Congressmen move to water down Sarbanes-Oxley Act

[NVMojo]

Three US congressmen are pushing for an amendment to the Sarbanes-Oxley Act (SOX), the law designed to make executives more accountable, in a bid to water down the regulations for medium-sized companies.

Gregory Meeks, a Democrat, has joined Republicans Tom Feeney and Pete Sessions to introduce an amendment to the Act that would exempt companies with a market value of less than $700m (£377m) or annual revenue of less than $125m and fewer than 1,500 shareholders from having to comply with the regulations.

The unusual cross-party move comes just days after Kenneth Lay and Jeffrey Skilling, the two top executives of Enron, were convicted of plundering the company. SOX was introduced in an attempt to prevent another Enron fraud. It was welcomed in 2002 for establishing a standard of good practice for the governance of a public company, the provision of adequate accounting oversight, the independence of auditors and the need for extensive financial dis-closure.

more...

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/05/28/cnsox28.xml&menuId=242&sSheet=/money/2006/05/28/ixcitytop.html

[Divine Discontent]

1. Feeney is such a douche

I get recorded calls from Tommy boy from time to time. He sounds like a complete dumbass. If he sounded intelligent, I'd give him the compliment; he doesn't. I mean reallllly dumb.

UGH... the torture of living in a Republican district.



http://www.cafepress.com/warisprofitable <--- CHECK IT OUT - top 2006 2008 stickers & anti-bush

[OKthatsIT]

13. Im surprised Feeney isn't in jail for his own criminal behavior

evoting software company for the 2000 election in FL.

[DiscussTheTruth]

2. hmmm. I'm not sure I get it.

Couldn't large companies just make smaller ones to hide behind this? I thought that was exactly what Enron did? This seems to be a way to get more of the companies to want to follow that path of destruction and make it look like it helps small business.

I understand the desire to make small business easier for people and that is good. But maybe they should let the states handle what qualifies as small business and stay out of it.

[sandnsea]

4. Nah, that couldn't be it

Anybody with a business with 1500 shareholders and $125 million in revenues isn't what most people consider a small business. Even when they pretend to stand for the little guy, they don't stand for the little guy.

The SEC is federal though, so this isn't up to the states to decide.

[Telly Savalas]

7. A Parent Company consolidates the results of its subsidiaries.

So making a bunch of smaller companies may have tax advantages and may make it harder for analysts to accurately assess what's going on with the company, but it's not a way of dodging an amended Sarbanes-Oxley. Even if it was, for a typical large corporation the administrative costs of spinning off hundreds of subsidiaries would likely be greater than that of Sarbanes-Oxley compliance.

The SEC's notion of what consititues a "small business" is very different from the mom-and-pop corner store most people envision when they hear those words. But since mom-and-pop stores don't issue publicly traded securities to finance their operations, a company with revenues of $80 million a year is small in SEC terms. (Of course politicians are being disingenous worms when they blur the two definitions of small business.)

The idea behind the legislation is this: there are provisions of Sarbanes-Oxley which call for tight internal controls. Most sources estimate the fixed costs of meeting such requirements to be a few million. For a giganto corporation, that's just a drop in the bucket, but for a company with $100 million in revenues, that few million can be the difference between a profit and a loss.

This argument may or may not be bullshit, but note that the largest and most powerful corporations aren't impacted directly by the proposed amendment.

[amandabeech]

9. I agree. I used to work with "SEC small" companies.

The legal and accounting fees connected with selling shares to the public and complying with continuing reporting rules prior to SOX could be enormous.

The problems are even more extreme with start-up companies who are not yet turning a profit or only a small profit. The materials that prospective investors receive prior to their purchase of shares clearly states that these stocks are extremely risky, and that the investor should not count on any returns--in other words, don't buy them unless you can afford to lose all your money. For these companies, the existing disclosure and anti-fraud laws and regulations are usually sufficient. I speak here from personal experience.

For more established companies, adding $3-$4 million a year would substantially impair the ability of some otherwise solvent companies to continue in business and continue to pay wages and provide benefits. Again, I speak from personal experience.

I'm not surprised at this development, frankly.

[TheFarseer]

3. Sar-Box is f*cking annoying

as far as I can see, all it means is I have to get five f*cking million people to sign tons of stupid s*it that no one cares about and also make vendors fill out a stack of papers before we can pay them. What a complete waste of time.

[hughee99]

5. Don't forget having to change all your passwords every few weeks. n/t

[LiberalPartisan]

6. Got that right!

The intent of SOX is laudible but compliance with those portions which are not focused on the Executives amounts to a tax on productivity - it is a real hassle for very minimal benefit.

[sendero]

8. That is the problem.

... with most similar legislation is it not?

There are lots of environmental regs that suffer the same problem, they do little to fix the problem but they piss of legions of folks and make great political points for the Repubs.

I'm definitely FOR something LIKE S-OX, but I'd bet a dollar to your doughnut that it is just more poorly crafted crap that costs money, pisses everyone off and accomplishes little.

[musette_sf]

11. IMHO SOX is a never-ending Y2K-type windfall

for consulting companies. It's not about the goddamned law itself. It's about a consultancy's interpretation of the law. I've read the law and 3/4 of the bullsh!t around so-called "compliance" has nothing to do with it.

SOX and "War On Terrrrrrr": War Without End.

[NorthernSun]

10. Quarterly reports

I like the fact that CEOs are now responsible for the truthfulness of their company's financial reports. This was long overdue.

[Telly Savalas]

12. That's not what's being watered down though.

Unless I've got my facts wrong, it's SOX 404 that would be impacted: provisions for tighter internal controls. As it stands SOX 404 is being phased in for "small companies" and they don't have to be in full compliance until 2007. The "watering down" would stop this phasing in (or at least make it easier to comply).

The CEO certifications for the financials presently happens for companies of all sizes, and I haven't heard anything about anyone wanting to change that. But you're right...it's hard to justify CEO's not certifying their financials.

[tn-guy]

14. I'd like to see S-Ox applied to political campaigns

If members of congress had to live with the same ridiculous regs on campaign financial reports that S-Ox imposes on companies the law would be repealed in 30 seconds.

I'd like to see each member of congress have to certify that all campaign finance reports are 100% accurate, with criminal penalties attached if a report is later found to be inaccurate. There wouldn't be a half dozen members left after the next election.

[hughee99]

15. Unfortunately, you will NEVER see that. n/t