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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: calgal who wrote (403713)	5/7/2003 4:31:24 PM
From: calgal	Respond to of 769670

Senators critical of Wall Street leaders URL:http://www.usatoday.com/money/industries/brokerage/2003-05-07-wall-st-deal-senate_x.htm WASHINGTON (Reuters) — Senior senators on Wednesday questioned whether a $1.4-billion settlement in the Wall Street analysts scandal will change attitudes at the top of the nation's biggest brokerages, while regulators defended the agreement as a historic move toward reform. "Firms are not contrite and simply consider the fines and penalties as a means to make a problem go away," said Chairman Richard Shelby at a Senate Banking Committee hearing on the settlement that was finalized last week with 10 firms. "I am not convinced that the global settlement has done enough to change attitudes at the top of these banks." The SEC on April 28 unveiled final terms of a settlement resulting from almost two years of probes into analysts issuing overly positive research, mostly in the 1990s market bubble, to please corporate managers and win investment banking business. Shelby, an Alabama Republican, compared huge investor losses to the relatively modest $1.4 billion payout and asked Securities and Exchange Commission Chairman William Donaldson whether the settlement punishes Wall Street enough. Donaldson — himself a multimillionaire former investment banker and ex-New York Stock Exchange chairman — pledged further probes of brokerage executives and said: "You cannot dismiss the fact that these are the largest fines that have ever been given. "This is not the end. This is just the beginning ... Very much on our agenda is the whole area of supervisory responsibility and we intend to pursue that," Donaldson said. The settlement banned two analysts from the securities business for life — ex-Merrill Lynch (MER) Internet analyst Henry Blodget and Jack Grubman, once the top telecommunications analyst at the Salomon Smith Barney brokerage unit of financial giant Citigroup (C). But no other individuals have been charged, despite thousands of memos and e-mails released by investigators showing managers deeply involved in an intertwining of research and investment banking that compromised analysts' work. Maryland Sen. Paul Sarbanes, the top Democrat on the banking panel, said Wall Street must "get with the program". Sarbanes, co-author of the sweeping 2002 Sarbanes-Oxley corporate and accounting reforms that came after the collapse of Enron, said: "If the people on Wall Street can't be sensitized to what's happened, then obviously the regulators are going to have to sensitize them." New York Attorney General Eliot Spitzer, who spearheaded the first probes into analyst misconduct, told the committee his investigation of individuals would intensify. He called brokerage executives "fair game" for regulators. Turning the tables on Congress as the hearing turned to the historic causes of the scandal, Spitzer attacked "an over-arching effort to deregulate the financial services industry over the last 20 years." He said, "I think we may now be paying the price for that deregulation," which came amid reassurances from investment and commercial banks that they could police themselves. "Those in the halls of Congress who believed that mantra are partially to blame," he said. "The single most important message for the American public and for Congress is that self-regulation ... was a complete, abject failure." Spitzer — a rumored New York gubernatorial hopeful — won national publicity by leading the analyst investigations, but ruffled feathers at the SEC and in Congress by encroaching on turf traditionally dominated by federal authorities. Bankers last fall circulated language on Capitol Hill that would have sharply cut the state role in securities regulation. No one in Congress picked up the language, but Sarbanes said it — or something like it — may be making the rounds again. Spitzer vowed to fight any effort to push state officials like himself out of securities regulation. "Pre-emption of the states would be an egregious, egregious mistake," he said. Merrill, Citigroup and Swiss-owned Credit Suisse Group's CSFB settled charges of securities fraud in the settlement. Other firms charged with lesser violations included Goldman Sachs, Morgan Stanley, Bear Stearns, Lehman Brothers, J.P. Morgan Chase, Piper Jaffray and UBS Warburg.