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Ring Around the White Collar

Ring Around the White Collar

by Rick Turoczy on July 12, 2006

Yet now America is losing its position as one of the most favorable countries in the world to do business. The reason is the government’s obsession with white-collar crime as manifest by such inhibitors of business as the Sarbanes-Oxley Act.

The law was passed by Congress as a typical overreaction to the white-collar criminals of the 1990s, most of whom were prosecuted and jugged without resort to Sarbanes-Oxley. It has always been illegal to defraud. What Sarbanes-Oxley has achieved is the stifling of honest business dealings. It has placed redundant accounting regulations on business and nearly criminalized serving on the board of directors, whether the board be that of a giant corporation or a local publicly-traded plumbing company. The cost of Sarbanes-Oxley has driven IPOs abroad and persuaded entrepreneurs to forego IPOs entirely, denying them access to public capital, to growth, and to job creation.

Consequently the business climate in the United States has turned sour. The business climate in places like London is less risky and IPOs that might have been issued here are now issued in London. The London Stock Exchange markets itself as “A Sarbanes-Oxley Free Zone.” London is prospering, a businessman told me the other day, because of North Sea oil and “Sarbanes-Oxley, which has encouraged Americans to take their IPOs here.”

Ring Around the White Collar

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