Punch line: Senators Hutchison (R., Texas) and Landrieu (D., La.) have offered an amendment to exempt companies with less than $150 million of shares held by the public from “internal-controls” audits – the most onerous of Sarbox impositions.
Ken’s Take: I was wondering when somebody would step up and highlight that Sarbox did nothing to stop or slow the 2008 financial meltdown …
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Excerpted from WSJ: The No-Cost Stimulus, May 18, 2010
Sarbox, the Beltway’s previous attempt at financial-regulatory reform, was intended to improve the information investors receive about public companies.
The law did nothing to prevent poor disclosure at companies like Lehman Brothers but it did saddle the U.S. economy with billions in unexpected costs.
The SEC estimates that the average public company pays more than $2 million per year complying with the law’s Section 404.
The SEC admits that compliance burdens fall disproportionately on smaller companies.
These audits are piled on top of the traditional financial audit, and on top of a company’s own internal-controls review.
The result is that going public in the U.S., once the dream of entrepreneurs world-wide, has for too many company founders become something to avoid.
Full article:
http://online.wsj.com/article/SB10001424052748703315404575250693201556662.html?mod=djemEditorialPage_h
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