SEC chief - New rules won't cure all the problems

WASHINGTON -- New regulations won't cure all the problems uncovered by the Enron collapse, leaving lawyers and accountants to tackle serious ethical issues, the chairman of the Securities and Exchange Commission said Tuesday.

Harvey Pitt, in a speech to attorneys and judges, said the Enron case has had an impact far beyond the large number of people who were "callously injured."

Investors nationwide lost money on a stock that had been a Wall Street favorite and thousands of Enron employees were stripped of their retirement savings in accounts loaded with Enron stock as the company slid into the biggest bankruptcy ever on Dec. 2.

With many investors unnerved by the Enron disaster and distrustful of the accuracy of the financial reports of big companies, lawmakers and regulators -- including the SEC -- have scrambled to propose changes in accounting rules and the financial reporting system for companies.

Need for changes

"Enron makes even more apparent the immediate need for necessary changes in our system," Pitt said at a conference of the Federal Bar Council in Puerto Rico. Copies of his speech were released in Washington.

Still, Pitt said, "Not all problems can, or should, be cured with regulations or legislation." He said the Enron debacle shows it is improper for companies' lawyers to help find ways to evade legal requirements, or otherwise act against the public interest, even if within the bounds of the law.

Accountants must not act as advocates for the companies whose books they audit, Pitt said.