SEC Defends Actions
Posted Jun 27, 2007 9:29 AM CST
By Debra Cassens Weiss
Members of the Securities and Exchange Commission took mostly softball questions at an appearance yesterday before the House Financial Services Committee.
The SEC refuted criticism that the agency is favoring investors over businesses, Bloomberg News reports.
"Many of the issues we face are sometimes trivialized as disputes between business and investors," the commissioners said in prepared testimony. "The truth is, when people invest in a company's securities, they are risking their money on the success of the business. Only if the business succeeds will their investment prosper."
Despite the recent controversies, questions were mostly gentle, the Washington Post reports.
A favorite topic was the prevalence of class-action lawsuits by investors. The U.S. Chamber of Commerce has criticized the SEC for backing shareholders seeking to hold third parties liable for helping corporations hide their financial picture.
The SEC had urged the Solicitor General to file an amicus brief backing the investors’ position in a case pending before the Supreme Court, but he declined to do so.
Rep. Richard Baker, R-La., said the SEC's position in the case presented a "clear and present danger" to capital markets.
Rep. Al Green, D-Texas, asked about a new program in which SEC enforcement lawyers must get input from the commission’s five members before beginning settlement negotiations.
The chairman of the committee, Rep. Barney Frank, D-Mass., pounded his gavel and ended the questions, the Post says. "In my judgment, the commission as currently constituted has hit the right balance," he said.