"U.S.
PIRG commends the Congress for sending the President a strong
corporate reform bill that will prevent cheating, punish criminals
and protect small investors. Yet, paradoxically, while the Sarbanes-Oxley
bill is a landmark reform, it is also only a good first step.
Much more needs to be done. We pledge to work with the Congress,
the administration and state legislatures to help finish the job.
"The
Congress gets a passing grade because it rejected the weak House-passed
accounting reform and instead enacted the tougher Senate bill.
The Senate bill includes two parts. Its accounting reforms were
passed by Banking Committee Chairman Sarbanes (MD) and passed
17-4 through the committee. While the House unfortunately rejected
the tough bill proposed by Financial Services Committee ranking
member Rep. John LaFalce (NY), Senator Sarbanes wisely adopted
many of the LaFalce proposals. The accounting reforms in the final
bill establish a new independent accounting oversight board with
a majority of public members, limit auditors from conflicts caused
by consulting contracts with their clients and require that company
boards of directors work for investors not management in audit
decisions.
"The
bill also includes critical corporate crime reforms passed unanimously
by Chairman Pat Leahy (VT) and the Senate Judiciary Committee.
Provisions enacted protect whistleblowers from corporate retribution,
preserve evidence, make shredding a crime and extend the statute
of limitations for defrauded consumers to sue corporate crooks.
"Yet,
in addition to these landmark reforms more needs to be done. First,
the Congress should revisit and strengthen the auditor independence
requirements and toughen the oversight board. Second, the Congress
should add two amendments that weren't even considered on the
Senate floor.
(1)
Enact the Levin-McCain amendment to require proper expensing of
stock options.
(2)
Enact the Shelby-LaFalce amendment to restore aiding and abetting
liability to lawyers, accountants and investment bankers and others
who act as accomplices to corporate crooks.
"Congress
also needs to protect worker pensions before adjournment. The
House has passed a weak unacceptable 401-k proposal. The Senate
has not yet acted.
"Also,
within the next 90 days, the SEC must appoint five strong investor
watchdogs to the new accounting oversight board. While the new
law allows two of these to be accountants, nothing in the law
says those accountants need to be connected to the accounting
industry. We will watch these selections closely."
