U.S. chamber urges revamp of SEC, citing threat of competition

Congress should revamp securities regulation, shield accounting firms from litigation and take other steps to bolster American financial competitiveness, according to a new report from the U.S. Chamber of Commerce.

Echoing other recent studies by business and political groups, the report to be released today by a chamber-appointed commission says that U.S. capital markets are threatened by rapidly maturing foreign rivals and that they must make significant changes to continue attracting foreign companies and investors.

“There have been great advantages to being the place where everybody brings their money, and we want to maintain those advantages,” David Chavern, the chamber’s chief operating officer, said in an interview.

Critics have generally dismissed such arguments, saying that business groups are trying to roll back investor-friendly reforms that were implemented after the corporate scandals of recent years.

Opponents point to factors such as record Wall Street profits to argue that the U.S. remains the world’s financial capital.

Among the chamber’s recommendations.

* Congress should restructure the Securities and Exchange Commission and force regulators to consider potential costs to companies when writing new rules. An SEC spokesman could not be reached for comment.

* Policymakers should take steps to protect large auditing firms from investor lawsuits and criminal prosecution to prevent the potential collapse of a sizable firm.

* Public companies should stop issuing estimates of upcoming quarterly earnings. Critics say such guidance pressures companies to fudge accounting to satisfy Wall Street profit expectations and to forgo spending and research that could boost their long-term prospects.

* The SEC should study state and federal litigation to determine whether there is a “proper balance” between investor protection and capital formation.

* Congress should give the SEC the ability to adjust the landmark Sarbanes-Oxley law implemented after Enron Corp.’s debacle. Business groups have contended that certain provisions of the law are too costly, particularly to small companies.

The chamber will hold a meeting Wednesday to discuss its proposals.

The report also addresses employee-retirement issues and calls for the overhaul of corporate retirement plans to ensure that U.S. workers save enough.

All employees should be required to participate in 401(k)-style plans, their monetary contributions should be raised over time and the government should help small companies offer retirement plans, the report said.

Dennis Lynch, a 401(k) expert at Sentinel Pension Advisors in Wakefield, Mass., said many of the proposals were well-intended.

But others, such as allowing certain employers to shift regulatory fiduciary oversight of their plans to outside financial institutions, are “absolutely flawed” and appear aimed at freeing businesses from regulation, he said.