To: TigerPaw who wrote (4194 ) 7/8/2002 3:06:44 AM From: Raymond Duray Respond to NY Times: Sen. John McCain - The Free Market Needs New Rulesnytimes.com we have seen the first principles of free markets — transparency and trust — fall victim to corporate opportunists exploiting a climate of lax regulation . I have long opposed unnecessary regulation of business activity, mindful that the heavy hand of government can discourage innovation. But in the current climate only a restoration of the system of checks and balances that once protected the American investor — and that has seriously deteriorated over the past 10 years — can restore the confidence that makes financial markets work. they should ask for the resignation of Harvey Pitt , chairman of the Securities and Exchange Commission. While Mr. Pitt may be a fine man, he has appeared slow and tepid in addressing accounting abuses, and concerns remain that he has not distanced himself enough from former clients. Executives maximized their compensation with stock option plans that burdened their companies with huge costs hidden from investors. Venerable accounting firms, having looked the other way as companies cooked the books, shredded documents to hide their misdeeds. Although American tax policy encouraged them to do so, corporations that move their legal headquarters offshore to avoid taxes appear conspicuously ungrateful to the country whose young men and women are risking their lives today to defend them.firm that audits a company must be prohibited from providing any consulting service — ever — to that company. Legislation sponsored by Senator Paul Sarbanes would create an Accounting Oversight Board to establish and enforce the standards for audits of publicly traded companies. But this oversight board should be completely independent from the industry , financed either as part of the S.E.C. or a separate agency.Stock options, while a legitimate and valuable form of employee compensation, must be identified as an operating expense in a public company's financial reports. Top executives should be precluded from selling their own holdings of company stock while serving in that company. Executives should be allowed to exercise their options, but their net gain after tax should be held in company stock until 90 days after they leave the company.Executives should be required to return all compensation directly derived from proven misconduct . Also, a corporate compensation committee should be made up of members of the board who have no material relationship with the company or personal relationship with its management. Indeed, the entire board should be similarly independent, with the exception of the chief executive. If their certification is false, they should go to jail. Investment services, including research, should be separated from lending, underwriting and securities trading .To love the free market is to loathe the scandalous behavior of those who have betrayed the values of openness that lie at the heart of a healthy and prosperous capitalist system .
