Mr. Chairman, Senator Gramm, Members of the Committee:
It is a very great honor for me to appear before this Committee today. I am deeply grateful for the confidence that the President has shown in me by nominating me to be a commissioner. I appreciate your courtesy in calling me before you today.
I have always regarded the Securities and Exchange Commission as one of the finest agencies of the U.S. Government. My twenty-year career has centered on the financial markets and the SECís oversight of them. I have reviewed the practices of companies that the Commission regulates, advised firms on complying with its regulations, and worked with the SEC to investigate and rectify situations where investors have been harmed. In fact, I had the privilege of serving as a staff member of the Commission for four years under two of the ablest chairmen that the SEC has had: Richard C. Breeden and Arthur Levitt. It is a personally meaningful coincidence that the actual term that I have been nominated to fill is the same one that both Chairman Levitt and Chairman Breeden held. If confirmed as commissioner, I would be proud to continue their first-rate efforts to fight fraud through a vigorous enforcement program.
While at the SEC, I helped pursue policy initiatives that foreshadowed many of the issues affecting the markets today. Under Chairman Breeden, one of my primary responsibilities was managing his effort to improve corporate governance, enhance shareholder communications, and strengthen management accountability through proxy reform. Under Chairman Levitt, I organized his outreach to individual investors through an investor town hall program, a consumer affairs advisory committee, and investor education efforts.
Since leaving the SEC, I have continued my work in investor protection by promoting meaningful internal safeguards in the private sector. I have helped financial services firms improve their compliance efforts and have undertaken investigations into corporate fraud, at times in conjunction with the SEC and the Justice Department. In the course of this work, I have spoken directly with hundreds of defrauded investors and learned a valuable lesson in the process Ė that the impact of fraud and corporate misconduct is felt far beyond the headlines. I have heard the Syracuse, New York, electrical union member tell me how he lost the down payment on his house through a Ponzi scheme. And, I have listened while a respected doctor broke down in tears when he described thousands of dollars of the pension fund for his staff (some of whom had been with him for more than 20 years) that were lost through the purchase of fraudulent securities.
Abstract commentaries about the evils of fraud in our financial markets pale in comparison to the direct, personal impact of these stories. I have no doubt that many members of this Committee have experienced similar tragedies from constituents back home. We need to remember that these people had their property stolen from them, as surely as if they had been robbed on the street. It is professionally and personally gratifying to have had the opportunity to help recoup even a small part of their stolen savings and pensions.
If confirmed, I will bring to the SEC this important real-world perspective of how enhanced compliance, rigorous examinations and thorough investigations can make a real difference for investor confidence that ultimately forms the foundation of our markets. Moreover, I believe I can make an important contribution to the Commission's ongoing efforts to improve its own programs and enforcement. The SEC is about to receive greatly enhanced resources as a result of the Presidentís increased budget request and the work of many here in Congress. We must ensure that these resources are used wisely to protect investors to the maximum extent possible, and I look forward to the opportunity to help achieve that if I am confirmed.
For many Americans, the SEC has long been just another federal agency in Washington with an alphabet-soup acronym. Today, however, the SEC is at the center of a crisis of trust that has dealt a serious blow to confidence in our financial markets. In recent months, those markets have been rocked by one corporate scandal after another, causing millions of investors to question the integrity of the capital markets.
Investors need to believe that auditors of public companies are unconflicted, ethical and acting in the best interests of shareholders. Investors also need to believe that corporate officers are honest and have the best interests of their companies and stockholders in mind, not just what is good for their own wallets. They need to know that their representatives on corporate boards are actively guarding their interests. And, most of all, investors should be able to rely on the financial reports issued by public companies to present a clear and accurate picture of the financial health of those companies.
Those beliefs have been shaken in recent months. The SECís top priority is to work to restore those bedrock principles and the investor confidence that keeps our economy strong. With more than half of all Americans invested in the stock market, the SEC is entrusted with an enormous responsibility.
The President has issued a powerful call to action to reinforce the ethic of corporate responsibility. This Committee and the full Senate have taken important steps to restore investor confidence, as have the House and the SEC. Each of these important actors in this process must remain committed to work together to restore confidence in our capital markets by rebuilding a mutual trust among market participants, including investors, corporate executives and auditors. If confirmed, I will dedicate my energy, experience, integrity and independent judgment to achieving that goal. I believe strongly that the SEC is a vital line of defense in protecting individual investors, and I look forward to the opportunity to return to that institution to serve that cause with Chairman Pitt and my fellow commissioners.
Thank you very much.
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