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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: patron_anejo_por_favor who wrote (180172)	7/16/2002 6:39:49 AM
From: Giordano Bruno	Read Replies (1) \| Respond to of 436258

(It's safe harbor stuff but I don't get it either after only half a glass of red wine.) IN OTHER NEWS... Senate Approves Tough Fraud Bill, Vows to Compromise With House By SHAILAGH MURRAY Staff Reporter of THE WALL STREET JOURNAL WASHINGTON -- The Senate unanimously approved landmark legislation to overhaul federal accounting regulation, targeting abuses that have roiled U.S. markets and the business community. But the bill, which passed 97-0, didn't include action on stock options. Senators argued about the issue all day, but procedural barriers prevented votes on two amendments related to how companies account for the popular corporate perk. WEIGHING ALL OPTIONS Senate Majority Leader Tom Daschle of South Dakota vowed that the issue would be resurrected in new legislation. "One way or another we will have a vote" on stock options, he declared. Critics have argued that stock options tempt executives to inflate earnings and can distort a company's bottom line. One Senate amendment would have required corporations to record stock options as a compensation cost -- a step Coca-Cola Co. and several other large companies recently elected to take voluntarily. Another would have instructed a beefed-up accounting-standards board to review how stock options are accounted for, and issue a ruling within a year. President Bush, in a speech at the University of Alabama, urged the Senate and the House, which passed its legislation in April, to quickly reconcile the two versions. "The two [chambers] need to get together as quickly as possible and get me a bill that I can sign before the August recess," Mr. Bush said. House leaders have indicated they will be prepared to go to conference with the Senate as soon as the Senate completes its work. Under intense pressure from business lobbyists, Senate leaders in both parties were reluctant to add stock-option language to the bill; the procedural barrier provided a neat excuse. It also prevented a flood of other amendments from being offered, which angered their sponsors but hastened a conclusion. The Senate approved two additional amendments Monday -- to quickly post stock sales by corporate executives on the Internet, and to establish rules of conduct for attorneys practicing before the Securities and Exchange Commission. Despite wanting to crack down on corporate abuses, senators were wary of overreaching, especially given the financial markets' recent decline. For many, the stock-options issue was a bridge too far. "Millions of Americans benefit from [stock options], and we need to be careful about what we're doing," said Sen. Phil Gramm (R., Texas). High-technology companies fought especially hard against any changes, since so many offer options to all or nearly all of their employees. Even without a stock-options provision, the bill still has plenty of muscle. Its centerpiece is a new Public Company Accounting Oversight Board to monitor the accounting profession. The five-member board would be appointed by the SEC and funded by publicly traded companies. Separately, the bill would bolster the independence of the Financial Standards Accounting Board. The oversight board would conduct regular inspections of public accounting firms, including annual inspections of the largest firms. It would have the authority to investigate and punish violations of board rules, securities law or professional accounting standards. The legislation would restrict the nonauditing services accounting firms can provide to public companies, including consulting services. However, it provides for case-by-case exceptions. It would force firms to rotate accounting partners after five years of auditing a public-company client, and would establish a one-year period before an accounting-firm executive moves to a client company as a chief executive, controller or chief financial officer. To bolster corporate-responsibility standards, the bill would require chief executives and chief financial officers of public companies to vouch for financial reports, and to forfeit profits and bonuses realized in the 12 months after the publication of earnings reports that are restated due to material noncompliance with securities law. Directors and executive officers also would be barred from trading company stock during "blackout" periods when their employees are prohibited from trading stock held in individual retirement accounts. The legislation would require loans to corporate insiders be reported by companies to the SEC within seven days. Material off-balance-sheet transactions would have to be disclosed, and sales of securities by corporate insiders would have to be reported publicly by the second day following such a transaction. To punish offenders, the bill would establish a securities-fraud felony that criminalizes any "scheme or artifice" to defraud shareholders, along with a new obstruction-of-justice felony that would specifically target shredding. Employees who raise questions about or challenge a company's practices would get new protections, and the statute of limitations on fraud cases would be extended. Punishments also would be toughened. To crack down on conflicts of interests by stock analysts, the bill would require SEC or stock-exchange rules to prohibit conflicts that could compromise analysts' independence. Analysts also would have to disclose if they own stock or receive compensation from a company, or are paid based on investment-banking revenue from the company. Write to Shailagh Murray at shailagh.murray@wsj.com Updated July 16, 2002 1:36 a.m. EDT