WASHINGTON, D.C. -SEC Chairman Arthur Levitt last month said the SEC would produce the "hard" evidence of auditing problems that Phil Gramm (R-Tex.), chairman of the Senate Banking Committee, called for to justify the commission's proposed independent auditor rules.

Levitt, testifying before the Senate Banking Committee's securities subcom-mittee, defended the SEC's rule proposal as necessary, first, because of the rise of "cross selling," - the practice of accounting firms also provide consulting services to their clients. This practice has led to the appearance of conflicts of interest and actual accounting violations, Levitt said. Accounting firms now report that over 50 percent of their revenues come from consulting services, he said.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.