June 11, 2005
The SEC and Sarbanes-Oxley
Whenever I go hear an SEC official speak on Sarbanes-Oxley they defend the statute and ask that business give it time to work. The defense can get very sanctimonious. Steve Culter's speech, given before he retired as Chief of Enforcement is recycled. He read a quote attacking a securities enforcement statute that sounds like some of the complaints against SOX and noted that it was made in 1933 in response to the Securities Act of 1933 (which we all know to be a success). It's a cheap debater's trick of course; designed to forestall a detailed look at the new act. Even a high-schooler knows that one enforcement statute is different from another.
What is irritating however is the SEC's role in all this. The SEC was asleep at the switch during the financial scandals in the early 2000s' and their inactivity was a major cause in the need for the new legislation. Now the SEC is trumpeting the new legislation as a position step forward (some of it is and some of it is not). Part of the legislation is a direction from Congress to the SEC to read the filings of private companies for pete's sake. This came after testimony before Congress revealed to an astonished Senate Committee that the SEC had not read the Enron filings in some time. Force companies to file thousands of pages of documents and no one at the SEC reads them if the auditor and legal firms on the documents are well known.
So the SEC, asleep at the switch in 1998 to 2001 and with the enforcement power to do something about it, now gets rewarded by a grant of larger powers from Congress. The SOX grant goes beyond additional traditional enforcement powers and gives the SEC jurisdiction into the structure and processes of American business operations.
Wonderful. Fail at your job and get more power and a bigger budget -- and unabashedly brag about it.
June 11, 2005 | Permalink
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