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Corporate Responsibility

The President's Comprehensive Corporate Reform Agenda

Today's tough new enforcement initiatives build on the 10-point reform plan the President announced in March. The President has an aggressive corporate reform agenda:

  • Expose and punish acts of corruption;
  • Hold corporate officers more accountable;
  • Protect small investors and pension holders;
  • Move corporate accounting out of the shadows;
  • Develop a stronger and more independent corporate audit system; and
  • Provide better information to investors.
Exposing and Punishing Acts of Corruption -- Holding Corporate Officers More Accountable

The Administration will use the full weight of the law to expose and punish corruption. Corporate officers hold offices of high trust and they should face stiffer penalties when they break the law. Corporate leaders who violate the public trust should never be given that trust again. The President proposes to:

  • Double the maximum prison term for mail fraud and wire fraud to ten years, and increase the prison time served for fraud committed by corporate leaders.
  • Create a new Corporate Fraud Task Force to increase DOJ’s ability to oversee and coordinate the investigation and prosecution of fraud and related criminal activity.
  • Empower the SEC to freeze improper payments to corporate executives while a company is under investigation.
  • End the practice of allowing corporate officers to receive loans from their companies.
  • Prevent CEOs or other officers from profiting from erroneous financial statements.
  • Ensure that CEOs or other officers who clearly abuse their power lose their right to serve in any corporate leadership positions.
  • Require corporate leaders to tell the public promptly whenever they buy or sell company stock for personal gain.
  • Strengthen laws that criminalize document shredding and other forms of obstruction of justice.
  • Challenge CEOs in America to fully comply with the spirit of existing SEC rules by explaining prominently and in clear English why their compensation packages are in the best interests of their companies.
  • Strengthen the SEC by seeking an additional $100 million in FY 2003 for the SEC to help hire more enforcement agents and improve other prosecutorial activities.
Moving Corporate Accounting out of the Shadows

The investing public needs a true, fair, timely and accurate picture of the assets, liabilities and income of publicly-traded companies. Greater transparency will expose bad companies and protect the reputations of good ones. Firms must attract investment by demonstrating their strengths, not by hiding their weaknesses.

  • An independent regulatory board should ensure that the accounting profession is held to the highest ethical standards.
  • CEOs should personally vouch for the veracity, timeliness, and fairness of their companies’ public disclosures, including their financial statements.
  • Firms’ accounting systems should be compared with best practices, not simply against minimum standards.

Protecting small investors and pension holders & Improving Investor Information

More than 80 million Americans own stock and many of them are new to the market. Buying stock gives Americans the opportunity to build wealth over the long term and create brighter futures for themselves and their families. To encourage stock ownership, we must make sure that analysts give honest advice, based on honest accounting, and honest and timely information. In addition, employees should be afforded protections in the administration of their 401(K) plans so that they have meaningful information, flexibility and confidence in their holdings.

  • Financial statements, annual reports, and other critical disclosure documents must be written in a straightforward, easily understandable form.
  • Each investor should have prompt access to critical information.
  • Each investor should have quarterly access to the information needed to judge a firm’s financial performance, condition, and risks.
  • Investors should have complete confidence in the independence and integrity of companies’ auditors.
  • The authors of accounting standards must be responsive to the needs of investors.
  • Employees should be able to sell their company’s stock and diversify into other investment options after 3 years of holding stock in their 401(K) plans.
  • Employees should be able to get sound advice on investing and diversifying their 401(K) accounts.

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