July 22, 2002
TOUGHER PENALTIES
CORPORATE ACCOUNTABILITY
RESTITUTION TO EMPLOYEES
THE SENATE AND LaFALCE BILLS HAVE THEM AND WE'RE FIGHTING TO KEEP THEM!
HOUSE REPUBLICANS MOVE TO WEAKEN SENATE ACCOUNTING REFORM BILL
Dear Colleague:
Last week, after the conclusion of the opening meeting of the conference, House Republicans put on the table an offer that strikes at the heart of some of the key provisions in the tough Senate corporate accountability reform bill. That offer -
eliminates the Senate provisions extending the statute of limitations -- that extension is essential to allow more time for defrauded investors to seek legal redress and to ensure that plaintiffs don't rush to the court to file an incomplete case in order to meet a deadline;
drops the Senate's stronger penalties for document shredding;
removes important Senate bill protections for whistleblowers who try to alert the public to corporate abuses;
puts the accounting industry back in the position of regulating itself by compromising the new public accounting board's independence and weakening its authority, by limiting its ability to investigate or enforce violations of the securities laws and to set auditor independence and certain other standards;
permits foreign accounting firms to be exempted from the oversight of the Board, representing a huge loophole in the scope of the Board's authority;
eliminates the important amendment which required corporate wrongdoers to give up their ill-gotten gains and made those funds available to adversely affected employees and defrauded shareholders;
creates a loophole that would allow the firewall the Senate bill creates between auditing and consulting -- necessary to ensure auditor independence, to be breached;
permits U.S. accounting firms to avoid compliance with tough new standards by doing business through foreign operations and would permit foreign audit firms which benefit from U.S. investment to avoid compliance with the standards set by the Board and escape Board oversight;
bars the use of disciplinary actions taken by the Accounting Board in subsequent legal actions, decreasing the ability of victims and defrauded investors to recover, regulators to enforce the new law, and prosecutors to enforce the new criminal sanctions.
In the name of corporate reform, House Republicans pursued cosmetic, rather than real change before. Now they're at it again. If we are to restore market confidence, and investors and workers are to be protected, Congress cannot allow window-dressing to erode meaningful investor protections. The Senate bill is the absolute minimum needed to achieve the kind of reform that will protect investors and restore market confidence. We cannot, and must not, allow House Republicans and their corporate friends to weaken our reform efforts.
Sincerely,
JOHN J. LaFALCE PAUL E. KANJORSKI
Ranking Member Ranking Member
Committee on Financial Services Subcommittee on Capital
Markets, Insurance and
Government Sponsored
Enterprises
