Video1985
A Delaware court rules that poison pills are legal antitakeover defenses. By 2004, companies like Goodyear Tire & Rubber Co. and ConAgra Foods Inc. are dismantling their provisions in the face of shareholder complaints. The National Commission on Fraudulent Financial Reporting — aka the Treadway Commission — is formed. Its 1987 report includes recommendations for management, boards, public accountants, and the Securities and Exchange Commission about how to prevent fraud.
1986
After heated congressional debate, President Ronald Reagan's Tax Reform Act of 1986, a massive overhaul of the U.S. tax system, becomes law. Ivan Boesky settles his insider-trading case with the SEC, paying back $100 million of his own money. The previous year, Boesky defined the decade with the immortal words, "Greed is all right, by the way. I think greed is healthy."
1987
The stock market suffers a 22.6 percent drop in a single October day to close at 1,738.74. The specialist system at the New York Stock Exchange comes under fire in a report on the crash.
Seventeen years later, the SEC is once again investigating specialists' trading practices.
Carpet-cleaning company turned Ponzi scheme ZZZZ Best declares bankruptcy. At congressional hearings, Rep. John D. Dingell (D-Mich.) asks, "Where were the independent auditors and the others that are paid to alert the public to fraud and deceit?" After a seven-year prison term, CEO Barry Minkow becomes a Christian minister and works as a fraud-buster for the FBI.
1988
Kohlberg Kravis Roberts & Co. pays $25 billion for RJR Nabisco after a bidding war. The dramatic takeover story is immortalized in the book Barbarians at the Gate.
1989
The Federal Deposit Insurance Corp. takes over insurance obligations for the Federal Savings and Loan Insurance Corp. after hundreds of banks close during the S&L crisis. One collapse — that of Lincoln Savings & Loan — ultimately costs taxpayers $3.5 billion. Its CEO, Charles Keating Jr., receives a 10-year jail sentence and a $250,000 fine for committing fraud.
With 90 million personal computers humming worldwide at the end of the decade, Microsoft founder Bill Gates's vision of a PC "on every desk and in every home," once viewed as audacious, begins to look modest. By 1990, IT spending will climb to 40 percent of total corporate expenditures. By 2000, it's 53 percent.
1990
Junk-bond king Michael Milken pleads guilty to six felony counts and agrees to pay a $200 million criminal penalty, as well as $400 million in a civil settlement. Sentenced to 10 years in prison for securities-law violations, Milken is released after just 1 year and 10 months; his former employer Drexel Burnham Lambert Group Inc. files for Chapter 11.
Congress passes the CFO Act in order to strengthen financial management at government agencies. Agencies dutifully install finance chiefs, but to this day, nearly all continue to fail audits.
Developer Donald Trump avoids bankruptcy, landing a $20 million loan from his bankers, which agree to bail out his hotel, casino, and air-shuttle businesses. He returns to prominence in 2004 with a top-rated reality-TV show, another bankruptcy, and the same interesting hair-do.
1991
Exxon pleads guilty to four misdemeanors in the Valdez oil tanker spill and pays $1.03 billion to settle.
The U.S. Sentencing Commission adopts guidelines for assessing penalties for corporations convicted of white-collar crimes. In 2005, some of those parameters come into question when the U.S. Supreme Court rules that the individual sentencing guidelines are unconstitutional.
1992
IBM announces plans to lay off 25,000 workers and take a $6 billion charge as it phases out its mainframe-computer business. It will resurrect itself, thanks to the success of its PC business under CEO Lou Gerstner and CFO Jerry York, who join the company in 1993. In 2004, IBM exits the PC business, too, to focus on services. The recession leads to a string of bankruptcies, as Macy's, TWA, and Wang Labs all file for Chapter 11. Phar-Mor Inc. fires its co-founder and CFO for alleged accounting manipulation; the company later takes a $350 million charge and it, too, files for bankruptcy.
Trash collector Waste Management Inc. and eight of its employees are indicted for stealing from the city of San Jose, California. In 1998, the company will be indicted for conspiracy. The SEC will later sue five executives, including CFO James E. Koenig, for a scheme to misrepresent the company's financial results by some $1.7 billion.
1993
In an attempt to settle labor strife and reduce costs, United Air Lines Inc. sells a majority stake to its unions for $5 billion in exchange for labor concessions. More than 10 years later, the airline continues to struggle with labor issues, including its massive pension obligations, as it fights to emerge from bankruptcy.
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