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Putting Accountability Back into Accounting

"The reluctant reformer" (Cover Story, Mar. 25) focused on two ways for the Securities & Exchange Commission to punish corporate executives involved in financial-statement fraud: force them to return their ill-gotten gains and bar them from serving as officers or directors.

If we truly want to get executives' attention and prevent abuses, the SEC must work more closely with federal prosecutors. Our research on approximately 200 cases of financial-statement fraud between 1987 and 1997 indicated that criminal charges were filed only 15% of the time, and we found evidence of only 27 individuals serving jail time. Even if SEC Chairman Harvey Pitt's "CEO misbehavior" plan is implemented, the penalties for committing fraud still pale in comparison to the enormous damage inflicted on the investors, employees, and other stakeholders.

Dana R. Hermanson

Director of Research

Corporate Governance Center

Kennesaw State University

Kennesaw, Ga.

Your recent editorial (Don't kill Andersen. Reform it," Mar. 25) was pathetic. How many second chances does it take before you are willing to admit that an organization that once stood for integrity and honesty is now rotten to the core? Are you prepared to hire Arthur Andersen as your auditors? I didn't think so.

Earl R. Washburn

Placerville, Calif.

What Arthur Andersen is alleged to have done is far more serious and damaging than the transgressions of Enron.

David Spirakis

New York I would like to respond to your assertion that Perfumania is a weak tenant ("The wrong time for REITs?" Finance, Mar. 11). During these difficult times, Perfumania has outperformed many other retailers while continuing to improve its stores' image, customer service, fragrance assortment, and shoppers' recognition. Perfumania finished February with sales about 14.5% above a year earlier, and we are implementing numerous improvements in order for this positive trend to continue. The company has approximately 250 stores and will be opening more in 2002 and 2003.

Jeffrey Geller

President and CEO


Miami As a longtime subscriber, I am not interested in right-wing polemics masquerading as book reviews ("A squandered Presidency?" Books, Mar. 25). Richard Dunham's review of Joe Klein's The Natural was far less informative about the book or the Clinton Presidency than it was about Dunham's (and your?) agenda to trash Clinton.

How can any responsible reviewer in a business publication possibly render a summary of this Presidency without mentioning that it included the longest sustained economic expansion in modern American history? That Clinton stood against every Republican in Congress to raise taxes in 1993, in the process reversing 12 years of Republican deficits? That the Dow Jones industrial average more than tripled during the eight years of this Presidency? Or that Clinton defied his own party to produce a significant reform of welfare?

Robert Freeman

Palo Alto, Calif. "Finally, skid control at GM" (The Corporation, Mar. 25), said General Motors Corp.'s money woes were caused in part by worker benefits, asserting that "GM's union workers have no co-pay for health care." As an active employee with traditional health care, I still pay 100% for doctor's office visits and required school physical exams and a co-pay for prescriptions and a portion of dental benefits, as well. These costs add up to a lot more than $0.

Gregory Burg

Wilmington, Del.

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