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Can the SEC Exempt Small Companies From Sarbanes-Oxley 404?
Last month the SEC Advisory Committee on Smaller Public Companies adopted the following three recommendations concerning oft-maligned Sarbanes-Oxley Section 404: 1. Exempt Microcap companies from S404,...
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Sarbanes-Oxley: Linux Users Beware
As you may have guessed from my previous posts, I’m not a big fan of Sarbanes-Oxley, so I generally appreciate the criticism it receives. Some of the criticism, however, is almost comical. Take for...
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Harvey Pitt on Sarbanes-Oxley
Click here for a Forbes article by Harvey Pitt on Sarbanes-Oxley. Pitt was chairman of the SEC during the passage of SOX. The article is balanced. Pitt points out some benefits of SOX: The 2005...
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Risk Allocation Provisions and Auditor Independence
I blogged previously about a W$J article on auditors including so-called liability caps in their client engagement letters (see here). My view was that it really wasn’t newsworthy because...
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Venture Backed Firms Going Public in London
This article from CFO.com reports that VCs have been having trouble taking their portfolio companies public in the U.S. largely because SOX has made it too expensive for small companies and the Wall...
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Management Talent Leaving in Droves for Private Equity
According to this Business Week article, top managers are fleeing public companies for jobs with private equity funds to hunt for deals, head portfolio companies, or both. The attractions are twofold:...
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Can the SEC Exempt Small Companies from Sarbanes-Oxley 404? (Part 2)
Back on the first day of TOTM’s existence, I raised the question of whether the SEC has the authority to exempt small companies from SOX 404 compliance as proposed by the SEC Advisory Committee on...
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Oxley & Baker: SEC Can Exempt Small Cos. from Sarbanes-Oxley 404
According to BNA, in a 3/2/06 letter to the SEC, Reps. Oxley and Baker stated that in their view the SEC does have the authority under both Section 36(a) of the Exchange Act and Section 3(a) of SOX to...
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Cox Says No to Sarbanes-Oxley 404 Exemption
From today’s Chicago Tribune (click here): Securities and Exchange Commission Chairman Christopher Cox said Monday that small companies won’t get an exemption from Sarbanes-Oxley rules requiring...
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Is Sox Encouraging Companies to Go Private with Private Equity?
With all of the discussion of late about the compliance costs of Sarbanes-Oxley, I thought I’d address a hypothesis that has been bandied around with increasing frequency about the relationship...
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Update on the SEC’s Authority to Exempt Small Issuers from Section 404...
The momentum seems to be building among legal academics that the SEC may lack the authority to exempt small companies from SOX 404 compliance. As many may recall, Bill previously analyzed this issue...
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Commisioner Atkins on Mutual Fund Governance Rules and SOX 404
Now available on the SEC’s website is a transcript of a April 27, 2006 speech by SEC Commissioner Paul Atkins given to the Investment Adviser Association. There’s nothing particularly surprising in...
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SEC announces planned Sarbanes-Oxley 404 improvements
Click here for the SEC’s press release with the details. Note that there is no mention of exempting small companies from SOX 404 compliance although the compliance date for non-accelerated filers will...
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Update on Lawsuit Challenging PCAOB
Recall that in February the Free Enterprise Fund filed a suit claiming that the Public Company Accounting Oversight Board (PCAOB) established under Sarbanes-Oxley violates the appointments clause of...
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Direct public offerings, free writing prospectuses, Vonage, and SOX
Back in 2001 I published an article entitled Going Public Through an Internet Direct Public Offering: A Sensible Alternative for Small Companies? DPOs had been (and continue to be) touted as a...
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Justice Department asks court to dismiss case challenging PCAOB.
Following up on this post, according to this Reuters article the Justice Department has filed a “statement of interest” asking the court to dismiss the PCAOB constitutionality case. [T]he lawsuit was...
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LSE companies worry about SOX.
According to this CFO.com article, London Stock Exchange listed companies are concerned that the acquisition of the LSE by a U.S. exchange will subject the companies to SOX (recall that Nasdaq’s $4.2...
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Explaining Backdating (and Jenkins Channels Manne Again)
Holman Jenkins reports that a group of economists led by Milton Friedman and Harry Markowitz are getting behind the idea of putting an end to the expensing of options. It is a great column. Jenkins...
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Two in the WSJ
Airlines and Antitrust. Kenneth Starr on Sarbox. The punchline: Even the statute’s co-author, Rep. Mike Oxley, has conceded that Sarbanes-Oxley was hastily written and enacted. In its rush to “do...
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Manne on Shareholder Democracy
Henry Manne is back with another article in the WSJ. This time Manne goes toe-to-toe with the “corporate democrats.” Profs Ribstein (“Shareholder democracy is just one of the burdens that public...
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Is There Really Less Securities Fraud? And If So, Should We Thank the Feds?
Securities fraud class-actions are down. In an op-ed in yesterday’s WSJ, Joseph Grundfest observed that both the number of such actions and the dollar value of total damages claims have dropped...
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Rent a CFO?
This recent article in the NYT (log in required) caught my eye. It discusses the growing market for temporary financial services to companies. Since SOX this market has grown by 68% to $8.9 billion,...
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Congratulations to Kate Litvak!
Kate Litvak (UT Law, and friend of TOTM) , whose excellent paper (discussed around the blogosphere here and here), “The Effect of the Sarbanes-Oxley Act on Non-US Companies Cross-Listed in the US,” has...
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Professor Bainbridge's Complete Guide to Sarbanes-Oxley
Is available here. Here is the description: Congress passed the Sarbanes-Oxley Act in response to major corporate and accounting scandals–and many consider the act to be the most significant change in...
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A Sarbox Update
From Larry Ribstein: A few years later, Henry Butler and I wrote a book decrying SOX, and discussing the evidence that was accumulating against it, as well as the SOX suit. Here’s an excerpt from the...
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The Collected Works of Henry G. Manne
I’m delighted to report that the Liberty Fund has produced a three-volume collection of my dad’s oeuvre. Fred McChesney edits, Jon Macey writes a new biography and Henry Butler, Steve Bainbridge and...
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Disclosure of ethics waivers under SOX: Recent scholarship from Rodrigues and...
Usha Rodrigues and Mike Stegemoller have penned an interesting article, “Placebo Ethics,” assessing the effect of one of SOX’s disclosure provisions: The required immediate disclosure of waivers from a...
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The federalization of corporate governance marches on
Last month I noted that the Senate was about to repeat its SOX mistake with another ill-fated foray into regulating corporate governance. I focused on provisions for mandatory majority voting,...
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The Supremes: Congress messed up SOX but no big deal
The PCAOB members’ tenure unconstitutionally insulated them from executive supervision, but in David Zaring’s succinct summary The remedy is the key, and although the Court didn’t explain the remedy...
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HP: the adventure continues
When I last discussed HP, I reflected on the spectacular failure of independent board governance associated with pretexting-gate. That, you might recall, was Patricia Dunn’s highly questionable...
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Jurisdictional choice for securities regulation
We usually think about jurisdictional choice for corporate law as applying to state business association laws, not the federal securities laws. But this distinction has never been clear given global...
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Evidence of the SOX effect on IPOs
Last week I noted that Facebook’s big private sale to Goldman was a symptom of how higher disclosure costs have helped make private firms reluctant to take the once-expected step of going public:...
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Jonathan Macey for SEC Commissioner
In a must-read op-ed in today’s Wall Street Journal, Yale Law’s Jonathan Macey weighs in on Goldman Sachs’s decision to allow only foreign gazillionaires — no Americans, regardless of their wealth or...
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Another path to growth: fix SOX
Yesterday I noted, anticipating the President’s call tonight for spending to encourage US growth and competitiveness, that “a better way to increase U.S. competitiveness is by changing the law rather...
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NYSE-Deutsche Borse and jurisdictional competition
The WSJ opines on the impending sale of the NYSE to Deutsche Börse of Frankfurt. It describes the merger as “a story of inevitable capitalist change and how no country or institution can take its...
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What happened to IPOs redux
A couple of months ago I asked, “what happened to IPOs.” Today’s WSJ asks almost the exact same question and gets the same answer: The elephant in the room is the 2002 Sarbanes-Oxley law, which...
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Schumer and the decline of New York
Six years ago Henry Butler and I wrote about what we called the Sarbanes-Oxley Debacle. Well, it’s still a debacle after all these years, and having significant effects on business and international...
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A Macro Conference
I was invited to attend the Financial Times Global Conference “The View From the Top: The Future of America” and since I was in New York anyway I thought it would be fun. I don’t hang around with...
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The ineffectiveness of internal controls reporting
We have heard much about the costs of internal controls reporting under SOX 404. Proponents argue that the fraud reduction is worth the costs. One might question this in light of anecdotes like all...
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Notes from the tea party caucus of corporate academia
Roberta Romano has just posted her paper, Regulating in the Dark. Here’s the abstract: Foundational financial legislation is typically adopted in the midst or aftermath of financial crises, when an...
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