AB 55 Is Not Enough; Davis Must Sign Powerful Anti-Fraud Measure -- SB 783
Santa Monica, CA -- Governor Davis has still not signed SB 783 (Escutia), which would punish executives who knew about financial fraud in their company, yet stood by and did nothing. Today, Governor Davis signed AB 55 (Shelley), which will require corporations to disclose more information about the companies' practices and penalties. Consumer advocates, who have worked with retirees, workers and other investors to pass SB 783 the nation's strongest corporate accountability bill said today that AB 55 is not enough.
"Governor Davis must protect retirees and workers from the next WorldCom, and he has to do more than sign a disclosure bill. AB 55 will prove beneficial to the public, but alone it is not enough," said Douglas Heller, senior consumer advocate with the Foundation for Taxpayer and Consumer Rights (FTCR). "California needs more than to learn about corporate wrongdoing after the fact, we need an early warning system to pre-empt financial fraud from ripping us off in the first place."
FTCR, a supporter of AB 55, sponsored SB 783, which, if signed by Governor Davis, will:
- create a confidential whistleblower hotline,
- protect employees who refuse to participate in illegal activities at work, and
- require executives to report financial fraud to the California Attorney General within 15 days of learning of the fraud or face a $100,000 fine for withholding critical information from the authorities.
"SB 783 will create a new culture of accountability in corporate boardrooms by punishing executive silence and establishing a new duty to come forward with information about accounting fraud. After being so cheated by the executives who gave us the California Energy Crisis, Governor Davis now has an opportunity to respond to the pirates and protect Californians from future fiascos, but today's action does not get us there. We are waiting for Governor Davis to finish the job," said Heller