|  | | 2006 News and Press Releases | | |
HEADLINE NEWS:
A Push to Fix the Fix on Wall Street
Stephen Labaton
New York Times. December 17, 2006
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EXCERPT: Some business groups, as well as the treasury secretary, Henry M. Paulson, have raised concerns that more companies are listing their stock overseas because of the regulatory climate in the United States. Last month, a committee of academics and businessmen headed by R. Glenn Hubbard, the former chairman of the Council of Economic Advisers and now dean of the Columbia Business School, and John L. Thornton, a former president and co-chief operating officer of the Goldman Sachs Group and the current chairman of the Brookings Institution, proposed a series of measures they said would address this problem. The remedies include protecting corporations from criminal and civil cases, imposing new restrictions on shareholder lawsuits, and capping the liability of accounting firms. At the core of critics' arguments is the idea that American laws make foreign markets more attractive than domestic ones. But some experts discount that link and point to other reasons why more companies are seeking out foreign markets. Listing and underwriting fees are significantly lower in many countries, and a number of companies that have recently listed in Europe and elsewhere overseas would never have met the disclosure or financial standards of American markets, even with the latest changes. ''You can reduce American regulations to zero and overseas markets would still be attractive to some companies,'' said Richard C. Breeden, a former chairman of the S.E.C. ''The proportion of offerings in the United States is going down. But India is getting richer and China is getting richer, and these trends reflect that.'' Wall Street firms like Goldman Sachs are also posting record earnings, Mr. Breeden added, a sign that American underwriters have not suffered. Barbara Roper, director of investor protection at the Consumer Federation of America, said it was also incorrect to blame shareholder lawsuits for the growing appeal of foreign markets, or to assert that such litigation has been unduly burdensome. The number of securities lawsuits has steadily and dramatically declined in recent years, Ms. Roper said, with a 45 percent drop in the first six months of this year. On an annualized basis, she added, the number of cases are at the lowest level in 10 years. Ms. Roper attributed the trend to better corporate governance and the Sarbanes-Oxley Act. Moreover, only five shareholder lawsuits cited accounting firms in 2005; in the first half of this year, only one. Other experts said that last week's actions could represent the high water mark for the retrenchment. ''Given the significant amount of change that took place, I'm not surprised that there is this counterrevolution,'' said Charles M. Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. |
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