Remember way back in 2002 when corporate America was rocked by one accounting scandal after another? A top Securities and Exchange Commission official reminded reform critics on Friday that we are “not out of the woods yet,” the Washington Post reported.
In remarks before the Directors' Education Institute at Duke University, SEC enforcement chief Stephen M. Cutler lashed out at those who claim the new corporate accountability rules go to far and should be rolled back.
To those who think the SEC is overstepping its authority, Cutler said they "may have too quickly forgotten the major frauds that rocked the U.S. markets to their foundations only a few short years ago," according to a copy of his remarks.
The call for a rollback in regulation comes nearly three years after the passage of the Sarbanes-Oxley Act, which mandated strict new rules to prevent the kind of fraud that led to the collapse of Enron, WorldCom and others.
Officials from the U.S. Chamber of Commerce have recently said the SEC's enforcement unit is overreaching and that other SEC divisions are hurting businesses that are forced to comply with rules designed to curtail fraud and financial mistakes, the Post reported.
The Chamber, one of the most vocal critics of the reform efforts, has taken legal action and conducted research on the matter. Among other action, Chamber leaders sued the SEC last year for requiring mutual fund boards of directors have independent chairmen, the Post reported.
Chamber of Commerce chief executive Thomas J. Donohue said this month that the group would challenge the SEC "on rules and regulations that go too far and are not based on solid research and data," the Post reported.
Divisions within the five-member SEC have recently come to light as well with Commissioners Paul S. Atkins and Cynthia A. Glassman publicly stating concerns that big corporate fines hurt shareholders. Instead, they argue, regulators should punish the people responsible for carrying out fraud. But other agency leaders insist that imposing steep financial penalties on companies helps deter wrongdoing, the Post reported.
"The notion that we should turn back the clock and ease up our enforcement efforts is sorely misguided," Cutler said. "Vigorous enforcement of the federal securities laws is an integral part of what it takes to maintain safe and efficient markets."