U.S. House Financial Services Capital Markets Subcommittee Focuses on 10th Anniversary of Sarbanes-Oxley Act

The U.S. House Financial Services Capital Markets Subcommittee marked the 10th anniversary of passage of the Sarbanes-Oxley Act by holding a hearing on July 26, 2012 to examine the law’s benefits and burdens on businesses and evaluate the need for reforms.

“As we approach the 10-year anniversary of the Sarbanes-Oxley Act, the Capital Markets Subcommittee will examine the impact the law has had on our nation’s public companies and the corporate governance procedures they operate under,” said Subcommittee Chairman Scott Garrett.  “It is essential that our laws balance the needs of promoting investor confidence and robust economic growth while ensuring our capital markets remain the most dynamic and competitive in the world.”

Financial Services Committee Chairman Spencer Bachus said, “When Congress passed Sarbanes-Oxley in response to the accounting and corporate governance scandals at Enron, WorldCom and several other large corporations, it did so to promote greater transparency in financial reporting, increase accountability in boardrooms, protect investors, and promote sound corporate governance.   While there are many good provisions in Sarbanes-Oxley that helped restore confidence in the U.S. capital markets, the costs associated with the law are significant.  It is incumbent upon this Committee to continually assess whether the costs of this law – and any financial services law – exceed the benefits and whether changes are necessary to ensure that compliance costs do not disadvantage small companies.”

During the hearing, the Subcommittee will also discuss H.R. 6161, the Fostering Innovation Act, introduced by Rep. Michael Fitzpatrick.  The bill would extend relief from certain Sarbanes-Oxley regulations to small companies.

Earlier this year, Congress passed legislation – the JOBS Act – that provides some small companies with relief from certain Sarbanes-Oxley internal control regulations.  The JOBS Act (Jumpstart Our Business Startups Act) was comprised of six bills that originated in and were approved by the Financial Services Committee.  All six bills were designed to make it easier for small companies and entrepreneurs to access capital.

The Witnesses included:

• Mr. John Berlau, Senior Fellow, Finance and Access to Capital, Competitive Enterprise Institute
• Mr. Mercer E. Bullard, Jessie D. Puckett Jr., Lecturer and Associate Professor of Law, The University of Mississippi School of Law
• Mr. John Coffee, Adolf A. Berle Professor of Law, Columbia University Law School
• Mr. Michael J. Gallagher, Chairman, Professional Practice Executive Committee, Center for Audit Quality
• Mr. Jeffrey Hatfield, President and Chief Executive Officer, Vitae Pharmaceuticals on behalf of the Biotechnology Industry Organization
• Ms. Marie Hollein, President and Chief Executive Officer, Financial Executives International

Click here for the Archived Webcast of this hearing.