No Need to Scrap Sarbox Completely

Lora Bentley

In a San Diego Business Journal piece published Monday, Wade Lindenberger responded to former House Speaker Newt Gingrich's call for the repeal of Sarbanes-Oxley. In short, he said Sarbanes-Oxley didn't cause the current problems. It might need tweaking, but don't repeal it completely.

 

Gingrich wrote recklessly, Lindenberger said. Sarbanes-Oxley was written to protect investors from losses incurred when company officials played fast and loose with finance and accounting rules. Those problems resulted in the collapses of Enron and Worldcom.

 

He argues that the collapses of Bear Stearns and Lehman Brothers came about because of "absentee risk management" and bad business decisions. Sarbanes-Oxley does not address those; it was not written to do so. But that doesn't mean we should scrap it completely and start over. After all, it does do what Congress intended for it to do. Lindenberger points out that since Sarbanes-Oxley became law, we have not seen collapses like Enron.

 

What's more, he notes that IPOs reached their highest levels after Sarbanes-Oxley had been effective for two years. Rather than blaming Sarbox, we should "chalk up the current dearth of IPO activity to our economic woes and the credit crunch."

 

I agree.



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