For Immediate Release: July 30, 2002

For More Information: Ed Mierzwinski, 202-546-9707

Statement of U.S. PIRG On Signing of the Sarbanes-Oxley Corporate and Accounting Reform Bill By Edmund Mierzwinski, Consumer Program Director

"U.S. PIRG commends the Congress for sending the President a strong corporate reform bill that will prevent cheating, punish criminals and protect small investors. Yet, paradoxically, while the Sarbanes-Oxley bill is a landmark reform, it is also only a good first step. Much more needs to be done. We pledge to work with the Congress, the administration and state legislatures to help finish the job.

The Congress gets a passing grade because it rejected the weak House-passed accounting reform and instead enacted the tougher Senate bill. The Senate bill includes two parts. Its accounting reforms were passed by Banking Committee Chairman Sarbanes (MD) and passed 17-4 through the committee. While the House unfortunately rejected the tough bill proposed by Financial Services Committee ranking member Rep. John LaFalce (NY), Senator Sarbanes wisely adopted many of the LaFalce proposals. The accounting reforms in the final bill establish a new independent accounting oversight board with a majority of public members, limit auditors from conflicts caused by consulting contracts with their clients and require that company boards of directors work for investors not management in audit decisions.

The bill also includes critical corporate crime reforms passed unanimously by Chairman Pat Leahy (VT) and the Senate Judiciary Committee. Provisions enacted protect whistleblowers from corporate retribution, preserve evidence, make shredding a crime and extend the statute of limitations for defrauded consumers to sue corporate crooks.

Yet, in addition to these landmark reforms more needs to be done. First, the Congress should revisit and strengthen the auditor independence requirements and toughen the oversight board. Second, the Congress should add two amendments that weren't even considered on the Senate floor.

(1) Enact the Levin-McCain amendment to require proper expensing of stock options.

(2) Enact the Shelby-LaFalce amendment to restore aiding and abetting liability to lawyers, accountants and investment bankers and others who act as accomplices to corporate crooks.

Congress also needs to protect worker pensions before adjournment. The House has passed a weak unacceptable 401-k proposal. The Senate has not yet acted.

Also, within the next 90 days, the SEC must appoint five strong investor watchdogs to the new accounting oversight board. While the new law allows two of these to be accountants, nothing in the law says those accountants need to be connected to the accounting industry. We will watch these selections closely."

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