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To: Sig who wrote (168654)	2/5/2002 7:39:49 PM
From: John Koligman	Read Replies (2) \| Respond to of 176387

OT Well our crack Treasury secretary has come up with another in a line of gems he has been producing lately. He wants to 'punish' rogue execs by 'taking away their shareholder lawsuit insurance'!!! Wow!! 'We need to make clearer the responsibilies of executives' Huh? They don't know what they are supposed to do?? Then he goes on to say that by doing this we can avoid wholesale changes in rules governing corporate disclosure. He also said citizens should be 'better educated' in financial matters.. Regards, John PS - With 'Big Five' accounting lackey Pitt over at the SEC, it looks like the current Gov't is not much more than a comfy board of directors for the biz world... O'Neill Wants Tougher Penalties For CEOs Who Mislead Investors By BOB DAVIS Staff Reporter of THE WALL STREET JOURNAL NEW YORK -- Treasury Secretary Paul O'Neill said he favors strengthening penalties for chief executives who release misleading financial statements, including barring them from using insurance to cover the costs of some shareholder lawsuits. Responding to the gale of criticism over the collapse of Enron Corp., whose disclosure statements were seen as inadequate or misleading, Mr. O'Neill said rules governing corporations should be changed to make clearer the responsibility of corporate executives. "It would be helpful to strengthen the certification [of financial results] that a chief executive officer makes on behalf of the company," he said during an interview at the World Economic Forum meeting in New York. One way to accomplish that, he said, would be to bar the CEO, other senior executives and directors from having insurance that pays for legal costs and judgments arising from situations where a firm doesn't release adequate financial information. Mr. O'Neill said such an insurance ban would apply "to all cases, whether there is wrongdoing or whether there is a wrongful statement." A total ban is important "so there is no ambiguity about the responsibility of executive officers -- that they have the responsibility to know and a responsibility to share" information. Insurance policies covering directors and officers liability typically state that deliberate misrepresentations or violations of securities laws are grounds for denying a claim. Other types of policies often are less clear in spelling out when an insurer must pay. In the Enron situation, insurers who wrote surety bonds are disputing some claims because the insurers say Enron misled them about how the bonds were to be used. Surety bonds are issued by insurers to companies that want to guarantee performance or payment in a business transaction. In the wake of the Enron collapse, President Bush named Mr. O'Neill to head a panel to look at changes in rules governing corporate behavior, which is expected to make recommendations by mid-February. He said it was "worth looking into" the insurance proposal, but the plan wasn't final. Mr. O'Neill also heads a separate panel to look at changes in pension laws, such as recommending that workers have more flexibility to diversify retirement accounts, and that senior executives be held to the same blackout periods on stock sales as rank-and-file employees. By focusing on the actions of CEOs, Mr. O'Neill said it should be possible to avoid wholesale changes in rules governing corporate disclosure. "It's not possible to devise a detailed regulatory scheme that anticipates everything that one ought to know," he argued. "Therefore, it's probably going to be more beneficial to put the duty on the executives because they should know everything that's necessary to know and they should provide everything that's necessary to know." Stephen Kaufman, chairman and CEO of Arrow Electronics, a Melville, N.Y., semiconductor supplier, who was also attending the WEF meeting, said he was concerned that a broad denial of insurance would make it hard to fill top corporate jobs and directorships. "As a CEO of a large company, it's impossible to know everything going on," he said. "Am I supposed to be sued because someone did something wrong? I'd have to think twice about taking the job if that were the situation." So long as an officer or director exercised "reasonable" care in producing financial reports, Mr. Kaufman said, he thought they ought to be able to qualify for insurance. Mr. O'Neill said he also would review the recommendations of a task force headed by former Federal Reserve Chairman Paul Volcker, who is examining international accounting standards. More and more of the world is one from a financial standpoint, Mr. O'Neill said, "I think there's no reason to have multiple standards." Separately, Mr. O'Neill said he expected pace of U.S. economic growth to pick up during the year, and forecast fourth-quarter growth at an annual rate of 3% to 3.5%. He anticipated that the government would run a surplus, including revenue from Social Security taxes, again in "a couple of years." He dismissed criticism that the government should measure its surplus or deficit, without including Social Security taxes. "Tell me why I should do that?" he said. "What does that have to do with anything." When the government runs a surplus, each dollar is used to retire debt, whether or not that revenue comes from Social Security taxes. That improves the fiscal condition of the government and makes it easier for it to borrow again in the future to pay for retirement of baby boomers. The proper level of government surplus is a subject for debate, Mr. O'Neill said, but the level shouldn't be determined by the amount of Social Security taxes coming into the Treasury now. "It's not a relevant thing," he said.