Sarbanes-Oxley legislation criticised

US Sarbanes-Oxley legislation was criticised this week by both an influential US judge and one of its architects, Michael Oxley.

In separate speeches in London, Judge Leo Strine, a vice chancellor of the Delaware Court of Chancery warned federal legislators to 'stay in their lane' and let individual states deal with corporation law.

And congressman Michael Oxley told a corporate governance conference that his legislation was 'not a perfect document' and some of its reforms had been 'excessive' following the 'hothouse atmosphere' around the collapse of WordCom and Enron.

According to the Financial Times, Judge Strine told the European Policy Forum think-tank on Tuesday that Sarbanes-Oxley was a 'strange brew' that brought together prudent concepts with 'narrow provisions of dubious value'. He added that 'the sour scent of hypocrisy wafted from some important congressional chambers', as former foes of the legislation began to back rapid action.

Meanwhile, Michael Oxley told the International Corporate Governance Network (ICGN) annual conference yesterday that, 'if I had another crack at it, I would have provided a bit more flexibility for small- and medium-sized companies.

'After WorldCom happened it was difficult to legislate responsibly in that type of hot-house atmosphere. But I am proud of the bill. Compliance is an investment in the strength of the US capital markets.'

However, in response to the suggestion that the US states should handle such corporate legislation, Oxley said, 'the idea we could leave corporate governance reform to 50 individual states is rather quaint. Investors were looking for a national response to a national problem.'