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Now
It is clear, in the midst of a seven
year corporate financial crime wave, that the business moguls
and their academic apologists, who make up the Committee on Capital
Markets Regulation (CCMG) have no sense of irony. It is not enough
that the CCMG's new report is recommending less law enforcement
and accountability after years of Republican regimes addicted
to de-regulation. The Big Boys want to make lower standards overseas
an argument for starting a race to the bottom, in order for the
U.S. financial markets to remain "competitive."
Here are some of CCMG's thirty-two
recommendations, expected to be the goal of a big lobbying effort
on the Securities and Exchange Commission (SEC) and the Congress
next year:
1. Limit how and when state
enforcement agencies can pursue cases of financial fraud on investors.
This is designed to take care of any future Eliot Spitzers, who
take their oath of office seriously instead of ceremoniously.
Quite properly, the Governor-elect, present New York Attorney
General Spitzer reacted, saying: "To eviscerate the power
of the one set of regulators who did anything is absurd."
2. Governments should sue the
corporations themselves only as a last resort and instead concentrate
on the culpable officials in the company. That will give rise
to all kinds of escape hatches and internal scapegoating by clever
corporate attorneys. They do demand that companies pay the legal
expenses of the accused, however.
3. Make it more difficult to
convict defendants by requiring proof of actual knowledge of
the specific fraud, which makes it easier for executives to get
off the hook for criminal negligence. The "I didn't know"
defense is to replace "you should have known."
4. Weaken the post-Enron Sarbanes-Oxley
law, including not applying the key section 404 on internal accounting
controls to foreign companies if they have to "meet comparable
standards" in their home country. What are "comparable
standards?" This is a recipe for delay and loopholes. The
record of "equivalency negotiations" under NAFTA and
the World Trade Organization is enough to give rigorous pause
to this slippery move.
5. Stricter cost-benefit analysis
to any new SEC rules than is now in place. This it the time-dishonored
technique of producing endless delays in issuing any rules
a device that has devastated updating or declaring new health
and safety standards in the consumer, worker and environmental
areas. A corporate law firm's gold mine.
6. CCMG wants shareholder approval
for any "poison pill" defenses against takeovers that
the company officers and Boards institute. Apparently, this change
would make companies more vulnerable to the lucrative business
of mergers and acquisitions. But some investor advocates may
like this enhancement of shareholder power, along with another
proposal requiring a majority vote of shares to elect a company
director.
In a broader context, CCMG
opposes giving shareholders the power to vote on these gargantuan
executive compensation packages that often amount to looting
company assets and relooting them when the executive is asked
to leave by the Board the so-called "golden parachute."
7. Either cap liability for
auditors or give them outright immunity. After major accounting
firms profited by looking the other way in big corporate scandals
like Enron, WorldCom and the like, it takes a special brand of
commercial hubris to stake out this position.
Once auditors are immune, the
CCMG wants to let outside Directors escape liability for "corporate
malfeasance," if they rely "in good faith" on
the auditors. It isn't clear what non-good faith reliance would
be like.
"If you take every single
step on their list," declared Barbara Roper, director of
investor protection at the Consumer Federation of America, "you
would have made it significantly more difficult to hold corporate
criminals accountable for their crimes."
These corporate criminals have
looted or drained trillions of dollars from workers, their pensions
and millions of investors since 2000. Not 5 cents on the dollar
have been recovered for their victims. Many of these recoveries
have come through private litigation investor class actions
mostly which the Big Boys want to restrict even more than
their restrictive victory -- through the Securities Act of 1995.
The more crimes, the more they drive for privileges and immunities
from the rule of law.
It is not likely that many
of these measures will get through the SEC or the new Congress,
apart from some leniency for small companies under Sarbanes-Oxley.
But they will deter efforts to strengthen the corporate criminal
laws and regulations on both the corporations and, in the words
of one prosecutor, "their lying, cheating and stealing"
executives and accomplices.
CounterPunch
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