- July 15 - America's investors, employees and pensioners can take heart
that the Senate is starting to look out for their interests. The Sarbanes bill
emerged from the Senate stronger than when it came in -- strengthened by amendments
that would broaden the definition of corporate fraud and increase the penalties
for fraud and document destruction.
The bill attempts to guarantee auditor
independence, but leaves the SEC with too much discretion to define which consulting
services accounting firms can offer their audit clients. We also regret a provision
to keep disciplinary proceedings against accounting firms secret until their final
But the real challenge now is to
keep the Senate bill from being gutted in conference committee. We call on Senator
Daschle and Speaker Hastert to name conferees who believe strong, swift reform
is needed to answer the crisis of market confidence.
The House-passed bill is a relic
of calmer markets. America can ill afford such a cynical move to protect campaign
donors in the accounting industry from the consequences of their inaction. The
House should pass a motion to instruct conferees to agree to stronger Senate language.
Unfortunately, House Financial Services
Chairman Michael Oxley (R-OH) is expected to chair the conference committee, and
he has not grasped the urgency of the crisis in financial markets. He has criticized
the Senate for rushing to enact reforms, calling the debate a "feeding frenzy."
Investors are more likely to view the accounting industry, not reformers, as the
sharks taking a bite out of their portfolios.
Bacgkround: According to CQ Weekly,
citing the value of U.S. stocks, as measured by the Wilshire 5000 stock index,
since March 2000, the value of all U.S. stocks has plunged by $7 trillion.
For more information, please contact
the Common Cause Press Office at 202/736-5770.