Businesses Seek Protection From Litigation (with the encouragement of the Bush administration)

[Omaha Steve]

http://www.nytimes.com/2006/10/29/business/29corporate.html?ex=1162699200&en=f703e1651fe395ff&ei=5043&partner=EXCITE

By STEPHEN LABATON
Published: October 29, 2006

WASHINGTON, Oct. 28 — Frustrated with laws and regulations that have made companies and accounting firms more open to lawsuits from investors and the government, corporate America — with the encouragement of the Bush administration — is preparing to fight back.

Now that corruption cases like Enron and WorldCom are falling out of the news, two influential industry groups with close ties to administration officials are hoping to swing the regulatory pendulum in the opposite direction. The groups are drafting proposals to provide broad new protections to corporations and accounting firms from criminal cases brought by federal and state prosecutors as well as a stronger shield against civil lawsuits from investors.

Although the details are still being worked out, the groups’ proposals aim to limit the liability of accounting firms for the work they do on behalf of clients, to force prosecutors to target individual wrongdoers rather than entire companies, and to scale back shareholder lawsuits.


Left to right: Stephen Hilger/Bloomberg News; Hiroko Masuike for The New York Times; Adam Berry/Bloomberg News; David McIntyre/Bloomberg News; and Mychele Daniau/Agence France-Presse-Getty Images

Leading the groups hoping to scale back regulation are, left to right, R. Glenn Hubbard, dean of Columbia Business School, John L. Thornton, a former president of Goldman Sachs, Robert Glauber, a former NASD chairman, Donald Evans, a former commerce secretary, and Samuel DiPiazza, chief executive of PricewaterhouseCoopers

The groups hope to reduce what they see as some burdens imposed by the Sarbanes-Oxley Act, landmark post-Enron legislation adopted in 2002. The law, which placed significant new auditing and governance requirements on companies, gave broad discretion for interpretation to the Securities and Exchange Commission. The groups are also interested in rolling back rules and policies that have been on the books for decades.

To alleviate concerns that the new Congress may not adopt the proposals — regardless of which party holds power in the legislative branch next year — many are being tailored so that they could be adopted through rulemaking by the S.E.C. and enforcement policy changes at the Justice Department.


FULL story at link above.