TITLE VII - STUDIES AND REPORTS
SEC. 705. STUDY OF INVESTMENT BANKS.
(a) GAO STUDY. - The Comptroller General of the United States shall conduct
a study on whether investment banks and financial advisers assisted public companies
in manipulating their earnings and obfuscating their true financial condition.
The study should address the rule of investment banks and financial advisers
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(1) in the collapse of the Enron Corporation, including with
respect to the design and implementation of derivatives transactions, transactions
involving special purpose vehicles, and other financial arrangements that may
have had the effect of altering the company’s reported financial statements
in ways that obscured the true financial picture of the company;
(2) in the failure of Global Crossing, including with respect
to transactions involving swaps of fiberoptic cable capacity, in the designing
transactions that may have had the effect of altering the company’s reported
financial statements in ways that obscured the true financial picture of the
company; and
(3) generally, in creating and marketing transactions which
may have been designed solely to enable companies to manipulate revenue streams,
obtain loans, or move liabilities off balance sheets without altering the economic
and business risks faced by the companies or any other mechanism to obscure
a company’s financial picture.
(b) REPORT. - The Comptroller General shall report to Congress not later than
180 days after the date of enactment of this Act on the results of the study
required by this section. The report shall include a discussion of regulatory
or legislative steps that are recommended or that may be necessary to address
concerns identified in the study.
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