SEC Chairman Christopher Cox, addressing an audience of accountants, also said the rules should be crafted in a way that promotes competition rather than hinders it.

"We're looking for recommendations on how to make the rules and their application much more clear, straightforward and transparent," Cox said in a speech to a conference of the American Institute of Certified Public Accountants, the industry's biggest trade group.

"From an investor protection standpoint, the need for greater clarity and transparency is obvious."

It was the second time in less than a month that Cox, a longtime California Republican congressman named by President Bush last spring as the government's top market regulator, made the case for a rethinking of rules while upholding the need to protect investors. He told Wall Street executives in mid-November that the SEC will listen to complaints about overly burdensome regulation in its effort to improve market competition.

The wave of scandals that started with Enron Corp.'s collapse in late 2001 spawned new accounting rules and a new independent organization to oversee the accounting industry and discipline auditors, the Public Company Accounting Oversight Board.

In his remarks, made to the conference by videotape, Cox said the accounting scandals "that our nation and the world have now mostly weathered were made possible in part by the sheer complexity of the rules. Criminal conduct could be concealed in a thicket of detail."

He said the SEC is encouraging "a major national effort" to reduce the rules' complexity, with the participation of the accounting oversight board, the standard-setting Financial Accounting Standards Board and the industry.

The accounting industry was shaken by the scandals and the criminal conviction in June 2002 -- overturned by the Supreme Court last May -- of accounting giant Arthur Andersen LLP for destroying Enron audit documents. A stream of instances became known of too-cozy auditors signing off on big companies' inflated and deceptive financial statements.

With Andersen gone, the Big Five accounting firms have become the Big Four: Ernst & Young, PricewaterhouseCoopers, KPMG and Deloitte & Touche. There were eight in the 1980s, but mergers thinned the top ranks.

The Big Four firms audit the books of some 80 percent of the publicly traded companies in the United States.

"Is this intense concentration in the market for large public-company auditing services good for America?," Cox asked in his speech. "If you believe, as I do, that genuine competition is essential to the proper functioning of any market, then the answer is no. ... As regulators, we have a stake in seeing to it that our rules promote, rather than restrict, competition."

The SEC on Friday named Bill Gradison, one of five members of the accounting oversight board, as its acting head until a permanent chairman is appointed to replace William McDonough, who left the post last Wednesday. Gradison is a former Republican congressman from Ohio and Cincinnati mayor.

-- MARCY GORDON (AP Business Writer)