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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (1053)	7/1/2002 4:26:45 PM
From: Jim Willie CB	Respond to of 89467

States Pressure Wall St. on Conflicts (NY, Calif, NC) By MICHAEL GORMLEY, Associated Press Writer New York, California, North Carolina Pressure Wall Street on Conflicts of Interest ALBANY, N.Y. (AP) -- New York, California and North Carolina officials agreed Monday to require many top Wall Street firms to adopt anti-conflict-of-interest policies to do business with the states' massive pension funds. The states will require investment banking firms and money managers doing business with the pension funds to disclose more about potential conflicts, adhere to several safeguards and accept closer monitoring. Columbia Law School professor John Coffee said the agreement, backed by billions of dollars in public pension funds, will be more effective than regulators' efforts to reform Wall Street. "What we're seeing here is consumer power, not regulatory power," said Coffee, who has closely watched the recent furor over Wall Street conflicts of interest. "No one wants to give up on New York or California's pension funds, which are huge, and to get that business I think you will find a competitive market adopting the standards they mandate. That's how consumer power works well in a competitive market." The California Public Employees Retirement System is the nation's largest at about $150 billion. New York's public retirement system has about $112 billion and North Carolina's nearly $54 billion. New York Attorney General Eliot Spitzer said a dozen more states with large pension funds are considering signing on to the initiative. "Our message today is simple and clear: If you wish to do business with our state, we expect you to adhere to the highest standards of integrity and disclosure ... so pensioners and taxpayers aren't stuck with the bill," said California Treasurer Philip Angelides. The agreement is expected to force change on an industry whose chief regulator, Securities and Exchange Commission Chairman Harvey Pitt, has been criticized for lax enforcement. "We've supported those goals since Day One," said Joseph Borg of the North American Securities Administrators Association. Its task force is pushing for similar reforms. The agreement imposes and extends Spitzer's May settlement with Merrill Lynch & Co. The firm, and a few other major brokerages, agreed to separate its analysts from investment banking. Internal e-mails obtained by Spitzer showed stock analysts were urging investors to buy the stock of companies they privately felt were risky in order to land the firms as investment banking clients. The revelations further weakened investor confidence, wracked by a wave of accounting scandals following last fall's collapse of Enron Corp. that have cost them millions. WorldCom, Adelphia Communications, Tyco International, Xerox and others have lost billions of dollars in market value as questions arose over their financial practices and accounting. "The fraud and theft committed by criminals on our city streets is no different from the fraud and theft committed by criminals in our corporate suites," said New York Comptroller H. Carl McCall, the sole trustee of his state's pension fund. Coffee said Monday's agreement should be immune to the criticism by some in Congress that Spitzer was overstepping his authority for political gain. "There is nothing sinister about the pension funds finding their voice and saying, `Here are the rules of the game that we insist on playing by,'" Coffee said. "I am going to make sure that the investment banking and money management firms that do business with North Carolina disclose all potential conflicts of interest and take whatever steps are necessary to ensure that our investments are protected," said North Carolina State Treasurer Richard Moore. -end-