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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (19845)	10/12/2004 9:37:12 PM
From: Joe S Pack	Read Replies (1) \| Respond to of 110194

SEC Chair Says Public Distrusts Wall St. guardian.co.uk Wednesday October 13, 2004 2:16 AM AP Photo DCMC102 By MARCY GORDON AP Business Writer WASHINGTON (AP) - Public mistrust of Wall Street and corporate America remains high, even though doubts have been eased somewhat by enforcement actions against hundreds of companies and corporate improvements, Securities and Exchange Commission Chairman William Donaldson said Tuesday. ``There's a large body of the general public ... who are still upset by the shenanigans,'' Donaldson said in an interview with The Associated Press. ``People are angry, still angry; they feel the perpetrators have not been disciplined yet; they want their money back in some form; and more importantly, they want justice.'' ``That is still there; I don't see that turning around on a dime,'' he said, but added: ``I think that it's off the bottom. ... There's been real movement at the governance level.'' Donaldson said some companies continue to lavish on executives extravagant pay packages that are not justifiable and are tied to short-term leaps in stock prices, and the SEC is considering tightened disclosure requirements for compensation. Corporate reform has taken root since a sweeping package of anti-fraud measures enacted in 2002, he said, but executive compensation still requires attention. ``I think we've gotten way over too far,'' with many companies' tying pay to short-term growth in earnings, he said. He called it an unhealthy trend. The agency is considering rules to require clearer disclosure of the real costs of pay packages. Donaldson, a former New York Stock Exchange chairman who has ties to President Bush's family, has taken an activist approach in the 20 months or so he has headed the watchdog agency. His actions have upset business interests and put him at odds on some issues with his two fellow Republicans on the five-member SEC. On other issues: -Donaldson said he still hoped agreement could be reached to make companies more accountable by opening their official ballots to big shareholders who want to install board directors. To date, he said, ``We have not reached a compromise.'' Donaldson and the two Democrats on the commission favor the proposal under consideration. Democratic Commissioner Harvey Goldschmid accused the SEC of bowing to corporate executives on the issue. -The chairman said the SEC is considering modification of a few of the dozen or so overhaul measures it proposed in response to the mutual fund trading scandal that surfaced about a year ago because they have been found unworkable. The SEC chief said he was disappointed but not surprised that the U.S. Chamber of Commerce has challenged in federal court a new rule mandating that the chairmen of mutual fund boards be independent from the companies managing the funds. The rule, adopted by a divided SEC, would take effect next year and could shake up the $7 trillion industry to which some 95 million Americans entrust their savings. The boards of an estimated 80 percent of U.S. funds - some 3,700 of them - would be forced to replace their chairmen. ``I think that the industry, insofar as it has been tarnished, will recover,'' Donaldson said in the interview. -About 1,000 new lawyers, accountants and examiners have been hired by the agency since Congress expanded its powers and nearly doubled its budget after the scandals, and Donaldson said it has been trying to anticipate problems before investors are defrauded and lose money. The SEC has handled an unprecedented load of investigations and prosecutions, including dozens of mutual fund cases, AOL Time Warner, Enron, ImClone Systems, Martha Stewart, WorldCom, Xerox and sanctions against accounting firms for failing to maintain their independence from companies whose books they audit. ``We're spending a lot of time changing the whole way that the SEC goes out and exercises its responsibilities,'' he said. -Affirmed the SEC's role as the final authority on accounting rules, saying questions related to mortgage giant Fannie Mae's accounting ``will ultimately be determined by the SEC.'' Executives of the government-sponsored company rejected allegations last week allegations by the Office of Federal Housing Enterprise Oversight that Fannie Mae had manipulated earnings to meet Wall Street expectations and had accumulated pervasive accounting improprieties. -Said the SEC has designated a remote location for its operations in case of another terror attack and has had practice drills to prepare. ^---