Easing US accounting rules may jeopardize markets: regulator
By Emily Chasan
NEW YORK, Feb 15 (Reuters) - Policy makers risk hurting the reputation of U.S. markets and damaging their competitiveness if they roll back too many securities laws enacted in response to the wave of financial scandals earlier this decade.
That was the retort offered on Thursday by a U.S. accounting regulator alarmed by the recent cascade of comment lambasting stringent U.S. securities laws, particularly the post-Enron Sarbanes-Oxley accounting legislation.
Public figures including New York Mayor Michael Bloomberg, U.S. Senator Charles Schumer, and a blue-ribbon investigatory panel have all recently blamed heightened regulation as the main culprit making U.S. markets less competitive than overseas rivals, and keeping foreign companies from listing on U.S. exchanges.
Placing himself squarely on the other side of the debate, Public Company Accounting Oversight Board (PCAOB) member Charles Niemeier said on Thursday that companies were not listing in the United States because of political and cultural reasons, and that altering regulation may not do anything to fix the problem.
"I don't believe that 'regulation-light' is an answer," Niemeier said at a New York Society of Security Analysts panel.
"We're looking at an interesting time in where these markets are developing in other countries. It would put us in an extremely dangerous position to have lowered our standards in the United States."
Calls to roll back regulation to enhance U.S. competitiveness picked up last November Committee on Capital Markets Regulation, backed by U.S. Treasury Secretary Henry Paulson, released a report calling for the changes.
John Thornton, Co-Chairman of the Committee, who also sat on the panel, said that the Committee was not looking to reduce the quality of companies that list on U.S. exchanges, but rather, to increase the efficiency of the rules.
Since Sarbanes-Oxley legislation was passed in 2002, the business community has complained that the costs associated with the internal controls section of the law have far outweighed its benefits.
The U.S. Securities and Exchange Commission, and the PCAOB proposed changes last year aimed to increase the efficiency of the law.
But beyond those changes, Niemeier said it was important to keep investor protections that maintain the strength of U.S. markets.
"If we start tweaking, are we putting at risk the one thing that gives us a true competitive advantage in the world?" Niemeier said.
Others on the panel said that changing the rules to satisfy competitiveness concerns alone, would not be in the best interest of U.S. investors.
"In our reaction to increased foreign competition we shouldn't throw the baby out with the bathwater," said Merritt Fox, a Columbia Law School Professor, who sat on the panel. "Our regulatory system, as it applies to U.S. firms is not perfect, but proposals for change should be justified on their own grounds, not simply that it scares foreign firms away."
(Reporting by Emily Chasan; Reuters Messaging: rm://emily.chasan.reuters.com@reuters.net;Tel: +1 646 223 6114))
