In an attempt to prevent further corporate fraud, Congress implemented the Sarbanes-Oxley Act in 2002 after accounting irregularities proved to be the undoing of Enron, WorldCom and other big firms.
However, some say these changes have not been for the better, contributing to what has been a decidedly soft market for initial public offering in the six years since SarbOx was introduced. In an
op-ed appearing in the San Francisco Chronicle, former House Speaker Newt Gingrich and David W. Kralik say that Congress should now take the opportunity to repeal the law, especially since the economy
is fast moving toward recession.
Even Rep. Michael G. Oxley (R-Ohio), one of the men for whom the bill was named, admitted recently that Sarbanes-Oxley was passed in haste. "Frankly, I would
have written it differently," he told the
International Herald Tribune. "Everyone felt like Rome was burning."
Gingrich and Kralik point out that SarbOx is prohibitively expensive,
particularly for small firms seeking to go public. They cite estimates from VCs indicating that the average company will now take 12 years before it can successfully issue an IPO, as opposed to five
years pre-SarbOx. This is mostly because small firms do not have the capital to cover the estimated $4.35 million needed for yearly compliance costs.
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