Dems seek to overturn Sarbanes-Oxley

[Frank Booth]

It took just five weeks after the WorldCom accounting scandal erupted in 2002 for Congress to pass, and President George W. Bush to sign, the Sarbanes-Oxley Act. That law required public companies to make sure their internal controls against fraud were not full of holes.

It took three more years for Bernard Ebbers, the man who built WorldCom into a giant, to be sentenced to 25 years in prison for his role in the fraud.

Mr. Ebbers will be 85 years old before he is eligible for release from prison. He may be freed, however, before the law is ever enforced on the vast majority of American companies. A Congressional committee voted this week to repeal a crucial part of the law. Other parts are also under attack.

Sarbanes-Oxley was passed, almost unanimously, by a Republican-controlled House and a Democratic-controlled Senate. Now a Democratic Congress is gutting it with the apparent approval of the Obama administration.

The House Financial Services Committee this week approved an amendment to the Investor Protection Act of 2009 -- a name George Orwell would appreciate -- to allow most companies to never comply with the law, and mandating a study to see whether it would be a good idea to exempt additional ones as well.

Much more at: Goodbye to Reforms of 2002


When the White House and most members of Congress are apparently in the pocket of Wall Street, where does that leave the rest of us?

[FarCenter]

1. Sarbanes Oxley, as implemented, is a pretty poor idea

The big accounting firms decided that it meant that companies have to put in all sorts of controls everywhere in the corporation. IT had to install all sorts of security stuff, often in systems not involved in accounting at all.

So it pretty much will keep Suzie in the mailroom from stealing stamps.

However, that wasn't the real problem. The real problem was how to stop the CEO, President, CFO, and other top executives from stealing from the company and/or defrauding the stockholders. I don't think it is at all effective at doing that.

[drm604]

2. I want to hear some more about what they are actually changing and their reasons for it.

They say it's to help small businesses. I have no idea if that's true, I'm certainly not making excuses for them, and I will damn them if they deserve it, but I want to understand the whole story first. For one thing, are they really "gutting" it or is that editorializing?

They should not let up on large corporations, but if there are unnecessary and onerous requirements on mom and pop businesses then maybe they, and only they, should be given a break.

[Telly Savalas]

4. That whole article was dogshit editorializing.

Democrats may be gutting it or they may be trying to make it work more effectively. One can't really tell from that article because it was painfully light on actual facts.

I know the complaint several years back was that for smaller companies, SOX compliance would consume a much higher percentage of revenue than it would for giant companies thereby making them less competitive. This article suggests that such costs have gone down "significantly" but doesn't quantify this decrease.

I'll be keeping my eye out to see if any journalists do any reporting on this issue.

[Ruby the Liberal]

5. SOX was bullshit for small businesses

The requirements on documenting things like software upgrades (that are the vendor's coding, not the company's) cost companies more to document than implement.

I appreciate SOX transparency, especially when it comes to large organizations that like to shift and hide losses, but for small businesses, it is a sinkhole.

[Ruby the Liberal]

6. Oh, and re: Mom-n-Pop?

SOX is only for publicly traded companies.

[OHdem10]

3. The Democrats should get themselves out and explain exactly

why.

Giving an in depth explanation of the reasons for change
early can often preempt confusion and therefore pre-empts
attacks.

They do not want to once again appear ready to help Business.

Keep in mind how many people lost everything they had
from crooked actions by companies like Enron.