Businesses Seek New Protection on Legal Front

[cal04]

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.

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.

http://www.nytimes.com/2006/10/29/business/29corporate....

[Kagemusha]

1. Just a little tweaking, no biggie.

And yes, that was

They don't want any accountants being held responsible for the next Enron, when the whole point ought to have been to not have another Enron in the first place.

[cyberpj]

2. Deja Vu - Anyone remember this one? July '05 Fed ruling for Iraq contractors (Halliburton):

Halliburton w/benefit from new Fed ruling to limit suits vs Iraq contracts

U.S. judge limits use of fraud law against Iraq contractors
By Erik Eckholm The New York Times
WEDNESDAY, JULY 13, 2005

A federal judge has issued a ruling that will limit the applicability of a critical antifraud statute against corporate contractors in Iraq.

Judge T.S. Ellis 3rd of U.S. District Court in Alexandria, Virginia, held on Monday that the False Claims Act did not apply to the many contractors who were paid by the American occupation authority using Iraqi oil money.

The False Claims Act offers large rewards to corporate insiders who reveal misdeeds, and huge financial penalties can be imposed on errant companies. It is widely regarded as the government's most potent weapon against contractor fraud.

The district court decision, which is the first to provide guidelines in what has been a legal void, could derail some whistle-blower lawsuits that are in their early stages and still under seal, experts in the field of procurement law declared.


http://www.iht.com/articles/2005/07/12/news/fraud.php

[rodeodance]

3. os course a WH who forbids oversight will help them

[Dover]

4. That's because corporations run this country. Regulations are

going to be a thing of the past under ANY administration because they all feed from the corporate trough. There's no such thing as political parties anymore....

[cassiepriam]

5. Will make corruption legal. nt

[Laelth]

6. This comes as no surprise ...

The Bush Administration has fought (since day one) to erode our Constitutional rights, and this is just more of the same. The 1st amendment guarantees five distinct rights. It says: Congress shall make no law 1) abridging the freedom of speech, or 2) freedom of the press, or 3) freedom of religion, nor may Congress establish a national religion, nor may Congress 4) restrict freedom of assembly, nor 5) limit the right of the people to seek redress of their grievances from the government. Most people forget that 5th fundamental right that's contained in our 1st Amendment. What that clause means is that Congress may not restrict the right of the people to access the Court system. The Court, after all, is the forum wherein people turn to the government to seek redress of their grievances, whatever they may be. Whenever I hear of a new "shield against civil lawsuits" or laws that "limit liability" I know that somebody's trying to take away my access to the Court system. I also know that Congress is Constitutionally prohibited from doing so. Beware, this is very serious business.

The Court system is, generally speaking, extremely fair. If the plaintiff doesn't have a case, the Court will dismiss the case outright or rule against the plaintiff in summary judgment. Bad cases get thrown out. Only a case that has some merit will ever go to trial. In this instance, the Repukes don't trust the Courts because they know the Courts are fair. They want the rules to unfairly favor big corporations, so they have to take power away from the Courts in order to ensure that their particular brand of injustice will be done. In the process, they also have to take away the rights of the people to access the Courts. Yet another attempt to shred the Constitution.



-Laelth


Edit:Laelth--corrected bad BB code.

[Sgent]

7. There is some truth to this

but Sarbox is not all good either.

The requirement that the CEO & CFO sign off on the financials under penalty of criminal prosecution for material misrepsentation is a good thing.

The odeious requirements placed on even small companies regarding paperwork, etc. is changing market dynamics. When US companies are routinely listing themselves on european exchanges to avoid spending the money to meet the regulations -- we need to recheck the regulations. Its not unusual for a small NASDAQ company to have to spend 5-10% of their revenue on Sarbox compliance. This needs to be rethought.