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Article

Title: Sarbanes-Oxley Lite

Author: Wolfe, Sean Article Type: Product Analysis
Source: Red Herring, v4 n1 p27(3) Publication Date: Jan 15, 2007
  ISSN: 1080-076X
URL of Publication: http://www.redherring.com

Companies may see a softening of guidelines and requirements as called for in the Sarbanes-Oxley (SOX) Act as politicians recognize the burden that the law is imposing on businesses. Foreign stock markets are attracting many U.S. companies that need an exit option other than being acquired. This comes as venture-backed companies complain about auditing requirements under the SOX guidelines. According to Dealogic, the United Kingdoms Alternative Investment Market attracted $6.2 billion investor money through 70 IPOs in 2006 compared to $5.3 billion through 11 agreements signed on the New York Stock Exchange, or $2.4 billion in 14 agreements on the Nasdaq for the same year. But there is no immediate relief for venture capitalists judging from pronouncements of Democratic leaders in Congress, such as incoming House Speaker Nancy Pelosi, who are leaving it to the hands of the U.S. Securities and Exchange Commission and the Public Company Accounting Oversight Board (PCAOB) to handle the matter. Adding to the worries of VCs are the comments made by former Federal Reserve Chairman Alan Greenspan, who called SOX a nightmare. Meanwhile, the SEC said it will have to wait for auditing requirement alterations before it decides SOX is too costly for small companies. The PCAOB is also planning a new auditing guideline to abolish unnecessary procedures and cut costs.

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