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

Business advisors Grant Thornton LLP have applauded the SEC and the PCAOB for their efforts in addressing the legitimate concerns of the capital markets while still reinforcing the value of Sarbanes-Oxley to investors.

“We believe that the new guidance and auditing standards strike an appropriate balance between efficiency and effectiveness, though it will take time to fully realize the effects,” the company said in a statement.

It added: “We believe that the current efforts of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) will help organizations more efficiently monitor the effectiveness of their internal control systems throughout the year. COSO recently commissioned Grant Thornton LLP to develop guidance - scheduled for completion in early 2008 - that will include in-depth guidance for implementing the monitoring component of COSO’s Internal Control — Integrated Framework.”

A public discussion document regarding this guidance should be available in June 2007.

Investorsoffshore: Advisors Applaud SEC, PCAOB For Addressing Sarbanes-Oxley Concerns

The US Treasury has welcomed a statement released by the Securities and Exchange Commission and the Public Company Accounting Oversight Board regarding their votes to address the implementation of Section 404 of the Sarbanes-Oxley Act:

“The SEC and the PCAOB, after carefully considering the effects of Section 404, moved this week to strike the right balance in enhancing financial reporting quality and eliminating unintended costs,” announced Under Secretary for Domestic Finance Robert K. Steel. “These key reforms should ensure that Section 404 is implemented in a risk-based and appropriately-scalable fashion, without sacrificing investor protection or diminishing the value of sound internal controls over financial reporting. Now that the regulators have acted, it is critical that public companies and the auditing profession respond to this call.”

Steel added: “Treasury congratulates the SEC, the PCAOB and their chairmen, Chris Cox and Mark Olson, for their cooperation in working to uphold investors’ confidence in and the competitiveness of America’s capital markets.”

Investorsoffshore: Treasury Welcomes Sarbanes Oxley Reforms

Paul Sarbanes and Michael Oxley, renowned authors of the 2002 Sarbanes-Oxley corporate governance reform legislation, have become America’s favorite whipping boys for the emigration of foreign equity listings from New York to London. But it was the earlier efforts of another congressman, one who now has far more influence over the competitiveness of the US capital markets, which in fact sparked the exodus by deliberately mixing domestic market regulation with foreign policy.

In 1999, two commissions reported to Congress on Chinese military links to commercial and financial activities in the US. The reports grabbed headlines with their focus on the purported role of the US capital markets in financing Chinese weapons development and proliferation. The first of these commissions was chaired by congressman Christopher Cox, now chairman of the Securities and Exchange Commission.

Financial Times: Cox, not Sarbox, is to blame for equity exodus

The U.S. Chamber of Commerce has launched a new center dedicated to lobbying Congress to ease Sarbanes-Oxley requirements and “strengthen the competitiveness of U.S. capital markets.”

The Center for Capital Markets Competitiveness (CCMC) was announced last week during the Chamber’s Capital Market Summit.

The Chamber represents 3 million businesses and wants to see the rules relaxed, but its summit Securities and Exchange Commission Chairman Cox said he opposes weakening the law.

“We don’t need to change the law,” Cox said. “We need to change the way it is implemented.”

In a statement, the Chamber said the new center will address domestic and international securities regulation, as well as challenges to the auditing profession, proxy rules, business due process, and a host of other issues.

SmartPros: U.S. Chamber Launches New Center

The U.S. Chamber of Commerce had offered up a number of recommendations for changes to the country’s legal and regulatory framework — taking aim at Securities and Exchange Commission and the Sarbanes-Oxley Act in the process.

The chamber, which lobbies for 3 million companies and more than 800 business associations, has been a vocal critic of both the SEC and SOX — going so far as to question the constitutionality of the Public Company Accounting Oversight Board, created as part of the legislation, in a lawsuit.

The chamber’s Commission on the Regulation of U.S. Capital Markets in the 21st Century issued the report Monday, and among its recommendations, says that the SEC should appoint a committee to study ways to reform and modernize the government’s regulatory approach to financial markets and market participants. As part of that reform, the chamber suggests that the SEC should be forced to consider potential costs to companies when writing new rules and that the agency should be given the flexibility to address issues relating to the implementation of SOX by making the legislation part of the Securities Exchange Act of 1934.

WebCPA: Chamber Offers Six Suggestions for U.S. Markets

Despite professions of independence, the Committee on Capital Markets Regulation has been accused of being sympathetic to the Bush Administration.

To anyone who has ever grumbled about shareholder lawsuits or Sarbanes-Oxley, last fall’s debut of the Committee on Capital Markets Regulation should have been welcome. Comprising 22 members from the worlds of business, law, and academia, the CCMR announced that it would examine the effects of regulations on the competitiveness of U.S. capital markets. But both the committee and its first report, released in November, have come in for criticism.

For one, the committee has been accused of being sympathetic to the Bush Administration, despite professions of independence. Critics note that Treasury secretary Henry Paulson publicly praised the committee’s efforts, and that one of its co-chairs, John L. Thornton, was a top executive at Goldman Sachs during Paulson’s tenure there. Meanwhile, the other co-chair, Columbia Business School dean R. Glenn Hubbard, was formerly chairman of President Bush’s Council of Economic Advisers.

CFO.com: Reform Effort Rebuked

Rules governing U.S. public markets are driving businesses to overseas exchanges and private sources to raise money, damaging the competitiveness of the American capital markets, a high-profile panel of chief executives and academics co-chaired by the former economic adviser to President Bush said Thursday.

The report to the White House makes a number of recommendations, including revising parts of the Sarbanes-Oxley Act — the landmark set of corporate-governance regulations passed in 2002 — that affect small companies, pursuing criminal cases against corporations in only exceptional circumstances and allowing shareholders of certain companies to vote on so-called “poison pills.”

“The threat to U.S. competitiveness appears to be real and growing,” says the report, which was authored by the Committee on Capital Markets Regulation. The committee is co-chaired by Glenn Hubbard, dean of Columbia Business School and former White House economic adviser, and John Thornton, a former president of Goldman Sachs who is now chairman of the Brookings Institution.

“There needs to be better cost-benefit analysis” about the consequences of regulation, said committee director Hal Scott, a Harvard law professor, at a press conference Thursday. “We need to do a better job on that.”Read the report.

The report makes 32 recommendations spanning shareholders’ rights, securities-fraud enforcement and the U.S. regulatory process and is the latest downbeat assessment of the impact of the Sarbanes-Oxley Act on U.S. companies and markets. The committee suggests stiffening the definition of a “material weakness” in a company’s financial statements and also says that foreign companies should be exempt from the law’s accounting standards if they meet similar requirements in their home countries. The report comes shortly before a Dec. 13 Securities and Exchange Commission meeting about the law, at which regulators are expected to propose significant changes in the way the law’s accounting provisions are implemented.

MarketWatch: U.S. competitiveness is at risk, says report