In a letter attached to the 130-page Senate Governmental Affairs Committee staff report, ranking Sens. Joseph Lieberman, D-Conn., and Fred Thompson, R-Tenn., accuse the SEC and Wall Street research analysts of allowing "the greed of a few" at Enron to go "unchecked and unchallenged."

"The investigation revealed a story of systemic and catastrophic failure -- a failure of all the watchdogs to properly discharge their appointed responsibilities," the senators write.

The report calls on the SEC to tighten and expand its review of corporate filings; enforce new rules to ensure that stock analysts and credit-rating agencies deliver untainted research; and take a more activist role in uncovering fraud.

The report, stemming from one of several congressional probes into Enron, comes at a difficult time for SEC Chairman Harvey Pitt, whose perceived cozy ties to business have again emerged as an issue. A new controversy erupted last week after news that the former corporate lawyer was backing away from his top choice to lead a new federal agency meant to oversee a badly tarnished accounting industry.

Many accounting firms have complained to Pitt that his top choice, John Biggs, the head of a big pension fund, is too tough on accountants.

The new Enron report will likely add to a growing chorus of critics who want Pitt to step aside for a more reform-minded successor.

Pitt won't bear the criticism alone: Arthur Levitt headed the SEC until February 2001, and Pitt didn't take over until August 2001.

The report says the SEC ignored a series of ''red flags'' in Enron's dealings by failing to review its annual reports after 1997; neglecting to follow up on the impact of regulatory allowances and exemptions the SEC gave Enron; and overlooking widespread conflicts of interest among Wall Street analysts.

-- Thor Valdmanis

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