Add another powerful voice to the growing chorus of Sarbanes-Oxley critics: Congressman Michael Oxley.
In early July, the coauthor of the controversial legislation spoke at the annual conference of the International Corporate Governance Network, in London, where he admitted that some SOX reforms are "excessive" and said that "if I had another crack at it, I would have provided a bit more flexibility for small and medium-size companies."
Earlier this year, in April, Oxley spoke before a meeting of the House Financial Services Committee to discuss the much criticized law. "I think too many times we, as policymakers, pass legislation only to see it totally misinterpreted at the regulatory level, much to our disgust," he said.
Such comments are a change of pace for the Ohio congressman, who had, until recently, defended both Sarbanes-Oxley and the Securities and Exchange Commission's enforcement of it.
But pointing fingers at enforcement agencies for overzealous misinterpretation isn't entirely fair, says John Berlau, a fellow at the Competitive Enterprise Institute, a Washington, D.C.-based think tank that has called upon Congress to repeal the law.
Politicians write vaguely worded laws, so that when enforcement agencies try to interpret them, "Congress can claim, 'Oh, we didn't write that!'" says Berlau. "It's easy to blame the bureaucrats."
While Oxley's comments may strengthen the resolve of those who wish to see reforms, Berlau is quick to note that "acknowledging that there are problems is only the first step." He adds that SOX should be put through the same congressional reviews as the U.S.A. Patriot Act. In fact, two bills have already been introduced to Congress, one calling for the repeal of Section 404.
That doesn't seem likely. At the London conference, Oxley expressed doubts that companies would see relief anytime soon: "Congress will not revisit this issue," he said. "The SEC reform [on smaller companies] is not going to happen either."
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