An entry in The 10B-5 Daily points out that the recent SEC investigation and securities class action suit brought against the China Life Insurance Company over accounting irregularities was mentioned in China Daily.

China Daily reported that the “vast difference in corporate governance, accounting.standards and business practices between the US and the mainland are exposing the latter’s corporate executives to what has become widely regarded as unacceptable risks.“

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The Wall Street Journal has noted that New York Attorney General Eliot Spitzer’s investigation into kickbacks and other improper incentives in the insurance industry is widening and moving toward the area of employee-benefits.

Since there are real problems with the proper exercise of fiduciary responsibility for 401(k) plans, there could be long-term implications for capital flows, especially in the equity market.

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Representative Barney Frank has proposed an amendment to the Sarbanes-Oxley Act that would require corporate executives to repay gains from stock options if the value of company stock declines by a “material amount” within one year of options being exercised.

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