RegulationCorporate GovernanceSarbanes-Oxley legislation criticised

Sarbanes-Oxley legislation criticised

Influential US judge and one of the legislation's architects, Michael Oxley, highlight its faults

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.’

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