WASHINGTON – It is "more than safe" for investors to return to the stock market as the government and business work to restore integrity to accounting and company conduct, the chairman of the Securities and Exchange Commission said Friday.
SEC Chairman Harvey Pitt referred in a speech to the crisis of investor confidence this year sparked by a wave of accounting scandals at big companies, which has helped push down the market to record lows. The Dow Jones industrial average plummeted 230 points Thursday to close below 8,000 for the first time since July 23.
Later, Pitt said in response to a reporter's question, "It is more than safe for investors to get back into our market."
Problems in the accounting and corporate conduct system "must be fixed and must be fixed as soon as possible," Pitt said in his speech at the conference of Women in Housing and Finance.
The SEC's receipt last month of sworn statements from the top executives of more than 700 of the biggest companies, vouching for the accuracy of recent financial reports as ordered by the agency, turned up problems with some companies but showed that the vast majority stood behind their numbers, Pitt said.
The SEC is putting in place rules to implement sweeping legislation enacted in July to crack down on corporate fraud. The law creates new penalties and jail terms for business fraud and an independent board to oversee accounting firms.
Pitt said the SEC plans by the end of this month to appoint five "prominent" individuals to sit on the new oversight board, and will choose them unanimously.
He also cited the agency's ongoing enforcement efforts against companies that violate securities laws.
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