On July 15, the Senate approved legislation I helped craft with Sen. Paul Sarbanes (D-Maryland), Sen. Christopher Dodd (D-Connecticut) and others to tighten regulation of corporate auditors and make executives more accountable for their conduct.
We believe this legislation is a major step toward restoring public confidence in our capital markets system.
The collapse of Enron Corp. was the first of too many boardroom scandals involving accounting abuses. As public outrage grows, stock prices plunge. We need federal legislation to right a wrong that is claiming the savings of retirees, working class families, and young professionals.
The American financial system depends on the broad availability of timely and truthful information. It is difficult enough for many investors to decipher the complex information. But it is criminal if corporate officials use fraudulent techniques to twist, disguise, inflate or distort the level of corporate earnings.
We think our measure, which is now pending in a House-Senate conference committee, will serve as the most important piece of legislation for the financial markets system since the original securities act became law under President Franklin Delano Roosevelt.
The measure would:
Establish a strong independent board to oversee auditors of public companies.
The board would have the authority to set standards, and to investigate and discipline accountants. Overseen by the SEC, it would have independent funding and membership and mark the end of weak self-regulation on the part of public company auditors.
Address pervasive conflicts of interest, ensuring auditor independence by restricting auditors from providing many consulting services. Where such services are still permitted, they would have to be pre-approved by the company's audit committee.
Strength corporate responsibility, requiring CEOs and CFOs to be personally responsible for the accuracy of their company's financial reports, and requiring auditors to report directly to the board representing shareholders rather than to management.
Establish safeguards to protect against investment analysts' conflicts.
Provide the SEC expanded resources to hire additional staff to carry out its mandate of protecting investors.
With proper oversight and strengthened laws, we can return trust and integrity to corporate America, ensure that no corporation violate the public's trust, clam investors and let our markets return to business.
Jon S. Corzine
United States Senate