SEC Proposes Listing Ban On Companies Failing To Adopt Audit Rules

By Agence France-Presse The Washington, D.C.-based U.S. Securities and Exchange Commission approved a series of proposals Jan. 8 directing stock exchanges to bar the listing of a company failing to comply with audit rules established by new legislation. The proposals, which will go out for a period of public comment before a final commission vote, were approved by the SEC's five commissioners in a vote during a meeting at SEC headquarters. The proposals relate to the independence of a company's audit committee members and to an audit committee's responsibility to select and oversee the hiring of a company's independent accountant. Some Wall Street observers have said the implementation of such rules by U.S. exchanges, such as the New York Stock Exchange and Nasdaq, could deter foreign companies from seeking a U.S. listing. European accounting representatives have reportedly been lobbying the SEC in a bid to secure exemptions to the rules for foreign issuers. The regulatory rules governing European audit committees are different from those being implemented under the Sarbanes-Oxley corporate reform act. Additionally, an outside auditor also must report directly to the audit committee, and the audit committee must have the authority to engage independent advisors if it deems such a move necessary. Foreign companies with U.S. listings, foreign regulators and other interested parties will now have the opportunity to register any concerns they may have with the new proposals before the SEC considers a final rulemaking on the proposals. The Sarbanes-Oxley corporate reform bill was passed by Congress last year in response to the accounting and corporate governance breakdowns related to the collapse of Enron Corp. and WorldCom Inc. Copyright Agence France-Presse, 2003