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To: Mark Adams who wrote (20755)	7/4/2002 3:49:15 PM
From: marek_wojna	Read Replies (2) \| Respond to of 74559

Mark, we still have to figure out new P/E when the reaccounting is finished and who knows how many co's were cooking the books. I'm 100% sure we will not find out any nice surprise but many ugly ones. Valuations is another story - what the market will do if so called "EXPECTED" earnings are suddenly not welcomed by investors, except if the company warns about lower than past earnings. BTW, I'm not alone in my view....... <<Big State Pensions Demand Wall St. Reform Mon Jul 1, 4:29 PM ET By Chris Sanders NEW YORK (Reuters) - State officials overseeing $220 billion of public pension assets and other funds in three states on Monday said Wall Street needs to clean up conflicts of interest between research and investment banking units, or lose state business. In the wake of Enron Corp.'s downfall and the collapse of WorldCom Inc. , North Carolina, New York and California officials want to protect the retirement funds of state residents. State pension funds lost more than $2 billion on investments in WorldCom's stocks and bonds alone. Under the proposal, investment banking firms that do business with New York, North Carolina and California will be asked to adopt rules clearly separating their research and investment banking divisions similar to those agreed upon by Merrill Lynch & Co. and New York state Attorney General Eliot Spitzer. "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," California State Treasurer Philip Angelides said in a release. But the Securities Industry Association, a trade group representing investment banks, broker-dealers, and mutual fund companies, said the new rules may "pose a problem because states could be essentially superseding federal laws involving the regulation of securities analysts," according to spokeswoman Margaret Draper. The state officials said the effects of the new measures will trickle down to individual investors because their pension funds invest in many of the same mutual funds as small investors. Effective July 1, every financial organization giving investment banking advice must adopt the principles laid out by Spitzer for Merrill. They include: an end to any input from bankers on analysts' pay; a committee to review all analyst recommendations; announcements when a bank ends research coverage of a company that include the reasons for the termination; disclosure of whether the bank has received any fees from companies covered by the firm's research staff; and monitors set up to ensure compliance with the new rules. For California, which expects to have sold more than $25 billion of debt by the end of 2002, the broker-dealer rules are especially important as it chooses debt underwriters. The three states also want investment companies that oversee pension assets to clean up their act as well. New rules for them include: periodic detailing of advice being given to corporate 401(k) plans where the money management firm could invest state pension monies in the stocks or bonds of the corporate client; details of how portfolio managers and analysts are paid; disclosure of fees paid to broker dealers; and installation of safeguards ensuring quality accounting and auditing at companies being invested in. North Carolina Treasurer Richard Moore, said in a telephone interview that he expects the banking and investment community to adopt the rules within two to four months. "Most of our managers are eager to satisfy us," Moore said, and have said they will put the proposal in place.