Lets not forget the Energy Policy Act of 2005 (EPAct), another post Enron reactionary piece of legislation. While this 500 plus page behemoth does do some good - mandatory electric reliability standards for one thing - the morass of ill-defined anti-market manipulation regulations with attendant draconian civil penalties is turning this into the new Lawyer's Employment Act. Let's hope the pendulum starts to swing back to a more sane position on both SOX and EPAct.
Go Ask Alice | 10.09.06 - 12:58 pm | #

I'm not saying I disagree with you about the ramifications of SOx, but how do you reconcile your position with the record-breaking market closes over the last week? And that happened despite the lack of IPOs and despite all of the formerly-public companies that have delisted to avoid SOx requirements.

I think there are plenty of other explanations. I also think you should be prepared for the frustration and possibly rage that you're going to feel when Mike Oxley tells us that the markets are up due to heightened investor confidence - which is due to SOX.
Mike | 10.09.06 - 2:14 pm | #

Mike,

The performance of the market, which is of already-listed companies, has nothing to do with the fact that new companies are eschewing US IPOs.

In terms of investor confidence, I don't know one finance professional who is more confident post Sox. It is just a gimme to law firms and accountants. The Dow is just 30 big companies and its performance is mostly irrelevant to the investment environment as a whole.
Leonardo | 10.09.06 - 8:33 pm | #

Leonardo - I agree, but my point is that it's an inconvenient set of facts. If my last name were Oxley (which it's not), I would be presenting these facts to the tune of "I passed a law governing companies, and we haven't had a big scandal since then, and the market has gone up. Clearly my law had a positive impact." You hear these guys spin. I wouldn't be surprised for Mike and Paul to take credit for getting Martha Stewart in jail, even though it was just on obstruction charges.

I've thought through this situation quite a bit over the last couple years, and I think it's a political loser, partly for the reason outlined above (unrelated facts will be twisted to show the "success" of the policy), and partly because if the issue were to come up on the hill, some populist would parade out a bunch of octegenarians who are bagging groceries because an evil business man stole their pensions.

While I certainly think a change is needed here, I don't think the familiar cry of "it's costing businesses money" is getting the point across.
Mike | 10.10.06 - 10:14 am | #