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Monday, 4 March, 2002, 20:08 GMT
Nasdaq chief: Reforms not needed
Hardwick Simmons, chief executive of Nasdaq
Mr Simmons says more rules won't help
The head of the Nasdaq has told the BBC that stronger laws are not necessary despite Enron's collapse.

His opinions fly in the face of an array of lawmakers who have been stressing the need for widespread reforms as they try to establish what went wrong at Enron.

It was really a failure of character in Enron's corporate office

Hardwick Simmons
Nasdaq chief
"I don't think more reforms are needed - I think everyone knows full well what their responsibilities are, " Hardwick Simmons told the BBC's World Business Report.

"Enron knew full well that it should be was really a failure of character in Enron's corporate office," he said.

The energy firm hoodwinked analysts and investors all over the world by inflating its profits.

Wall Street analysts, auditors and credit rating agencies have all come under fire from lawmakers for failing to warn investors of pending disaster.

Spiritual need

"What everybody has to do is get with a spirit of disclosure and transparency," said Mr Simmons.

Investors have been scared away from the stock markets following Enron's bankruptcy, and an array of different companies have been infected by "Enronitis" - or a lack of trust in the accounting practices of that firm.

In Enron's case, the letter [of the law] was lived up to, but the spirit was raped

Hardwick Simmons
But Mr Simmons says that 98 out of 100 companies are reporting just the way they should be.

He said that Enronitis was a good thing, meaning that every company and every number will be inspected.

But he disagrees that stronger rules and regulations are needed to protect investors better.

"The minute you set up too many rules and regulations, they become targets, and people live up to the letter but not the spirit," he said.

"In Enron's case, I think the letter [of the law] was lived up to, but the spirit was raped."

Areas for reform

Despite Mr Simmons' opinion, widespread reforms are expected to be introduced in the following areas:

  • The role of business funds in political campaigning.
  • The need to reform pension laws to stop over-exposure to one stock, and prevent a company from investing its pension funds in its own stock.
  • The need for higher standards of transparency and disclosure in the audit profession.
  • Potential conflicts of interest between consultancy and auditing work.
  • The need for tighter regulation on financial derivatives trading.

    A dozen congressional committees have already been sifting through the details of Enron's downfall to discover how to introduce tighter laws.

    Nasdaq chief Hardwick Simmons
    Enron knew full well that it should be transparent
    See also:

    25 Feb 02 | Business
    Enron scandal at-a-glance
    26 Feb 02 | Business
    Bitter row dominates Enron hearing
    27 Feb 02 | Business
    Analysts fend off Enron criticism
    15 Feb 02 | Business
    Andersen 'infected by greed'
    04 Feb 02 | Business
    Enron: Crime, punishment and reform
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