Germany to Set Up Private Financial Regulator

In an attempt to woo investors back to the stock market after accounting scandals such as Enron, the German government wants to set up a private regulator with the power to police company accounts. The watchdog, which will be funded and staffed by private industry, will be able to investigate the audited annual reports of public companies, probe suspected accounting irregularities or make random checks. According to the government bill which will authorize the agency, more controls over accounts will “reduce the cost of company finance as investors return to buying stocks.” In 2000, 6.2 million Germans held shares in companies, but after the stock market plunge of that year and the ensuring accounting scandals, the number fell to 5.3 million in the first half of this year. The bill states that the private watchdog agency will be overseen by the government’s BAFin financial regulator and will gain new powers to reject auditors, demand new audits or fine companies breaking the rules up to €50,000 ($61,000).