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London prospers from US regulation

London prospers from US regulation

by Rick Turoczy on August 10, 2006

An analysis by Peter Wallison, of the American Enterprise Institute, suggests that the cost to the US economy of the Sarbanes-Oxley Act of 2002 may be several times the peak market value of Enron and its fellow corporate villains. These costs vary from direct expenditure on formal internal controls and audit fees, which are up 57 per cent, to more nebulous costs, such as boards of directors spending more time and brainpower on compliance than on the company’s business and strategy.

The biggest long-term loss to Wall Street is the business it is driving away. Some is smaller companies going from stock market listings to private equity ownership, which is largely unregulated. These losses outweigh new listings on the New York Stock Exchange (NYSE) or Nasdaq. More visible is new business lost to foreign exchanges, mainly in Europe and particularly in London. In 2000, Mr Wallison claims, 90 per cent of the new equity capital raised by companies outside their home territory was raised in the US. In 2005, the US hosted only one of the top ten foreign offerings and only one of the top 25 global offerings.

London prospers from US regulation

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