Despite the dismal opinion that many publicly traded companies have of the Sarbanes-Oxley Act of 2002, the story of one New York-based company proves it does have value. The New York Times reported last week that discount retailer Syms has given in to investor pressure and listed its shares with the Nasdaq -- just weeks after delisting from the New York Stock Exchange.
Company officials took steps to delist from the NYSE specifically to avoid the headaches and costs of Securities and Exchange Commission oversight and Sarbox compliance. According to a company statement, the story says, the company's motivation was:
to minimize financial and administrative burdens associated with being a Securities and Exchange Commission (the "SEC") reporting company and regulatory compliance under the Sarbanes-Oxley Act of 2002. The Company estimates that the savings in both direct and indirect costs associated with deregistration will be substantial on an ongoing basis and that the direct recurring annual savings will exceed $750,000.
Shareholders, however, didn't find the move acceptable and began protesting "vigorously." They argued that delisting would deprive them of the regular financial reports and other information about their investments that would accompany SEC registration. And they did more than offer lip service, apparently. The value of Syms stock reportedly dropped more than 40 percent after the plan to delist became public knowledge.
Conversely, on the day that the shares were listed on the Nasdaq, Syms stock rose more than 11 percent.
Clearly, Syms investors feel the systems set in place by Sarbanes-Oxley and the SEC requirements are important to protect their interests. And as the writer points out, the Syms story is just one of many.