The new Senate legislation that would tighten accounting-industry oversight will not contain a controversial proposed amendment that could have stripped state regulators of much of their power to pursue securities industry abuses.
The amendment, backed by industry giant Morgan Stanley Dean Witter & Co., failed to find a sponsor.
"The language did not make it in, but we will still be vigilant," said Ashley Baker, spokesman for the North American Securities Administrators Assn., which vehemently opposed the amendment. The group represents state securities regulators.
NASAA portrayed the amendment as Wall Street's attempt to defang the states at a time when they are spearheading some of the most aggressive securities-law enforcement actions--such as New York Atty. Gen. Eliot Spitzer's recent $100-million settlement with Merrill Lynch & Co., forcing the firm to revamp its stock research practices after allegations that analysts gave tainted advice.
The Senate bill, passed by the Banking Committee on Tuesday, still faces a full Senate vote and a conference-committee session to iron out differences with House legislation. If the amendment resurfaces at any stage, NASAA again will fight it, Baker said.