After Harvey Pitt's stormy tenure at the helm of the Securities and Exchange Commission, President Bush turned in 2002 to an old Wall Street hand, William H. Donaldson, to restore investor confidence in the wake of a wave of corporate scandals. To the surprise of many, Donaldson launched the most aggressive period of corporate police work since the agency's founding. On Wednesday, Donaldson announced his resignation, and Bush moved swiftly to replace him with Rep. Christopher Cox (R-Calif.). Cox may be known for espousing low taxes, lawsuit curbs and deregulation, but boardrooms beware: The Donaldson experience shows past performance is no guarantee.
The Andersen Reversal
It was cold comfort for the tens of thousands of Arthur Andersen workers who lost their jobs, but last week the Supreme Court overturned the 2002 criminal conviction that doomed the accounting giant. The unanimous ruling -- undoing the first major criminal conviction of the corporate scandal era -- held that the trial judge erred by allowing jurors to vote for conviction, even if they did not necessarily believe Andersen executives had acted with intentional dishonesty. The decision will do nothing to revive the firm. But it could prove to be a blow against a federal crackdown on corporate crime, especially as prosecutors pursue charges of obstruction of justice.
If investors needed more evidence of the Kremlin's business intentions, they got it in the nine-year prison sentence handed to Mikhail Khodorkovsky. Russian President Vladimir Putin's government has been dismantling Khodorkovsky's giant Yukos oil company for months, sending capital flying for the border, roiling oil markets and raising questions about Russia's rule of law. Khodorkovsky's sentence may prove popular with ordinary Russians, but it will only worsen Russia's international business standing. Adding an exclamation to the point, state-run Gazprom said it would buy the national daily newspaper Izvestia, tightening Putin's control over Russian media.
A Blind Spot
Viagra was once hailed as an antidote for sagging profits at Pfizer. But its introduction has been followed by brutal competition with other impotence drugs and now a Food and Drug Administration investigation into links to blindness and vision impairment. The FDA has identified 38 cases of impaired vision in Viagra users. Five other cases involve rivals Cialis and Levitra. Pfizer has responded that it has never found vision loss in 103 clinical studies with 13,000 patients. Scientists cautioned that the same problems causing impotence could be impairing vision. Nevertheless, the drug giant said it is discussing whether to include information on the issue on its label.
Just when the U.S. job market appeared to be gaining momentum, the Labor Department reported Friday that employers added only 78,000 workers to their payrolls in May, the fewest in nearly two years. That figure followed a robust gain of 274,000 jobs in April. The problem spot remains manufacturing, where 7,000 jobs were shed last month. The leisure and hospitality industries also lost jobs, as did the professional and business sector. Once again, economists are chattering about a soft patch that may have more staying power than initially believed. On the bright side, the nation's unemployment rate ticked down a tenth of a percent, to 5.1 percent.