December 20, 2004
Pushing Back Against Regulators
With the re-election of President Bush and the fading memory of the collapse of Enron et al., it appears that the business lobby is increasing the pressure on the SEC and prosecutors to back off from the tough stance that had been taken in the past few years towards corporate crime and accounting/regulatory violations. Last week, Treasury Secretary John Snow indicated in an interview that he favored a more "balanced" approach toward enforcement of the Sarbanes-Oxley Act. A CNN report includes the following statement by Secretary Snow: "I think regulators, government officials, U.S. attorneys -- all of us who have a role in administering the oversight system for corporate governance -- have to be cognizant of the need for appropriate, measured balance here." An article in the Wall Street Journal (Dec. 20) indicates that business groups are opposed to William Donaldson continuing as Chairman of the SEC. The article notes, "The biggest gripes center on the SEC's regulatory and enforcement approach. Businesses complain they are being forced to spend too much time and money trying to comply with a slew of new regulations, many of which are required under the 2002 Sarbanes-Oxley Act. They also have taken aim at other SEC initiatives, including plans to give shareholders more power to nominate directors, register hedge-fund advisers and require independent chairmen for mutual-fund boards."
Chairman Donaldson is hardly the scourge of Wall Street, and Secretary Snow of course asserts that the Sarbanes-Oxley Act is "absolutely essential" and requires "no major modifications." One wonders whether his teeth were clenched when he said that. It will be interesting to see whether the enforcement climate changes over the next couple years, or at least until the next major scandal erupts. (ph)
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