State Board Report

November 2008

The importance of investor protection was underscored at the Annual Meeting by Damon Silvers, Esq., who represents the AFL –CIO’s 12,000,000 members that have invested $3 trillion. A member of the Treasury Department’s Advisory Committee on the Auditing Profession, Mr. Silvers observed that ACAP’s work began about 14 months ago “when substantial parts of the business community were complaining that they were over‐regulated: This seems like it was from the distant past.” These parties also complained that “too many at the state level are mixing in things they shouldn’t be mixing…There was a strong push from the business community to weaken public protection.”

“We have seen it from the SEC on IFRS, from the PCAOB on reliance on foreign inspections, and from the FASB….a paradigm of weakening our accounting rules, but more importantly, the oversight thereof and of auditing. This paradigm has taken up too much of the time of the SEC, PCAOB and FASB,” Mr. Silvers said. “Failing to be an island is not the same as weakening investor protection. “

As the US engages internationally, Mr. Silvers said, three issues need to be addressed: (1) How can we strengthen the auditing profession? (2) How can we enhance the integrity of our markets? (3) How do we revive the global economy?

Mr. Silvers blamed the world’s financial crisis on people trying to invest in countries where there is less regulation and a lack of transparency. He supports a single strong global framework operating in a form of federalism that allows for multi‐layered regulation. Mr. Silvers told the boards, “I think it will be a long time before anyone suggests that the reason for this problem is because people like you are doing their work.”

The Wall Street Journal has reported that Mr. Silvers is one of the candidates under consideration for SEC Chairman after Christopher Cox leaves office in January 2009.

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