Greenspan: Dump SarbOx

BOSTON—The Sarbanes-Oxley Act is doing more harm than good and must be overhauled, Alan Greenspan told a technology audience here.

“One good thing: Sarbox requires the CEO to certify the financial statement. That’s new and that’s helpful. Having said that, the rest we could do without. Section 404 is a nightmare.” Greenspan’s remarks came at a meeting of the Massachusetts Technology Leadership Council here on Sept. 25. Greenspan was Chairman of the Federal Reserve board for 18 years, having retired in early 2006.

He said the evidence is clear that Sarbanes-Oxley strictures are driving initial public stock offerings away from the New York Stock Exchange and to the London Stock Exchange. Increasingly, he said, people recognize that Sarbanes-Oxley must be changed. “The pressure on getting 404 significantly altered is rising and is taking on a critical mass.” But he added, “You do not get a bill altered when the two names [Sarbanes and Oxley] are in the process of retiring. People are waiting until they are gone. Then, hopefully, changes will be made. Any bill that passes both houses almost unanimously, cannot be a good piece of legislation.”

Greenspan addressed other technology and business issues including the state of the economy. He said the recent tapering off does not indicate a recession. “The American economy is slowing down,” he said, noting high inventories and the contraction of the housing market. However, he said the recent decline in gas prices was good news and on balance, a recession is not imminent. “We’re not as good as we were in recent years, but the signs of this thing folding just aren’t there,” he said.

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