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EDITIONS
Friday, 19 July, 2002, 23:29 GMT 00:29 UK
US stocks watchdog defends role
News of a government investigation at Johnson & Johnson gave Wall Street another reason for a selloff on Friday pushing the Dow industrials to post-terrorist lows.
US shares have lost $1.5 trillion in value in a fortnight
The US' chief stock market regulator has said he has no regrets so far over his brief tenure as the markets' chief police officer, during a wave of accounting scandals which have sent investors fleeing the market.

Harvey Pitt, who heads the US Securities and Exchange Commission (SEC) said calls for his resignation were "politically motivated".


We need to have somebody who knows where the bodies are buried

SEC chairman, Harvey Pitt

"We've undertaken numerous initiatives," the SEC chairman said. "I'm enormously proud of our accomplishments, proposals and enforcement program."

"They've been aggressive, creative, well focused and effective."

'Absurb proposition'

Mr Pitt's past links with big US corporations have led to questions about his ability to police the market aggressively enough and led to calls for him to resign.

"We need to have somebody who knows where the bodies are buried," Mr Pitt told a National Press Club forum.

"I really refuse to believe that the American public would be happier with somebody who knew absolutely nothing about the securities markets or how to fix them," he said in response to reporters' questions.

"That to me is an absurd proposition."

Accountability

In his speech to the NPC forum in Washington, Mr Pitt said he expects the overwhelming majority of big companies to certify that their financial statements are accurate, as required, by August 14.

"Of course none of us necessarily knows, but my expectation is we will see the overwhelming majority of corporations, (chief executives and chief financial officers) feel comfortable in certifying," he said.


We will ferret out wrongdoing wherever we find it

Harvey Pitt

He said the new initiative, a requirement for the nation's top 1,000 publicly traded firms, would help to restore investor confidence among Americans in financial markets, adding that he intends to vigorously pursue those who skirt securities laws.

"The heaviest hammer against financial fraud, of course, is criminal prosecution and serious jail time," he said, even as he acknowledged the SEC has no power to prosecute criminal behaviour.

Pointing to the accomplishments of his tenure, Mr Pitt said, "In just ten months, we've sought to throw unfit officers and directors out of corporate boardrooms for good in 71 cases, with more on the way - already almost twice the number we sought in 2000."

When asked whether he thinks President George W Bush's sales of shares in Harken Energy in 1990 deserved another look, Mr Pitt responded that some critics want to turn the current scandals into seats in Congress.

"Some people want to extract political advantage in that context."

WorldCom debacle

With respect to Halliburton, the giant oil firm once run by US Vice President Richard Cheney that is under investigation by the SEC, Mr Pitt said, "No one in this country gets a pass.

"Anyone who violates the law has to be held accountable."

For 68 years, the SEC has maintained a model of independence, he said.

SEC chairman Harvey Pitt
Pitt has refused repeated calls for his resignation

"We have a completely independent enforcement agency," he said. "We will ferret out wrongdoing wherever we find it."

The SEC chairman said accounting scandals that began last autumn with the fall of energy-giant Enron have greatly affected Americans' trust in their country's stock markets.

Although accounting scandals were not new, he said, the current batch are different because "they occurred when more Americans than ever before are invested in the stock market".

He credited his agency with moving swiftly in response to the scandals, the latest of which is WorldCom, the telecommunications giant embroiled in a $3.8bn accounting scandal.

Mr Pitt said his agency had heeded the lessons of the Enron scandal, appointing a corporate monitor at WorldCom to ensure no documents were destroyed.

In addition he said quick action also prevented any WorldCom assets from being dissipated by extraordinary payments by company officers.

The SEC chairman also said a lack of resources at his agency was a real problem, adding he hopes Congress will act quickly so that he can hire more staff.


Analysis

IN DEPTH
The Markets: 9:29 UK
FTSE 100 5760.40 -151.7
Dow Jones 11380.99 -119.7
Nasdaq 2243.78 -28.9
FTSE delayed by 15 mins, Dow and Nasdaq by 20 mins
Launch marketwatch
View market data
See also:

19 Jul 02 | Business
18 Jul 02 | Business
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16 Jul 02 | Business
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16 Jul 02 | Business
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16 Jul 02 | Business
15 Jul 02 | Business
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