

It is nowhere near Christmas, but some ghosts of scandals past have risen up again. As commentators haul out comparisons to various eras in order to make sense of the stock market, it may be the scandal-ridden early 2000s that loom largest.

A new door into corporate greed and misdeed is cracking open -- the options-backdating scandal -- while others are nearly closed. This week, a Houston jury convicted former Enron executives Jeffrey Skilling and Kenneth Lay on 29 criminal counts. Fannie Mae (FNM Quote - Cramer on FNM - Stock Picks) was fined $400 million for its accounting scandal, although its executives may just be seeing the beginning of their personal scandals. Meanwhile, the Securities and Exchange Commission and U.S. attorneys' offices are investigating two dozen companies for backdating stock-option grants, a new thorn in the markets' side. Backdating entails manipulating the option's issue date to maximize their value to company executives.

"It is the end of an era, but here we find out that the era is not over," says Roy Smith, professor at New York University's Stern School of Business. The options-backdating scandal is another reminder to the public that these "clever fellows" can find a way to ensure that they're compensation isn't affected by anything -- markets or rules, he says.

Some say the options backdating already has weighed on the technology sector, which has badly underperformed since late April. The Nasdaq Composite turned lower before its blue-chip brethren started their downturn on May 10 and lagged during this week's recovery rally.

The Nasdaq rose 0.5% Friday to 2210.37 and gained 0.75% on the week, but it is down 6.75% from its 2006 peak of 2370 on April 19. The Nasdaq reached its low for the year this Tuesday, when it closed at 2158.76. Stocks rose for a third straight day Friday amid hopes the latest round of economic data lessen the odds of more Federal Reserve rate hikes.

« Previous Page

1 2 3 4

Next Page »