SOX Center

The Sarbanes-Oxley Act might be meant to guard against massive white-collar scandals, but the resignation of a high-profile tech veteran suggests the law may also be restricting efficiency atop Silicon Valley’s corporate ladder.

Earlier this month, venture capitalist and Netscape founder Jim Clark announced his departure from the board of directors at photo-printing site Shutterfly, where he served as chairman. In his resignation letter, he cited “the constraints imposed by Sarbanes-Oxley on (his) having any significant role on the board” as one of the primary reasons for departure.

It appears that Clark felt Sarbanes-Oxley–commonly known as SOX–had built an insurmountable wall between his status as a major shareholder and investor at Shutterfly, and his role on the board of directors.

CNET:Is Silicon Valley strangled by SOX?

Online photo site Shutterfly Inc. said on Monday that Chairman Jim Clark, co-founder of Web pioneer Netscape Communications, had resigned, saying securities regulations had “gone too far.”

In a letter to management released in a regulatory filing, the Silicon Valley veteran said he was resigning from the board both because the company has matured from a technology developer into a manufacturer and due to constraints imposed on major shareholders by the Sarbanes-Oxley securities law.

Shutterfly made an initial public offering of shares in September, and Clark held roughly 30 percent of the outstanding shares following the IPO, according to the shareholder prospectus. Shutterfly shares are trading down 4 percent from its initial offering price of $15.

“Sarbox (Sarbanes-Oxley) dictates that I not chair any committee due to the size of my holdings, not be on the compensation committee because of the loan I once made to the company, not be on the governance committee,” Clark wrote.

Reuters:UPDATE 1-Shutterfly chairman quits, attacks Sarbanes-Oxley

Jim Clark, co-founder of internet icon Netscape Communications, has resigned as chairman of online photo site Shutterfly saying that Sarbanes-Oxley corporate governance regulations had ‘gone too far’.

In a letter to management released in a regulatory filing, Clark said one reason for him resigning was due to constraints imposed on major shareholders by the Sarbanes-Oxley securities law.

AccountancyAge:Internet pioneer hits out at Sarbox rules