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To: Taki who wrote (112519)	2/6/2003 9:49:53 AM
From: Taki	Read Replies (1) \| Respond to of 150070

(COMTEX)B: SEC Nominee Talks Tough on Fraud B: SEC Nominee Talks Tough on Fraud WASHINGTON, Feb 06, 2003 (AP Online via COMTEX) -- President Bush's nominee to head the Securities and Exchange Commission promised Wednesday if confirmed to aggressively enforce corporate anti-fraud rules and said his highest priority is selecting a new chairman of the board overseeing the accounting industry. At his Senate confirmation hearing, Wall Street investment banker William H. Donaldson also defended his record as a former chairman of the New York Stock Exchange but softened his opposition to a rule prohibiting companies from revealing information to financial insiders ahead of the public. Donaldson, a Bush family friend, pledged to work to rebuild investor confidence shaken by last year's business scandals and to allow the SEC to fully investigate and prosecute corporate lawbreakers without regard to politics. Amid the cascade of accounting failures, Bush's own transactions as a one-time director of Harken Energy Corp. drew renewed scrutiny and the SEC has been investigating Vice President Dick Cheney's tenure as chief executive of oil-service firm Halliburton Co. Donaldson, who also was a chairman of insurer Aetna Inc., expressed only qualified approval of a recent crackdown on abuses by Wall Street investment firms led by New York Attorney General Eliot Spitzer. He termed it "constructive up to a point" as a supplement to SEC enforcement efforts, but said state law-enforcement officials should take care not to intrude on the federal agency's turf. Nearly a dozen big investment firms recently agreed to pay a total $1.4 billion to settle Spitzer's allegations that they misled customers with stock research biased in favor of companies that gave the firms investment banking business. His highest priority is selecting a new chairman of the board overseeing the accounting industry, Donaldson told the Senate Banking Committee. The current SEC chairman, Harvey Pitt, resigned under fire in early November in a flap over his selection of former FBI Director William Webster to head the accounting board. Webster also resigned. The SEC chairman and four fellow commissioners nominate the accounting board boss, and Donaldson said naming that person "is the No. 1 priority that I have ... We're behind the eight ball." The 71-year-old Wall Street veteran received a friendly reception from senators of both parties on the panel and is expected to be confirmed soon by the full Senate. He answered their questions with animation and an easy smile and relished the analogy they drew between his challenge as SEC chairman and his service in the Marine Corps in the early 1950s. Panel chairman Sen. Richard Shelby, R-Ala., told Donaldson: "You will be undertaking a tremendous public trust. ... Your leadership will be key to rebuilding the faith of investors in our markets." He didn't promise instant results. "Just as the war on terrorism cannot be won overnight, neither can investor confidence be completely restored so quickly," Donaldson said. "Corporate America, Wall Street and their professional stewards - lawyers, accountants, corporate and financial managers and financial regulators - still have much work to do." Senators were clearly impatient to replace Pitt, the Bush administration's first SEC chief, whose continued lame-duck tenure has become a political irritant as a beleaguered SEC issues new rules for companies and investigates and prosecutes a heavy load of corporate fraud and accounting deception. "It's now the first week in February and he's still on the job," said Sen. Paul Sarbanes of Maryland, the committee's senior Democrat. "We need to get moving." Sarbanes was a key author of sweeping legislation enacted last summer that expanded the SEC's powers to prosecute fraud and ordered the agency to put into effect new rules for companies, executives and accountants. If confirmed, Donaldson said, "I will demand accountability from all responsible parties. I will aggressively enforce civil penalties and work cooperatively with state and federal law enforcement agencies ... to bring those who break the law to justice." In 2001, Donaldson denounced as "terrible" a year-old SEC rule prohibiting companies from revealing financial results and other information to stock analysts and other Wall Street insiders ahead of the public - a long-standing practice. He called the Regulation Fair Disclosure of 2000 - pushed by small-investor advocates and then-SEC Chairman Arthur Levitt - "crazy in terms of what it does to the free flow of information." Like other critics, Donaldson contended it could make company executives afraid to say anything. Asked about the issue at Wednesday's hearing, Donaldson acknowledged his earlier stance but said he believed the rule was now "working better." He promised to monitor its impact as SEC chairman. Democrats on the Banking Committee also have examined Donaldson's leadership of the stock exchange in the early 1990s, when floor brokers made millions of dollars in illegal trades. The trading fraud scandal later brought the first criminal prosecutions of floor brokers at the exchange. "There's been a lot of misunderstanding," Donaldson testified, referring to allegations that he and other senior NYSE officials quietly approved of letting brokers who worked on the exchange floor trade and share in profits with private customers. "Enforcement and protection of investors was always my top priority." Donaldson, a founder of Wall Street brokerage Donaldson, Lufkin & Jenrette, recently reported personal assets of between $89 million and $253 million. He was required to report only a range of assets, not specific numbers. He promised to sell his stocks in more than 50 corporations and his interests in partnerships to avoid any potential conflict of interest. --- On the Net: Securities and Exchange Commission: sec.gov By MARCY GORDON AP Business Writer Copyright 2003 Associated Press, All rights reserved -0- APO Priority=r APO Category=1155 (PROFILE (CO:Harken Energy Corp; TS:HEC; IG:OIS;) (CO:Halliburton Co Holding Co; TS:HAL; IG:OIE;) ) KEYWORD: WASHINGTON SUBJECT CODE: 1155 * end of story *