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Hello, Sarbanes-Oxley. Goodbye, Manhattan.

Hello, Sarbanes-Oxley. Goodbye, Manhattan.

by Rick Turoczy on March 12, 2006

For starters, growth is coming from emerging markets—and many emerging- market companies are heading to London to raise money. The trend is largely due to Sarbanes-Oxley, the complex corporate regulatory regime put in place by the U.S. government in 2002 after the Enron debacle. “Sox” reporting standards are so arduous they are scaring away many foreign companies that might have chosen to list in New York. Individual companies are reluctant to state their Sox aversion on the record, for fear of being seen to play regulatory arbitrage. But in a London Stock Exchange survey of international firms that went public last year, 90 percent said the demands of Sarbanes-Oxley made listing in London more attractive. The result was a record year for international listings in London, including whoppers like the $1.6 billion IPO of the online gambling site PartyGaming.

At the same time, the LSE is aggressively marketing the City as the world’s “true” global financial capital, pointing out it does the most international equity trading, has the largest pool of international funds and is the world’s leading cross-border lender. “There’s $700 billion worth of institutional capital here invested in foreign equities,” says Tracey Pierce of the LSE.

Hello, Sarbanes-Oxley. Goodbye, Manhattan.

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