WASHINGTON –- The Securities and Exchange Commission has taken initial steps to protect corporations, executives and accounting firms from investor lawsuits that accuse them of fraud.
For starters, the SEC filed a brief in Supreme Court last week urging the adoption of a legal standard that would make it more difficult for shareholders to prevail in fraud lawsuits against publicly traded companies and their executives, The New York Times reported.
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At the same time, the agency's chief accountant said it was considering ways to protect accounting firms from large damage awards in cases brought by investors and companies.
According to the newspaper, critics of the SEC's actions said the moves signaled a major retrenchment from the post-Enron changes and showed that a lobbying push by big companies, Wall Street firms and the accounting industry was gaining traction.
But SEC Chairman Christopher Cox defended the agency's actions, saying both efforts were in the best interests of investors because they were aimed at preventing the accounting industry from further consolidation and at limiting what he called "fraudulent lawsuits," including some he said were filed by "professional plaintiffs."
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Cox said the consolidation in the accounting industry had prompted Congress and the SEC to consider ways to "prevent the demise of another firm," the Times said.
In addition the SEC's chief accountant recently explained that since there are only four large accounting firms remaining in the U.S., the SEC had begun to consider how to limit the legal liability of those firms in suits filed by investors and companies.
Still, the newspaper said institutional investors and some analysts were alarmed at the developments and noted that the number of shareholder lawsuits has been declining noticeable.
Editor's note:
Big Government Lies Exposed. Go Here Now.
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