Return to Transcripts main page

CNN Live Today

Possible Deal Could Make Life Tougher for Corporate Crooks

Aired July 24, 2002 - 13:05   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: There's word today from Capitol Hill of a possible deal to make life tougher for corporate crooks.

With that story, CNN congressional correspondent Jonathan Karl.

Hi, Jon.

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Well, Kyra, this has been interesting. This thing has been moving through the Congress at lightning speed, the effort to crackdown on corporate wrongdoers, and now a significant hurdle has been cleared. It hasn't been formerly announced, but the House and the Senate have come to an agreement on a bill to crackdown on people accused of corporate fraud.

And what's interesting in the dynamic here is that the Senate passed a bill that Democrats said was much tougher than what the Republicans passed over in the House, but when they got to negotiating the difference, the bill got tougher, and it was the House Republicans that were pushing for stronger penalties.

In the end, the new -- this deal includes stronger penalties for those convicted of corporate fraud, of now up to 20 years in prison. The Senate had talked about 10 years in prison. And it also allows for, or requires, instant disclosure of stock sales for senior executives in publicly-traded corporations; they must disclose sales of their own stocks immediately under this bill.

And it also includes a fund that would be made up fines paid by corporations and individuals that violate the law in this regard, and the fund would be used to compensate defrauded investors and employees for the losses that they suffered as a result of those actions. Now, this all moves forward, the deal we're expected to be announced later today. But already both sides in this debate are saying that they believe this deal is the right way to go and the right step toward creating confidence in corporate accounting.

(BEGIN VIDEO CLIP)

REP. JOHN LAFALCE (D), NEW YORK: We must restore integrity in our markets, and the perception of integrity. And the only way to restore integrity and the perception of integrity is a good strong bill. I think that is what we're going to report out of conference today, and will be signed into law. It will be signed by President Bush, and I do think that will restore confidence, and I do think it will give a significant boost to both the markets and the economy.

(END VIDEO CLIP)

KARL: Now in addition to those tougher penalties, this bill would also set up an independent oversight board to provide some regulation, oversight over the accounting industry. Right now, the accounting industry is self-regulated, and it would also put severe limitation on the amount of consulting services that accounting companies can do for companies that they are, in fact, auditing. They will now not able to do some of the same consulting work if they're doing the accounting work.

As for the White House reaction to all this, just a short while ago, Ari Fleischer at the briefing at the White House said that the White House is happy to hear a deal has been struck. That's an indication. As expected, this bill would likely be signed immediately once it is passed here in the Congress, and it is expected to be passed once the deal is struck this week -- Kyra.

PHILLIPS: All right, we'll talk more about it more this week.

Jon Karl, thank you.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com