Thank you, Mr. Chairman.
First of all, let me tell you that I'm very pleased we are beginning to move the nominees for the Commission. I believe that we must get all of the Commissioners there to begin enacting some of these important reforms being legislated.
I would also say that both of our nominees have very accomplished records and I'm pleased that both of them hold the Commission in high enough regard that they are willing to return to government service.
The issues facing the Commission will require a major undertaking. Reforms about the methods by which we review and discipline publicly traded companies, executives, and others associated with the formation of the capital markets are underway. It is important that we find quality individuals with the utmost integrity to fill these positions.
I would like to say just a few words about Chairman Pitt. I have to say that Chairman Pitt and I may not always agree, but I believe the recent attacks on him to be unwarranted. Mr. Pitt has come under fire for having represented some of the accounting firms who have been criticized in recent restatements. But I believe Chairman Pitt's work in the private sector is a great asset to investors. We need individuals who are willing to work in government who know and understand the industries they regulate. I do not want lifelong government bureaucrats monitoring these companies.
These restatements did not all of a sudden appear when Chairman Pitt was confirmed. In most cases, they began during the late 1990s when companies became intent on not seeing the Internet bubble burst. I have to ask what was going on at the SEC while these companies were filing all of these false financial statements? What I imagine happened was that the companies, who are very familiar with who is at the Commission and where the resources are being devoted, thought they could take advantage of the situation because no one was paying attention.
Just look at what's happened since Chairman Pitt has taken office. He has opened a record number of investigations of restatements filed by public companies. He has taken steps to break the relationship between research analysts and investment bankers. He has supported legislation that will increase penalties on corporate executives engaged in fraudulent behavior. And, he has indicated his support of this legislation, which by the way, I anticipate to be supported by the majority of the Senate later today.
The numbers are very clear. In Chairman Levitt's last year as Chairman, 503 total enforcement actions were filed. Already this year, Chairman Pitt has filed 415. Officer and Director Bars for 2000 were 38 - this year so far 71. Subpoenaed enforcement proceedings in 2000 were 9 - this year 18. The numbers go on and on. My point is that Chairman Pitt seems to be left cleaning up the mess his predecessor left in corporate America.
So, I offer my support for these actions taken by Chairman Pitt. Instead of attacking him, I am more concerned about what was happening at the SEC that bred this climate where executives felt compelled to engage in this unethical behavior. Why weren't some of these actions taken three or four years ago? Did the SEC Chairman not see the potential conflicts that could arise out of research analysts getting compensation based on investment banking business?
Therefore, I would say that I commend Chairman Pitt for the work he is doing. From what I understand, the actions he is taking at the SEC have struck fear throughout the corporate community that they'd better get their act together.
I have a number of issues that I think the Commission needs to address in the near future. Not the least of which is implementing the accounting reform bill. In addition, the securities laws need a serious review. The National Market Structure must be evaluated and revamped. With technological advances that have been made, we cannot expect the markets to continue to operate on rules and laws that were developed 25 or 30 years ago. Also, the time seems to have passed the effectiveness of the current rules under which the Intermarket Trading System operates. I look forward to working with the Commission to address these and other problems.
Again, Mr. Chairman, thank you for moving the nominees along, and I look forward to working with you and the other members of the Committee on issues affecting the securities industry.