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SOX offers a remedy to restore trust

SOX offers a remedy to restore trust

by Rick Turoczy on May 1, 2006

Remember when your mother made you take medicine that tasted awful? At first, it was a horrible experience, but over time, you realized that it actually was good for you.

The same argument can be made for ensuring corporate controls. These checks and balances are good not just for investors but for companies, as well.

An advisory committee to the Securities and Exchange Commission recently voted unanimously to recommend that smaller public companies be exempted from Section 404 of the Sarbanes-Oxley Act of 2002 (SOX). Such a move would add risk for small-company investors and, in the long run, would have an adverse effect on small businesses – the very firms that are resisting the scrutiny.

The exemption is a short-term answer. Micro-cap and small-cap companies will pay the price for the lack of transparency.

SOX offers a remedy to restore trust

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