Senate Panel Scrutinizes Wall Street Settlement

United States Senators have expressed skepticism and have questioned whether the recent $1.4 billion Wall Street settlement against large investment banks would lead to meaningful reform and help the average investor. The comments came during a Senate Banking Committee hearing about the recent settlement between federal and state regulators and 10 investment banks over conflict of interest charges.

Committee members told regulators that they were skeptical about the effects of the settlement on the Wall Street culture. Sen. Richard Shelby (R-AL), chairman of the banking committee, said that he wasn’t convinced that the fines and penalties had done enough to change the attitudes at the investment banks. Mr. Shelby also questioned the small size of the settlement in relation to the amount of money that investors had lost.

Securities and Exchange Commission (SEC) Chairman William Donaldson defended the settlement, saying that it was the largest fine ever for the SEC. He also said that investors could pursue additional lawsuits to recoup money, although he acknowledged that many investors would probably never be fully repaid.

Sen. Paul Sarbanes (D-MD), the committee’s senior Democrat, echoed Mr. Shelby’s concerns, saying that analysts were still in “denial” and needed to “get with the program.” Mr. Sarbanes referred to remarks made a week earlier by Philip J. Purcell, the chairman and chief executive of Morgan Stanley. As part of the settlement, Morgan Stanley has agreed to pay $125 million. Mr. Purcell downplayed the harm that was done to investors, saying that he wasn’t “concern[ed]” about his firm’s actions.

Mr. Donaldson told legislators that his agency would continue its Wall Street investigations. “This is not the end,” he said. “This is the beginning.” The Wall Street Journal reported last Friday that regulators would be moving further up the chain of responsibility and targeting investment bankers next.

You may like these other stories...

The US Securities and Exchange Commission (SEC) has chosen a former partner and vice chairman with Deloitte LLP as its new chief accountant.James Schnurr, who specialized in financial and SEC reporting for public companies...
Summer is a time for kicking back and playing a few round of golf with friends, for example. But if you're on the green, you'd better be careful: The SEC may be looking over your shoulder.In July, the SEC announced...
An examination initiative launched by the US Securities and Exchange Commission (SEC) earlier this week will enable the agency to evaluate whether municipal advisors are complying with new SEC rules that went into effect...

Already a member? log in here.

Upcoming CPE Webinars

Sep 30This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 9In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards.
Oct 15This webinar presents the requirements of AU-C 600, Audits of Group Financial Statements (Including the Work of Component Auditors).
Oct 21Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience’s communication style.