Sarbanes-Oxley Act co-author and current NASDAQ vice chair Michael Oxley gave the keynote address earlier this week at the Gartner Financial Services Technology Summit. He spoke about the "the crisis in confidence and loss of trust" that resulted from the Enron scandal and others like it, an impact that was magnified because "average citizens" were affected by the scandals.
That, he said, was what gave rise to the law that bears his name, according to Bank Systems & Technology. And according to Oxley, Sarbox has been successful in that it has motivated a return of the average investor's confidence in the capital markets.
But as blogger Kathy Burger points out, reference to the current subprime mortgage scandal was conspicuously missing from Oxley's remarks. Why? She speculates as follows:
Maybe that's because this is occurring only a few years after the events that spurred the passage of Sarbanes-Oxley, or maybe the former Congressman thinks the legislation is only applicable to accounting practices and the capital markets and believes (wrongly, I think) that it has no relevance to the cap markets. But I'm sure that, just as Enron, WorldCom et al begat Sarbanes-Oxley, so will the fallout (failed companies, workforce cuts, people losing their homes, etc.) from the subprime mess spur the creation of new or updated regulation.
I certainly agree. And if some have their way, Sarbanes-Oxley may even be extended to apply to subprime mortgages.