"We said the first thing you have to do is make auditors independent," Roper recalled. "They didn't like that argument. The next thing you know they've introduced this bill that reflects nothing from our discussion: nothing on auditor independence and an oversight board with virtually no powers structured in a way that ensures the most control by the accounting industry."
Then WorldCom's accounting debacle exploded onto the scene and President Bush demanded that Congress come up with a bill on corporate accountability by August. When the bill that was to become Sarbanes-Oxley was being completed in conference, Roper said, Oxley suggested that it be called the Sarbanes bill because of all the work Sarbanes had done on it. "Sarbanes gets up and said, 'If that's what you're going to do, we should call it Sarbanes-Oxley,' and Oxley slaps his name on a bill he fought every step of the way."
Accounting standards
Sarbanes-Oxley is largely a bill that imposes new accounting standards and oversight. For example, it requires accounting firms to change lead partners on a client every five years. Wall Street was largely untouched by the bill. The law's only securities regulation was prohibiting Wall Street firms from retaliating against research analysts who criticize investment banking clients.
Investor advocates say the current influence of the financial services industry in Washington leaves Main Street Americans vulnerable to continued corporate chicanery or unfair Wall Street practices.
Nancy M. Smith, former director of the SEC office of investor education and a former securities regulator for New Mexico, is now director of RestoreTheTrust.com, an investor advocacy organization. "Public policy in Congress or at regulatory agencies reflects what the industry wants because investors aren't organized," she said. "They are paying all these fees to brokerage firms and mutual funds and they should find out what the lobbyists for those firms are doing. And what they're going to find out is that they are not lobbying for the interest of investors."
As a result, Smith added, investors should demand that the companies they deal with represent their interests. "Silence from investors allows the industry to shape public policy, and that needs to change," she said.
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