SOX Center

Critics of the 2002 Sarbanes-Oxley act say the bill’s post-Enron/WorldCom accounting reforms have made U.S. capital markets less competitive with those overseas. It’s no surprise that one of its authors, former U.S. Rep. Michael Oxley, says that’s hardly the case. Oxley says recent refinements to the section of the act requiring companies to monitor internal financial controls and accounting are improvements, but he doesn’t believe SOX, as it’s commonly known, was crippling U.S. businesses.

Oxley was in Houston recently to talk to clients of law firm Baker Hostetler, where he now works in an Of Counsel role.

He talked to the Chronicle’s Tom Fowler about SOX’s legacy, the collapse of Arthur Andersen and why bankers may be more to blame for the high cost of going public.

chron.com: Oxley says reforms’ effects overblown

Teamwork counts, especially when it comes to committing crimes at a corporation.

In a new examination of 374 companies accused of securities fraud between 1997 and 2002, an average of seven people were implicated in each case, including CEOs, chief financial officers, chief operating officers, general counsels, board directors and auditors.

“Far from being a solitary act, securities fraud necessarily requires complicity,” said William Black of the Kansas City, Mo.-based Institute for Fraud Prevention, which sponsored the study.

The institute is a coalition of universities funded by the Association of Certified Fraud Examiners, the American Institute of Certified Public Accountants, accounting firm Grant Thornton LLP and D-Quest Inc., a risk-management firm.

The study examined companies accused of fraud in lawsuits or regulatory actions.

CEOs were implicated in nearly 90 percent of the cases examined. Next came CFOs, 78 percent. Then board directors, 40 percent; vice presidents, 36 percent; COOs, 20 percent; controllers, 19 percent; and general counsels, 7 percent.

Big accounting firms - including Arthur Andersen, KPMG, Deloitte & Touche, Ernst & Young and Price Waterhouse - were implicated in 18 percent of the cases, the study said. (Grant Thornton, which sponsored the study, is not mentioned, but it has had similar issues.)

The study said that in many cases, management ran the board instead of the other way around. Often, the board chairman and the CEO were one and the same.

Denver Post: Fraud too pervasive to roll back SarbOx