The New Millennium is not even 1% completed
and our economic resources are almost depleted
because the fearful have almost stampeded
in the withdrawal of all of their funds.
But many believe that there is a good reason
for a play it safe kind of season
since Madoff and others
have stolen money by the tons.
What do you think of the idea of a group of investors and interested observers
exploring the possibility of forming a non-profit financial watch-dog group. The
purpose of the organization would be to select a group of independent financial
auditors who would be charged with the task of thoroughly auditing the books of
selected and willing public companies.
The first 100 companies that would be asked to voluntarily submit to the audit
would be the Dow 30, the top 50 companies from the S&P 500 and the top 20
Nasdaq corporations. These would be known as the American Millennium Group
AMG: because the list will hopefully grow to at least 1000.
For companies that pass the audit Congress would be asked to set up a new Federal
Agency to insure shareholders for up to 80% of their original investment in return
for the payment of an appropriate (actuarially determined) premium. In addition
the AMG shareholders would pay only half of the going income tax rates on
dividends and capital gains. But in order to be eligible to participate in this program
new and existing shareholders would have to agree to keep their money invested in
the program for at least 3 years or pay a substantial penalty for early withdrawal.
The basic purpose of the AMG program would be restore the status of the securities
market as a forum for long term investors. Let the speculators go elsewhere. The
managements of the AMG member companies would also obtain some breathing
room. They would be more free from the pressure of trying to meet quarterly street
expectations and also from the always present temptation to cheat: as a means of
reaching those expectations.
Once such a program gets started companies will be vying to get in. But no company will
be allowed to participate unless the Chairman, CEO and other front office executives (voluntarily) relinquish all rights to due process in the event of civil litigation in which investors
attempt to recover investments lost due to negligence. In other words the executives would
have to agree that if a Madoff type scandal broke, then all of their assets would be immediately frozen until things could be sorted out. The CEO's and the other officers should expect to be
paid the market rate in compensation for jobs with such high levels of responsibility and that require such substantial sacrifices of legal due process.