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The Problems With Sarbanes-Oxley

SOX required the establishment of internal controls, but few executives have b

When companies pause for a moment to take stock of all the regulatory thorns in their sides, Sarbanes-Oxley may seem like less of a concern when compared to the mammoth Dodd-Frank Wall Street Reform and Consumer Protection Act. However, SOX, as it has come to be known, may be more of a roadblock

When companies pause for a moment to take stock of all the regulatory thorns in their sides, Sarbanes-Oxley may seem like less of a concern when compared to the mammoth Dodd-Frank Wall Street Reform and Consumer Protection Act. However, SOX, as it has come to be known, may be more of a roadblock than a means of keeping accountants and corporate boards honest.

John Dvorak, writing for PC Magazine, goes so far as to call for the act's repeal, saying its rules have made it difficult, if not impossible, for a start-up tech company to become an IPO, rally for public financing and dole out shares to stockholders. As a result, the major companies on the market - the likes of Yahoo! and Google - go around scooping up small organizations, adding to their collections.

"The rules of Sarbanes-Oxley make it very difficult for small innovative companies to float shares and get public financing," he says. "If Congress would repeal the act, many of these problems would disappear and much of today’s economic stagnation would end."

According to The New York Times, fewer than 35 CFOs and other corporate executives have been charged under the law's Section 404. The underuse may make it less of a deterrent than it was meant to be, the source reports.  

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