SOX is Working

We note the editorial by Joel Seligman (author of The Transformation of Wall Street) and Harvey Goldschmid (former Commissioner to the SEC) in the National Law Journal, titled "System is Working."  The piece in part is a defense of SOX but also has as a theme criticism of further efforts to weaken private enforcement mechanisms.  As the piece concludes:  "The challenge of a wise system of securities regulation is neither to 'overdeter' and chill legitimate corporate activity nor to 'underdeter' and encourage corporate misbehavior. Two important ways to get the balance right is to reduce the wide pendulum swings in SEC budgets and to leave unhobbled the vital safety net provided by private litigation."

Comments

[vinnie mirchandani]

I am in the tech business, a former CPA, and a SOX critic on my blog - www.dealarchitect.typepad.com. Admittedly I do not follow it anywhere closely as you do and my blog covers a wide range of other topics

Glad to see you defend it. but what would be nice is if you frame it in terms of SOX is working but it cost us this much. Now was that much worth it? For an area crawling with accountants, there is little factual, financial analysis of cost or benefit from SOX. Vague generalizations like we need it investor confidence. If an auditor got something like that from a client it would raise all kinds of red flags about evasiveness.

Also, I am concerned about the glamorization of SOX - see the Dow is up. For 3 years SOX depressed the market. Businesses have adjusted to it, not particularly enjoying it or benefitting from it and SOX gets the credit?

In the last few months I have seen Greenspan, Oxley - big supporters in 2001 express concern, remorse about the law. What do they know or what are they hearing which says SOX had major flaws?

Finally I highly recommend you read Fortune's recent cover issue where they say Business is Back. The 2 major points they make is "the shaming of business is over". And that if Big Business was maligned, big government has shown itself to be even more inept and corrupt in the last couple of years - Katrina, iraq, various scandals.

Most accountants want to be self-regulated. I wish they would not be so supportive of govenement and compliance laws to regulate other industries.

Thanks for listening to my contratian POV.