As more corporate scandals come to light and send shock waves through Wall Street, two prominent figures in the U.S. business world called Sunday for a thorough housecleaning of corporate America.
Securities and Exchange Commission Chairman Harvey Pitt says the government regulatory agency plans to appoint a corporate monitor for WorldCom. Civil fraud charges are being brought against the telecommunications company by federal regulators after it claimed a $3.8 billion operating expense and said it was a capital expenditure.
WorldCom is the latest in a string of companies, including Enron and Global Crossing that has come under scrutiny because of it's financial reporting practices.
In an appearance on the ABC television show This Week, Mr. Pitt said the WorldCom monitor will make sure that large amounts of money aren't given to corporate executives and that no documents are destroyed.
While he says he'd like to see WorldCom officials face criminal charges, Mr. Pitt said the SEC can only charge them with civil fraud, which only provides for fines instead of jail time.
"With some of these people, the only way to hit them where they really hurt is in their pocketbooks and their ability to ever do this again," he said. "What we're doing is we're stripping them of their salaries, their bonuses, their options. And we're getting the courts to give us orders to make it certain that they will never be able to serve in another public company."
Also appearing on ABC's This Week, was New York Stock Exchange Chairman Richard Grasso, who acknowledged that Wall Street has been rocked by the recent allegations of corporate wrongdoing.
We've had some massive failures. And we've got to root out the bad people, the bad practices. And certainly whether the number is one or fifteen. That's in comparison to more than 10,000 publicly traded corporations. But one, just one Enron or one WorldCom is one too many."
Some analysts predict that with the market sharply down, more companies could fail as a result of accounting practices used during the bull market of the 1990s.