The U.S. Chamber Details its Recent Successes and Agenda for 2008
The Center For Capital Markets Competitiveness, a newly-established arm of the U.S. Chamber of Commerce focused on strengthening the U.S. capital markets, recently issued its first report. That report summarizes the Chamber’s successes over the last year and lays out its agenda for this year.
In the Chamber’s view, the “U.S. capital markets are hampered by a litigation system run amok, an outdated and burdensome financial services regulatory structure, and accounting and tax policies that increasingly are out of sync with a truly global economy.” The fundamental weakness in an “incoherent” regulatory system resulted in a missed opportunity to avert the current subprime crisis.
Nevertheless, the Chamber had a number of achievements last year, according to its report, which include:
• Defeating the SEC’s special interest shareholder access proposal in favor of its time tested policy of limiting shareholder access;
• Thwarting abusive securities litigation primarily by having the Supreme Court adopt its position in Stoneridge, which rejected an SEC-developed “scheme liability” theory adopted by plaintiffs to impose liability on third parties to corporate transactions under the antifraud provisions of the federal securities laws;
• Supporting the Attorney-client and work product privileges principally by working for the passage of the Attorney Client Privilege Protection Act of 2007, which has passed in the House of Representatives and is pending in the Senate;
• Supporting global accounting and auditing standards, an item which appears to be high on the agenda of SEC Chairman Cox; and
• Improving Sarbanes-Oxley, Section 404 by convincing the SEC and PCAOB to proceed with implementation in a more cost effective manner, particularly for smaller companies.
The Chamber’s goals for 2008 appear to be more aggressive that in the past. Those goals include:
• Establish a modern and coherent capital markets regulatory structure. The debate on a new regulatory structure took a large step forward on March 31 when Treasury Secretary Paulson announced his plan for regulatory reform, discussed here.
• Restoring fairness to legal, regulatory and enforcement processes. As part of its effort the Chamber not only continues to back passage of the Attorney Client Protection Act of 2007, which would preclude prosecutors from requesting a waiver of privilege (but which will not end the current “culture of waiver” as it has come to be called because there will still be the prospect of purchasing amnesty or more favorable treatment through a “voluntary” waiver) and seeking to eliminate rule making through enforcement actions. The overall goal is to end criminal liability for business organizations except for an actual criminal enterprise. Achievement of this goal would of course end in part the “culture of waiver” since business organizations would not be bargaining to avoid liability with DOJ, although the difficulty would continue as to the SEC.
• Implement a global financial reporting model which in part would eliminate what the Chamber calls “speech GAAP” or SEC staff interpretations through speeches and staff bulletins. This would end the practice of SEC staff accounting bulletins, a position SEC Commissioner Atkins has advanced.
• Expand and enhance opportunities for wealth creation and retirement security which includes a call for oversight of corporate governance rating agencies or proxy advisory firms which, according to the report are “being manipulated to serve as enablers for these special interest groups …,” which are primarily the trial lawyers in the view of the Chamber. This point ties to the Chamber’s position on proxy access discussed above.