SOX Center

Study finds small firms hit especially hard

A new University of Georgia study finds that the landmark Sarbanes-Oxley Act of 2002 and related rule changes of the major stock exchanges have dramatically altered the makeup of corporate boards, making them larger and more independent. The legislation also had the unintended effect of increasing director pay by more than 50 percent.

“Post Sarbanes-Oxley, the demand for directors by firms is up and the supply is down because the job is harder,” said study co-author Jeff Netter, a finance professor and chair holder in UGA’s Terry College of Business. “So what do you find” Pay is up – pay is way up.”

The Sarbanes-Oxley Act (SOX) was passed with near unanimous Congressional approval following the corporate scandals that brought down companies such as Enron and WorldCom. Among other things, the act and changes imposed by the New York Stock Exchange and Nasdaq sought to enhance corporate governance by promoting board independence and imposing greater responsibility and accountability on board members.

EurekAlert: UGA study finds surge in director pay following landmark Sarbanes-Oxley Act of 2002

Sarbox ‘no longer makes sense from a cost and administrative perspective’ says chemical giant’s CFO as ICI prepares to leave New York Stock Exchange.

ICI is gearing up to leave the New York Stock Exchange to free itself from the blight of Sarbanes-Oxley compliance.

The company predicted a £4m annual saving from the de-listing based on the costs ‘incurred using external suppliers and auditors to provide ongoing support to the company’s Sarbanes-Oxley compliance’.

Alan J Brown, ICI’s CFO said: ‘ICI will continue to comply with the Combined Code on Corporate Governance and the UK Listing Authority listing rules and maintain quarterly reporting. However, it no longer makes sense from a cost and administrative perspective to submit to the reporting obligations under the Exchange Act.

AccountancyAge: £4m-a-year Sarbox millstone forces ICI to abandon US listing

The U.S. and Europe should be able to achieve a single accounting standard by 2009, the chairman of the Securities and Exchange Committee, Christopher Cox, said Sunday.

Cox was appearing on a panel at the German Marshall Fund Brussels Forum. In other comments, he said the SEC was proving able to modify the U.S.’s Sarbanes-Oxley legislation to meet European concerns and that he expected the accounting progress to become a key part of a new transatlantic partnership on eliminating regulatory divergences.

U.S. President George W. Bush and German Chancellor Angela Merkel are due to sign a new regulatory partnership Monday in Washington. The deal will create a transatlantic council to set priorities. Accounting standards are a “wonderful example,” a “tangible result” of what the new accord can achieve, Cox said. Progress towards common accounting standards is “going swimmingly,” he added. Specifically, he said the SEC was already willing to allow foreign issuers of securities to report results either in the IFRS international standards or the U.S. GAAP standards. It soon will consider whether allowing U.S. issuers to have a similar choice, he added.

European and U.S. regulators are working together well, Cox continued. He noted how they had managed to avoid a “calamity” when the New York Stock Exchange took over Euronext. He also noted how the SEC had managed to be “attentive to European concerns” about Section 404 of the U.S. Sarbanes-Oxley Act of 2002, which required strict internal audits of corporate accounts.

MarketWatch: SEC’s Cox sees common accounting standards by 2009

Telekom Austria, Vernalis Plan to Delist From U.S. Exchanges

European companies are already signaling their intent to take advantage of a pending change in rules that will let them easily cancel U.S. stock listings and escape the regulatory constraints of the Securities and Exchange Commission and the Sarbanes-Oxley Act.

Telekom Austria AG and Vernalis PLC, a small Great Britain-based pharmaceuticals company, Tuesday said they plan to delist and deregister from U.S. markets when the rules change on June 4, saying the cost of listing outweighs any benefit. Earlier this month, European staffing giant Adecco SA announced similar plans.

Telekom Austria is listed on the New York Stock Exchange; Vernalis trades on Nasdaq. Both also trade in their respective home countries.

The moves come as U.S. financial officials, including Treasury Secretary Henry Paulson, grapple with what they see as the shrinking competitiveness of U.S. financial markets. Other stock exchanges, particularly in London and Hong Kong, are winning initial public offerings that previously might have gone to the NYSE or Nasdaq.

Yahoo!Finance: European Cos. Exit U.S. Exchanges

Adecco, the world’s biggest temporary employment group, on Wednesday became the latest European company to seek a delisting from the New York Stock Exchange because of limited trading volumes and high costs.

However, the decision is particularly piquant for Adecco, which became the first big European group to fall foul of the intricacies of the US Sarbanes-Oxley legislation in 2004.

Adecco was forced to repeatedly postpone reporting its earnings after the discovery of irregularities in parts of its North American business.

The investigation resulted in the discovery of only minor procedural irregularities, but led to costs of almost €100m for legal, accounting and public relations services – and ultimately led to the departure of John Bowmer as chairman.

msnbc: Adecco to seek NYSE delisting

Attempts to overturn portions of Sarbanes-Oxley may pick up steam this week after an April 4 report showed the value of European stock markets has overtaken U.S. markets for the first time since World War I.

The seismic shift in the value of equity markets is a further blow to the New York Stock Exchange and other U.S. markets, which have seen some of the larger initial public offerings opt for overseas markets instead of their traditional NYSE home.

Critics of SarbOx blame the recent regulation for pushing the IPOs abroad. They claim the legislation makes compliance in the U.S. too costly.

A vast transatlantic stock market emerged on Tuesday when the New York Stock Exchange won control of pan-European market operator Euronext, creating an entity worth 29 billion dollars linking trading platforms in six cities.

The two markets said in a statement that the NYSE had acquired 91.42 percent of Euronext capital and 92.22 percent of the voting rights according to a provisional tally of shareholder acceptances.

The new leviathan, creating the first inter-continental stock market capitalised at about 22 billion euros, will bring markets in New York, Paris, Brussels, Amsterdam and Lisbon under one group and will also include the Liffe financial futures market in London.

A vital point is that companies quoted on each market will continue to operate under existing regulations. European companies will not be affected by severe accounting rules, as stipulated by the Sarbanes-Oxley legislation, which are much criticised in the United States for increasing costs on quoted comapnies.

Yahoo: NYSE buys Euronext, forming first inter-continental stock market

The Asia Tigers Fund, Inc. (NYSE: GRR; the “Fund”) reports to stockholders that its Chief Executive Officer has submitted to the New York Stock Exchange his required annual certification for 2006 and that the Fund has included the certifications of its Chief Executive Officer and Chief Compliance Officer, as required by Section 302 of the Sarbanes-Oxley Act, in the Fund’s Form N-CSR containing the Fund’s annual report for the fiscal year ended October 31, 2006, which was filed with the Securities and Exchange Commission on December 29, 2006. Although the Fund’s annual report did not include this information, these certifications were appropriately filed as required.

Yahoo: Asia Tigers Fund NYSE Certification

The head of the New York Stock Exchange has launched a blistering attack on the lack of regulation surrounding the London Stock Exchange’s junior Aim market.

John Thain, chief executive of the NYSE, criticised the junior market for its lack of corporate governance standards. Mr Thain, speaking at the World Economic Forum in Davos, Switzerland, said he felt Aim “did not have any standards at all and anyone could list”.

Although he believed it was beginning to change its approach, he added that London “had to be careful not to damage its reputation by allowing in companies that are not well run”.

He also said that he felt that neither the LSE’s Official List nor Aim had such a strict approach to corporate governance as his own NYSE or Nasdaq, which is currently trying to buy the LSE. Many in London do not want an American takeover because they fear overly-stringent regulations, such as Sarbanes-Oxley, may be forced to apply to UK-quoted companies.

Telegraph.co.uk: NYSE chief attacks Aim

New York Stock Exchange CEO John Thain said New York would regain its footing against London, Hong Kong and other competitors in financial services once authorities act to scale back some of the more onerous provisions of the Sarbanes-Oxley law.

Speaking at a panel discussion on risks in financial markets Friday at the World Economic Forum, Thain dismissed a story in the Financial Times in which a senior Lehman Brothers official said New York can only hope to staunch the bleeding.

“The United States has a great history of overreacting and then coming back,” Thain said.

U.S. financial executives and politicians have touted this week a report by McKinsey & Co that concluded London, Japan and other parts of Asia as growing in influence and jobs, while New York is on the decline. New York for the first time saw London outpace New York in initial public offerings in 2006, data show, amid a long decline in New York’s share of global IPO revenues.

MarketWatch: NYSE’s Thain: Business will come back