SEC Past Chairmen Roundtable

All but one¹ of the living former Chairmen of the U.S. Securities and Exchange Commission (SEC) gathered at a Past Chairmen's Roundtable sponsored by the SEC on Dec. 20, 2005. The roundtable was hosted by current SEC Chairman Christopher Cox. The format of the roundtable included opening and closing statements on any matter of interest, including reference to major initiatives undertaken during the respective former chairmen's tenures, and how those relate to issues of today.

Broad points made by a number of the former chairman in their opening and closing remarks included:

• Support for the new requirements, some of which were established under the Sarbanes-Oxley Act, pertaining to the role of board members, particularly independent board members, on audit committees and compensation committees.
• Support for the SEC's previously announced current project, consider proposing increased/improved disclosure of executive compensation.
• Support for the SEC's controversial independent chairman and independent board member requirements for mutual funds; these new requirements have faced challenges in court.
• Support for the SEC's recent efforts to ease the securities offering process such as the recent Securities Offering Reform final rule, and the recent proposal for electronic filing of proxy statements and related materials. However, some caution was voiced about whether adequate due diligence would follow in a sped-up securities offering process, and whether electronic proxy filing would be more susceptible to fraud than paper filings.
• Support for the vigorous enforcement process at the SEC.
• Support for the SEC's role in encouraging transparency to promote growth in capital markets and protect investors.
• Support for SEC's role in the global marketplace; while focusing on protecting U.S. investors, there is a need to be of assistance to other international regulators - while, at the same time, asking for their cooperation in addressing cross-border fraud.
• Virtually universal support for addressing the "obsolescence" of financial reporting and disclosure, including the "brittle illusion of accounting exactitude" (both terms used by former Chairman Rod Hills) and the overabundance of disclosure that does not necessarily serve investors needs, and may not be relevant. One of the past chairmen (Pitt) noted a byproduct of this is need for the SEC to consider when formal rulemaking with public comment period should take place, versus informal staff guidance.
• One former chairman (Harvey Pitt) noted the need for further improvement in the quality of audits; another (William Donaldson) highlighted concern about concentration of the auditing profession; both Pitt and Donaldson referenced the high level of concern among auditors about liability, and Pitt suggested liability is driving disclosure, rather than whether information is informative to investors.
• A number of the former chairman referred to the Sarbanes-Oxley Act as being a success, and one (Williams) cautioned against efforts to water it down; although he noted that, regarding Section 404 on internal control reporting, it was appropriate to "ease up some on the 80 percent of issuers that are 5 percent of market cap".

Click on the links below for further information on the SEC Past Chairmen's Roundtable

Financial reporting and disclosure - highlights

Unofficial transcript (prepared by FEI staff who listened to the webcast) will be posted shortly

Archived version of the webcast

List of past chairmen participating in the roundtable

¹ Chairman Cox noted that former Chairman Arthur Levitt sent his regrets he could not attend.

Prepared Dec. 20, 2005 by Edith Orenstein (eorenstein@fei.org), Director, Technical Policy Analysis, Financial Executives International (FEI) based on listening to the public webcast of the roundtable. This summary does not represent FEI opinion, unless specifically noted above.