Updated from 1:56 p.m. EST When Harvey Pitt took over the Securities and Exchange Commission last year, many investors expected to see a more lenient SEC than the one Arthur Levitt headed. But the mistrust sown by the accounting shenanigans at Enron is making Pitt look tougher than anyone had reckoned. Wednesday the agency proposed sweeping new corporate disclosure rules that would require faster and more extensive reporting of hidden debt obligations and ratings changes. Notably, the list is replete with the hot-button issues surrounding Enron's collapse, as well as the watchwords of a number of other accounting dust-ups, such as those at Tyco ( TYC) and Global Crossing. As such, the measure is clearly aimed at calming down an investing public riled by the notion that companies' books can't be trusted. In the wake of the high-profile accounting problems that have swept the Street since Enron's demise, shareholder advocates and others have proposed even more stringent rules. Pitt's salvo Wednesday appears to have calmed the market; stocks were up about 1%. Still, exactly what form these rules will eventually take isn't clear at the moment.
Those proposals obviously bear Enron's fingerprints, but the last of them, the employee stock issue, also calls to mind Nortel's ( NT) disclosure Monday that its chief financial officer had quit after apparently selling company stock before an earnings warning. And in an echo of recent developments at Tyco International, the SEC said it would also seek to require company officials to make real-time filings when they sell stock back to a company. Another proposal would shorten the time companies have to file their annual reports to 60 from 90 days, and the time in which they have to file quarterly reports to 30 from 45 days. In addition, the SEC will seek to have the list of disclosable events expanded to include ratings changes, insider transactions, defaults, equity offerings that aren't in company prospectuses, waivers of corporate ethics or conduct rules for insiders, changes in the rights of securities holders, definitive agreements, loss or gain of important contracts, and restructurings. Barry Barbash, an attorney with Shearman & Sterling who headed the SEC's investment management division under Levitt, says the proposed rules "are tied to the chairman of the SEC's desire to get information into the public's hands more quickly. They're all thematically tied." Barbash says other proposals based on the same goal of speeding disclosure are likely in the works. Just how the new rules read in the end will depend on the outcome of the proposal-and-review process. First the proposal gets drafted. After that, it's typically given 60 to 90 days for public comment. Then the SEC reviews comments and decides.