Dem Lawmakers Adler and Maloney Throw Investors Under the Bus

October 27, 2009

(ChattahBox)—Two House Democrats, Reps. John Adler of New Jersey and Carolyn Maloney of New York, plan to introduce two pro-business amendments today to weaken much-needed reforms to protect investors from financial fraud, which were enacted in the wake of the sweeping Enron and WorldCom accounting scandals. The amendments would exempt small and medium sized firms from the external audit requirements of the Sarbanes-Oxley Act.

Investor protection groups decry the amendments, as a direct blow to investor confidence and transparency, which would impede the nation’s financial recovery.

Adler and Maloney are seeking to weaken the Investor Protection Act of 2009, which was drafted by the Treasury Department over the summer, to provide new tools to the Securities and Exchange Commission to protect investors.

Rep. Adler a freshman Congressman and self-described conservative, “Main Street Democrat,” won a seat usually held by a Republican and he is anxious to prove his conservative principles to win reelection in 2010. His amendment would exempt publicly-traded firms with market capitalization less than $700 million from a Sarbanes-Oxley mandated external audit.

Adler speaks of implementing “less stringent requirements” and easing the costly “burden” on small businesses; a position supported by the U.S. Chamber of Commerce. But investor groups claim that the cost of an outside audit is exaggerated by firms, and in the long run, it’s certainly cheaper for investors than to restate earnings.

The Council of Institutional Investors and American Association of Individual Investors wrote a joint letter to the House Financial Services Committee condemning Adler’s proposed amendment, as a travesty.

“we believe the costs have often been exaggerated by…opponents, particularly with regard to the costs for small companies, and that the benefits more than outweigh those costs,” said the groups in their letter.

Lynn E. Turner, chief accountant for the SEC from 1998 to 2001, accused Adler of turning his back on investors, for the express purpose of benefiting from corporate campaign contributions.

What Adler is really doing is dialing for dollars,” bluntly said Turner. “He’s got a job that he wants to keep, and he has to run for that job every two years. So this is probably a strong indication that Adler couldn’t care less about investors, and cares much more about getting the money so he can keep his job.”

Rep. Maloney on the other hand is known, as a staunch liberal and her anti-investor amendment is puzzling to many of her constituents.

Barbara Roper, director of investor protection at the Consumer Federation of America said, the amendment is “worse than I would have expected from [Congresswoman] Maloney.”

Maloney’s amendment would completely exempt publicly-traded firms with market capitalization of less than $75 million. But critics say smaller firms are especially susceptible to accounting fraud and that outside audits are essential.

Jeff Mahoney, general counsel for the Council of Institutional Investors said of Maloney’s proposal, “The need for strong internal controls is particularly important for the generally riskier smaller public companies that would be the beneficiaries of any exemption.”

The SEC has already been issuing exemptions from the independent audit requirement to smaller firms, to ease the transition for less capitalized firms, but the exemptions are about to come to an end.

Maloney recently came under fire for repeating the N-word, while retelling a story. She lost her husband, Clifton Harlan Wells Maloney, 71, a millionaire investment banker last month, who suffered a tragic accident while on a mountain expedition in China.

Reps. Adler and Maloney plan to bring up their anti-investor amendments during a session of the House Financial Services Committee on Tuesday.

Source


Comments

2 Responses to “Dem Lawmakers Adler and Maloney Throw Investors Under the Bus”

  1. Old Man Dotes on October 27th, 2009 1:11 pm

    Anything supported by the U.S. chamber of Commerce is designed to increase profits by cheating or stealing from consumers; obviously Adler and Maloney are on the take.

  2. Tossing board under feet - Silverfish Longboarding - The Longboard … | Skateboarding Leisure Knowledge on October 30th, 2009 2:36 am

    […] Dem Lawmakers Adler and Maloney Throw Investors Under the Bus … […]

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