Enron was a bombshell amidst the financial community when it hit, but, unlike a conventional weapon, it has acted more like an atomic bomb. For instance, there were numerous casualties when it first exploded, especially among those closest to the company. There also was a huge shockwave that affected companies and people far from the epicenter. Probably the most insidious effect of this debacle, however, is the fallout that continues to affect everyone, specifically, the regulatory burden, and associated costs, of complying with Sarbanes-Oxley. Even if you buy into the necessity of SOX, which I don’t, one has to question the cost/benefit trade-off of what is being achieved.
While there has been massive complaining and some half-hearted attempts at challenging the constitutionality of the SOX legislation, nothing much has been accomplished – at least, until now. Everyone running a small to mid-size, public leasing company should be cheered by a new bill introduced by Representative Tom Feeney and Senator Jim DeMint that is intended to ease the SOX requirements for small companies.
It is no secret the cost of complying with government fiats disproportionately affects smaller businesses, and Section 404 of SOX is no exception (the General Accountability Office has come to the startlingly same conclusion that smaller public companies have been disproportionately impacted by the high cost of Section 404). The Competitive and Open Markets that Protect and Enhance the Treatment of Entrepreneurs Act (good Lord!) is intended to ease the cost burden of 404 compliance. The Act would exempt from Section 404 any public companies with under $700 million in market capitalization and whose revenues do not exceed $125 million. The measure reflects a recommendation of the Securities and Exchange Commission's Advisory Committee on Smaller Public Companies.
Thanks for illuminating the progress on this issue. I've posted numerous times about the troubles that SOX has created for emerging companies that either are or are seeking to go public. This is an issue of national competitiveness that threatens the long term health of our economy. We do need changes!
ddt
Posted by: Devin Thorpe | September 7, 2006 10:14 PM | Permalink to Comment