Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : The Enron Scandal - Unmoderated -- Ignore unavailable to you. Want to Upgrade?

To: Karen Lawrence who wrote (1827)	2/28/2002 4:09:20 PM
From: stockman_scott	Respond to of 3602

House Democrats Unveil Investor Protection Bill Thursday February 28, 3:47 pm Eastern Time By: Judith Burns, Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- Eager to protect investors from another Enron Corp. ( ENRNQ) collapse, House Democrats introduced legislation Thursday to curb accountants, Wall Street analysts and corporate boards, while increasing funding for securities regulators. Democrats said their bill, the "Comprehensive Investor Protection Act of 2002, " would be better for investors than a Republican bill offered by House Financial Services Committee chairman Michael Oxley, R-Ohio. Rep. John LaFalce, D-N.Y., said the Democratic bill provides "a real solution" rather than "meaningless cosmetics," and was drafted with help from labor unions, consumer groups and former Securities and Exchange Commission Chairman Arthur Levitt, not accountants. About a dozen Democrats, including House Minority Leader Richard Gephardt, D- Mo., are co -sponsoring the bill, which would create a seven-member board to inspect and discipline accountants. Funding for the new board would come from fees imposed by accountants on audit clients. Corporations would be required to rotate auditors every four years and accounting firms would be barred from providing many non-audit services to audit clients. Tax advice could be provided only if approved by corporate boards. The bill also contains a "document retention policy" requiring auditors to keep key files for seven years and would require that auditors wait two years before being able to go to work for former clients. Wall Street would face new restrictions as well, as the bill would ban analysts from owning stock in companies they cover or being paid based on investment banking revenue. Democrats want the New York Stock Exchange and the National Association of Securities Dealers to set criteria to evaluate research and have analysts be paid based on the quality of their work. Corporate boards would be given the power to hire and fire auditors, and would have to meet with auditors at least quarterly. In addition, the bill restricts corporations from contributing to directors' pet charities. The Securities and Exchange Commission would be a big winner, as the bill doubles funding for its enforcement, corporation finance and accounting staff, for a total budget of $876 million in fiscal 2003. Speedy disclosure of stock sales by insiders would be required under the bill, along with selling by affiliated parties of stock and related derivatives. In the event of a "lockdown" that freezes employees from trading securities in a 401(k) retirement savings plan, the bill requires top executives also be barred from trading as well. AFL-CIO deputy general counsel Damon Silvers called the Democrats bill "the real deal," which would crack down on abuses and conflicts in corporate boardrooms, investment banks and audited financial reports. "It covers all the bases," agreed Consumers Union legislative counsel Frank Torres. He urged Congress to adopt tough, new investor protections and rescind laws that "defanged the watchdogs in the name of deregulation." The Democrats' bill would repeal portions of the 1995 Private Securities Litigation Reform Act, making it easier for class-action plaintiffs to gather information in lawsuits. It also would overturn a Supreme Court decision so that outside lawyers and accountants could be sued for aiding and abetting a securities fraud. Oxley's bill tackles many of the same areas, but doesn't call for mandatory rotation of auditors and leaves design of a new accounting oversight board to the SEC. -By Judith Burns, Dow Jones Newswires; 202-862-6692; judith.burns@dowjones.com (This story was originally published by Dow Jones Newswires)