Author: "Jacob Frenkel" <JSFRENKEL@sgrlaw.com> at Internet
Date: 09/12/2000 4:36 PM
CC: LevineE at SEC1
TO: RULE-COMMENTS at 03SEC
CC: <firstname.lastname@example.org> at Internet
CC: <email@example.com> at Internet
Subject: Independent Counsel Smaltz Testimony Concerning Auditor In
------------------------------- Message Contents
I write on behalf of Independent Counsel Donald C. Smaltz offering Mr. Smaltz's testimony before the Commission concerning auditor independence.
On September 9, 1994, the Special Division of the United States Court of Appeals for the District of Columbia appointed Mr. Smaltz to investigate, inter alia, "the acceptance of gifts by [Secretary of Agriculture Espy] from organizations or individuals with business pending before the Department of Agriculture," and related matters. The Office of Independent Counsel filed 12 indictments and two civil complaints, including criminal and civil cases against companies with securities registered with the Commission pursuant to section 12(g) of the Securities Exchange Act of 1934. The Office of Independent Counsel closely scrutinized the conduct of independent auditors and audit committees, and their members, and gave serious consideration to possible claims arising out of their conduct.
Mr. Smaltz related his acute interest in such conduct in his Fourth Annual Report to Congress, dated April 26, 1999 (letter to the Honorable Albert Gore, Jr., Vice President of the United States and President of the Senate, and the Honorable J. Dennis Hastert), section captioned "Legislative Considerations Unrelated to the Independent Counsel Statute," where he indicated his intent to recommend legislation to Congress "(1) requiring agricultural cooperatives of a certain minimum size to make and keep financial records in a manner consistent with the books and records provisions of the Securities Exchange Act of 1934, [and] (2) requiring agricultural cooperatives of a certain minimum size to provide, at a minimum, annual (financial) reports to the cooperative members and the Department of Agriculture...." Additionally, in correspondence with Chairman Levitt, Mr. Smaltz commented on the conduct of persons and companies subject to the Commission's jurisdiction.
Mr. Smaltz's experience as an Assistant United States Attorney for the Central District of California, an attorney practicing securities litigation and white-collar criminal law, and most recently as Independent Counsel enable him to bring unique insight to this important issue.
Should the Commission's schedule permit it to receive testimony from Mr. Smaltz at its hearing of September 20, 2000, Mr. Smaltz will endeavor to be available to testify that day before the Commission. His preference, if possible, would be on the morning of the 20th. Should a later date or different forum be more desirable to the Commission and its staff, Mr. Smaltz will work to accommodate that preference.
You may contact me at 202-973-2621 concerning the scheduling of Mr. Smaltz's testimony.
Jacob S. Frenkel
(former) Counsellor to the Independent Counsel
(presently) Counsel, Smith Gambrell & Russell, LLP