Financial markets will soon regain the public's confidence in the wake of recent corporate scandals, Chair and Chief Executive Officer of the New York Stock Exchange Dick Grasso told an audience at the Washington Duke Inn Monday night.
Grasso's speech introduced a two-day program that continues today and tomorrow entitled "The Directors' Education Institute at Duke University," which the Fuqua School of Business and the School of Law are co-sponsoring. At $3,250 a head, corporate leaders from around the nation gathered to learn about new efforts to ensure business legitimacy in the wake of the Enron financial scandal.
"It was the perfect storm of failure that started with Enron but did not end with Enron," Grasso said in his keynote address. "The public will absolutely come back if we can say, with complete candor, we have stripped the system of bad people and bad practices."
Grasso outlined past NYSE measures to regulate its member companies. As far back as the 1950s, the stock exchange has prioritized independent checks on its companies, he said.
"We got it wrong in the latter part of the 90s," Grasso said. "We'll get it right again with the help of some very stringent regulations, some of which we've already put in place."
The NYSE appointed the Corporate Accountability and Listing Standards Committee earlier this year to find ways to more effectively monitor publicly held companies.
"Independent directors are not there for the private entertainment of managers-they are there to represent the stockholders," Grasso said.
He added that the NYSE will also ensure strict punishments for those who are dishonest in their business transactions and that other stock markets would embrace the findings.
"When you break the rules, we kick you out-not after lengthy judicial encounter, but that day," he said. "Seven trillion dollars is missing from the wealth of American investors, from the wealth of American corporations. This behavior is totally unacceptable."
While he condemned those who did not abide by the law, Grasso also stressed that the dishonesty of Enron and others was unusual and that most NYSE companies abide by the rules.
"The conduct of Enron should not be mistaken for the norm," he said. "For every Enron, there were hundreds of thousands of company managers in the 'X-ons' of this world who do it right. You certainly wouldn't know that from the press each morning."
Grasso concluded by saying that, although the public could not count on success when playing the stock market, they should be able to rely on public companies' honesty.
The audience-comprised mainly of business executives and a scattering of academics-gave the speech a warm response. Ernie Shaub, EnPro Industries' president and chief executive officer, noted the emphasis Grasso put on the fact that companies like Enron represented a minority of cases in this country.
Paul Rasmussen of Tyson Street Partners said the speech was excellent overall.
"I am impressed that Duke has taken the stance that it's taken," he added in regards to Grasso's invitation to speak.
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