shocker of the day
SEC Allows Auditors As Tax Consultants; Agency Abandons Proposed Ban
The Securities and Exchange Commission voted yesterday to back away from some tough restrictions on accounting firms it had considered in the wake of widespread corporate accounting scandals.
One of the most controversial proposals would have prohibited accounting firms from crafting tax shelters for audit clients and could have cost the firms millions of dollars in lost revenue. Investor activists saw the proposal as a bold stroke to restore public confidence, but it was strongly opposed by the accounting industry.
...Some investors closely watching the agency's actions were disappointed by the vote. "Passing watered-down rules does nothing to restore investor confidence," New York State Comptroller Alan G. Hevesi said through a spokesman.
This news--and indications that the SEC is considering backing away from other reforms--comes at a time when the stock market has now retreated from the slight uptick it enjoyed at the beginning of the year, and jobless claims jumped by another 18,000 (I won't be part of that figure until next month). These figures clearly point to an ongoing weakness in the economy and lack of confidence on the part of corporations and consumers alike.
I do want to point out that the decision was unanimous among the three Republicans and two Democrats appointed by Bush. This development is less about partisanship than about a government more intent of doing the bidding of corporations than protecting the public interest. But these developments indicates that the crisis of investor confidence that contributed to the stock market plunge persists. The bottom line is, no amount of dividend tax cutting or regulatory waivers designed to boost corporate profilts are going to help the markets if investors don't believe they can trust financial reports. But I don't think we can trust the SEC to police the industry in anything like an adequatre fashion. Good news for corporate boardrooms, bad news for both Wall Street and Main Street.