Home -> Law Blog Directory -> Corporate & Securities Law Blogs -> Jim Hamilton's World of Securities Regulation

Corporate & Securities Law

: Jim Hamilton's World of Securities Regulation

By Jim Hamilton

Justice Douglas Presages Enron and Doing the Minimum

If we look back, sometimes we can see that there is nothing really new under the securities regulation sun. In 1936, Commissioner William O. Douglas, later US Supreme Court Justice, said, in a speech at the Yale Club, that when disclosure of truth becomes an art and when avoidance of disclosure becomes a game, the essence and spirit of the new legislation will have become subverted although the formalities may have been fully satisfied. That does sound like the Enron situation. Comm. Douglas also said that the conventions of accountants tend to become fixed and ritualistic. They are likely to degenerate into shibboleths. Instead of being descriptive tags, accounting terms too often become vague and indefinite words of art, not pungent with meaning, not vital with significance. Instead of accurately reflecting the true state of the financial condition and of the accounting practices of the company, they too often result in devitalizing the facts by forcing them into a mould which only traditional and conventional practices can justify. The Justice instructs us that the true function of the public accountant is to subject to an impartial mind the accounting practices and policies of issuers.

Full post as published by Jim Hamilton's World of Securities Regulation on July 18, 2008 (boomark / email).