Former SEC Chief Discovers the Risk in Investing

The Wall Street Journal reports:

Richard C. Breeden built a career playing referee to corporate America. Now, as a player, he's finding the game to be pretty rough.

As chairman of the Securities and Exchange Commission from 1989 to 1993, Mr. Breeden pushed to crack down on cozy boards and overpaid executives. He later served as a court-appointed monitor of scandal-tainted companies such as telecommunications giant WorldCom Inc. and accounting behemoth KPMG. He wrote a scathing report that characterized Conrad Black's Hollinger International Inc. as a "corporate kleptocracy."



In 2006, he launched Breeden Capital Management to invest in lagging companies, with an eye toward turning them around. He met early success when his first investment, the restaurant chain Applebee's International Inc., sold itself at a premium. But these days, Mr. Breeden, 60 years old, is finding that the skills he honed keeping companies on the straight-and-narrow do not always make for successful investing.

For two years he has been the largest shareholder and most influential director at Zale Corp. Once America's largest jewelry retailer, Zale now is struggling. Its sales have been sinking, it has run short on cash and credit, and it fired its chief executive and his top two lieutenants in January.