London Likes the Sarbox Effect

Lora Bentley

U.S. public companies loathe it, at least one U.S. legislator says it's killing the economy because so many companies are delisting or deciding not to list in the first place, members of the Securities and Exchange Commission call it "frightening" and foreign public companies -- especially those in Europe -- can't seem to stomach the thought of having to comply with the Sarbanes-Oxley Act of 2002.

 

According to an article in The Independent, however, the London Stock Exchange is quite thankful for Sarbanes-Oxley. LSE reported yesterday that it has received more initial public offering funds so far this year than were received throughout last year.

 

Experts attribute the jump to three things: 1) many smaller U.S. companies that can't afford to list in the U.S. because of Sarbanes-Oxley requirements still want to list somewhere; 2) it costs less to sell stock in London; and 3) London's regulatory hand is far lighter than those in the U.S.

 

As the writer points out, though, the things the LSE prides itself on most just may be its downfall. In an apparent effort to stem continuing losses to London markets, the U.S.'s Nasdaq is in the market to acquire the LSE.



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