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Don’t throw Sox baby out with the bath water

Don’t throw Sox baby out with the bath water

by Rick Turoczy on May 7, 2006

Senator Paul Sarbanes and Congressman Mike Oxley are both retiring from Congress at the end of this year. The business community will be delighted to see the back of them — and to get on with the task of pushing through changes to the law that bears their names, and is better known as Sox. That legislation was designed to improve the quality of corporate governance in the wake of the collapse of Enron and WorldCom, and scandals at other companies.

But, say its critics, what the CBI calls the law’s “nitpicking process,” and the costs of complying with the reporting and governance requirements of section 404, exceed any benefits generated by Sox. Key legislators are complaining to the Securities and Exchange Commission chairman, Christopher Cox, that US securities exchanges are losing market share to overseas rivals because companies can avoid Sox’s burdens by doing their capital-raising beyond the statute’s reach.

Don’t throw Sox baby out with the bath water

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