A Market Bad Enough to Make You Swear

Criticized for lacking a plan to put the U.S. economy back on track, the Bush Administration has turned to tough talk and big gestures — like the much-derided President's Economic Forum last week in Texas — to restore confidence. No surprise then that skeptics saw more big-shtick than big-stick in last week's Securities and Exchange Commission deadline for CEOs and CFOs to swear to the accuracy of their accounts.

The 695 U.S. companies that filed statements last week, and the big U.S.-listed European firms like British Petroleum and Unilever that file later this month, after all, have troops of lawyers checking every word and inserting caveats to keep their bosses from going to jail. And the handful of accounting restatements were unspectacular. But taken alongside the push for companies to list stock options as expenses and the Sarbanes-Oxley Bill, which will make these kinds of declarations routine and drastically increase penalties for fraudulent behavior, the sec-mandated certification looks like a key baby-step toward improving corporate governance.

"There is no silver bullet," says Merrill Lynch's Tim Cobb, "but it's an important part of a wider move." At the very least, the rewards for aggressive accounting are quickly being outweighed by the prospects of jail sentences and, perhaps most intimidating, lawsuits from America's notoriously litigious shareholders. That won't resurrect a bull market soon, or even necessarily make the market behave rationally. But it looks like a good place to start.

MEDICAL RESEARCH
Striking Back At SHAC
insurance brokers don't often get threats written in blood. But that's what happened to U.K. employees of Marsh when activists at Britain's Stop Huntingdon Animal Cruelty campaign (SHAC) began claiming the firm was involved with the Huntingdon Life Sciences drug-testing company. Such secondary targeting of financial institutions that support testing firms started in Britain but is now affecting Marsh employees in the U.S. SHAC denies involvement but posts bulletins trumpeting the attacks and listing the "Top 20 Terror Tactics" on its website. Marsh is striking back with lawsuits against SHAC in five U.S. states. Frankie Trull, president of the Foundation for Biomedical Research, worries that if they succeed, groups like SHAC could decimate U.S. and European drug research. "If the liability becomes too great, these companies won't shut down. They'll move."

THE BOURSE

The Swedish Succession
Uncertainty about IKEA's future leadership was laid to rest last week, as 76-year-old founder Ingvar Kamprad said his three sons would take over the ?25 billion furniture empire.

Vivendi Agonistes
The firm reported a €12.3 billion loss and announced plans to sell €10 billion in assets to reduce its €35 billion debt. S&P dealt another blow, downgrading Vivendi's debt to junk status.

Retreat from Japan
NASDAQ looks set to curb its global ambitions. After taking a $10.3 million charge on NASDAQ Japan, the Tokyo exchange warned it may close, throwing 98 listed companies into turmoil.

An uncomfortable fit
Ford sold Kwik-Fit to Europe's CVC Capital Partners for just $500 million. In 1999, the Detroit automaker paid $1.5 billion for the British car repair chain.

INDICATORS
Bard in a Brave new world
"This blessed plot, this earth, this realm, this ... Pennsylvania?" For 13 years Shakespeare's World has tried to build a theme park based on the dramatist in his birthplace, Britain's Stratford-upon-Avon. But after permission was repeatedly denied, the company decamped to plant its $200 million park in the U.S., just outside Pittsburgh.

Belly Up To The Buffet
Members of the Financial Services Forum, including the largest U.S. banks, insurers and Wall Street firms, followed influential financier Warren Buffett's advice and agreed as a group to report stock options as expenses. Most companies will factor options into their results by 2003.

Piracy Police get personal
The Recording Industry Association of America is considering suing individuals who swap songs over the Internet. The RIAA is also urging the Department of Justice to prosecute music swappers, but some executives fear the tactic could backfire.

A Market Correction
The Johannesburg Stock Exchange is creating guidelines that would require listed companies to report employee HIV/AIDS infection rates and detail the steps they are taking to help. The rules are expected to take effect next year.

BOTTOM LINES
"When we die, we don't go to purgatory. We just land up on the roof and lie there."
Ed Headrick, inventor of the modern Frisbee, who died last week at age 78

"Honesty in business is the new patriotism."
Paul O'Neil, U.S. Treasury Secretary, telling CEOs what they can do to restore faith in America's economy

"Some individuals have taken 'casual business' to mean dressing down to extremes."
Mark Ferron, chief operating officer at Deutsche Bank's global markets unit, in a memo that makes the company the latest to disavow the informal dress codes of the 1990s