U.S. post-Enron crackdown ebbs, regulation eased

By Kevin Drawbaugh

WASHINGTON (Reuters) - The tide of U.S. government regulation of financial markets is receding after the 2001 Enron scandal sparked a four-year crackdown on accounting fraud, biased Wall Street research and other sharp practices that troubled investors worldwide.

Business lobbyists are gaining ground in efforts to roll back 2002's Sarbanes-Oxley (SOX) law with public attention focused on the Iraq war, immigration and other issues.

The new Democrat-controlled Congress promises greater oversight of regulators, but the push back against post-Enron regulations is well under way. A federal court is even considering a lawsuit that seeks to shut down the Public Company Accounting Oversight Board (PCAOB) -- an audit industry watchdog panel set up as the centerpiece of SOX.

Questions about the influence of the new Congress and the future direction of the Securities and Exchange Commission, the PCAOB, bank regulators and other agencies will feature at the Reuters Regulation Summit that begins on Monday in Washington.

The SEC last month proposed several measures meant to respond to business pleas for regulatory relief. One would let companies and auditors scale back their reviews of corporate internal financial controls. Another would allow foreign companies to more easily escape SEC oversight.

Under the leadership of SEC Chairman Christopher Cox, who is halfway through his second year as the nation's top investor-protection regulator, the commission will be considering public input on these and other measures through much of 2007.

Also scheduled to take part is the Food and Drug Administration. Commissioner Dr. Andrew von Eschenbach, just confirmed in December, will have to work with Congress as lawmakers consider renewing legislation to let the agency collect hefty fees from drugmakers for product reviews.

The legislation could become a vehicle for drug-safety reforms or other measures.

In addition, the summit will host a representative of the Centers for Medicare and Medicaid Services, which oversees the nation's health insurance plans for the elderly, poor and disabled.

The agency is implementing the second year of its controversial prescription drug plan -- a target of Democratic leaders who have vowed to change the program to allow the government to negotiate with drugmakers for lower prices.

The FBI will also participate, just a month after the Department of Justice agreed to rein in corporate crime prosecutors after criticism about over-aggressive tactics.

(Additional reporting by Lisa Richwine)