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Will Dodd-Frank Follow SOX's Footsteps?

Will Dodd-Frank stop corruption and fraud, or suffer SOX's fate?

The importance of regulating corporate America jumped to the forefront of public dialogue following the collapse of the financial and housing industries in 2008, just as it did when major accounting scandals led to the passage of the Sarbanes-Oxley Act in 2002.

 

As Jesse Eisinger of ProPublica recently wondered: Is the Dodd-Frank Wall Street Reform and Consumer Protection Act doomed to have its teeth removed, leading it to become like the "mocked, patronized and vilified" SOX?

Eisinger compares the two laws. Both have come under attack from lawmakers, corporate executives, although their fears of burdensome reporting requirements and crippling expenses associated with compliance have yet to achieve fruition. He explains that corruption is usually like a fungus that slowly grows and spreads - building upon itself and becoming more severe and poisonous.

"Requiring a step where the top dogs actually have to mark the books as their own territory halts that process," he says. "It steels their concentration and improves the culture, preventing those initial halting steps toward fraud."

As a result, it's vital that Dodd-Frank isn't "gutted" and doesn't lose all its power to effect meaningful change.

Echoing that sentiment, Roy Harris writes for CFO World that it's important that regulation is useful but does not get in the way of normal, legitimate business alink_delimiter_3 .