Obama jobs group raps fraud-busting Sarbanes-Oxley
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Sweeping reforms enacted after investors lost millions because of accounting fraud at Enron, WorldCom and other publicly traded companies are stifling jobs creation.
At least that's the opinion of President Barack Obama's Council on Jobs and Competitiveness. It wants to provide relief from the accounting regimen to a wide swath of corporate America. The advisory group believes that easing the regulations will reduce companies' costs and make it easier for entrepreneurs to raise money by selling stock.
Critics say rolling back the protections will create something other than jobs.
"All you're going to do is have more fraud. The ultimate losers are going to be investors," said Jeff Klink, a former federal prosecutor whose Gateway Center firm helps clients prevent and detect fraud.
Barbara Roper, of the Consumer Federation of America, found the proposal short on reasoning and long on irony.
"The Jobs Council looks at jobs losses that are the direct result of a financial crisis brought on by weak financial regulation and proposes as a solution further weakening regulations," she said.
The recommendation was included in a report Mr. Obama's jobs gurus released last week.
The law that the Jobs Council is taking aim at is Sarbanes-Oxley, or SOX. Enacted in 2002, it requires publicly traded companies to disclose internal controls they have in place to prevent fraud and to determine how effective those controls are.
SOX also requires CEOs and CFOs to certify the truthfulness of financial statements, mandates more timely disclosure of material information and requires companies to beef up the accounting expertise in their boardrooms.
The council's report states that "nearly all members" recommend that companies with market values of less than $1 billion be spared from complying with all of SOX, or at least with its internal controls provisions. If that's not possible, companies should be exempt from the law for the first five years after they sell stock to the public, the report states.
First Published October 16, 2011 12:00 am
