SCANDALS: Penn Central Precedents?

The Securities and Exchange Commission was only doing what had long been expected last week when it filed civil suits charging that massive fraud preceded the spectacular 1970 bankruptcy of the Penn Central. Even so, the suits—one against twelve former officers and directors of the railroad, headed by onetime Chairman Stuart T. Saunders, and also the accounting firm of Peat, Marwick, Mitchell & Co.; another against the investment firm of Goldman, Sachs & Co.—are unusually significant.

The SEC is clearly trying to set precedents that would expand its regulatory authority over company...