Sunday, November 12, 2006

NYT takes a swing at SOX opponents

The New York Times' editorial today (see "The Corporate End Run") comes out arguing that the business groups proposing significant changes to the Sarbanes-Oxley Act are greedy crooks trying to take advantage of the fact that both Senator Sarbanes and Congressman Oxley have just retired to push for relaxed regulations and protection from shareholder lawsuits. (In fact, the editorial repeats the same arguments I've made here, here, here, and here, in many cases citing the same sources. Guess I'm just ahead of the curve.)

In particular, the NYT states:

United States markets lost their dominance of initial stock offerings for numerous reasons that had little to do with regulation. Some of last year's biggest deals were Chinese and French privatizations. Markets elsewhere are bigger and more liquid than they once were. There are also intangibles, such as America's recent unpopularity, increased barriers for visa seekers and extraordinary budget and trade deficits, which might make an issuer think twice about a dollar-denominated stock.

The London Stock Exchange, one of the leading beneficiaries of the American decline, commissioned a study showing that underwriting fees in London are just 3 percent to 4 percent of a transaction, compared with an average of 6.5 percent to 7 percent in the United States.

When workers confront globalization, they are told to adapt, take their pink slips and go to night school. It is the harsh downside of an integrated world economy that has on balance significantly enriched the country. When financiers feel the pinch from competition in Hong Kong and London, they run to the Bush administration for rule changes.

America's investor protections and corporate regulations have made it a nation of share owners, with almost 57 million American households owning stocks either directly or through mutual funds. The Securities and Exchange Commission has already signaled that it will smooth the implementation of Sarbanes-Oxley, especially for smaller companies. And abuses of the private litigation system like pay-to-play should be stopped. There is room for reform. But over all, the system is working. It may need tweaks, but it does not need a revamping.

I don't usually take the same "Worker's of the world, unite!" tone as the NYT, but it's still good to see that they occasionally get something right. Even if it has been said elsewhere by others already -- but, hey, it's the NYT. Don't ask for too much.

The editorial also references this NYT article by Stephen Labaton ("Businesses Seek Protection on Legal Front").

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