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Spitzer cautions against easing Sarbanes-Oxley corporate reforms

[JURIST] Many of the efforts to soften the corporate accountability reforms of the 2002 Sarbanes-Oxley Act [PDF text; SEC materials] are being pushed by the same corporations that employed questionable accounting and business practices before the Sarbanes-Oxley reforms, New York state attorney general and governor-elect Eliot Spitzer [JURIST news archive] said in an interview with the Financial Times published Monday. Last week, US Treasury Secretary Henry Paulson [official profile] accused Sarbanes-Oxley of raising the cost of doing business in America [transcript; Bloomberg report], citing declining share sales since 2002 as one example of its impact, and recommended legislative tweaks to the Act, especially to the internal control structure requirements of Section 404 [KPMG backgrounder]. Spitzer said Monday that individual corporations are responsible for their own poor performances, and that corporate accountability and ethics will strengthen US markets in the long run.

The Sarbanes-Oxley Act has been an object of criticism since its passage in the wake of the Enron debacle and other high-profile corporate scandals. Rep. Michael Oxley, one of the law's co-sponsors, said last year that the legislation was "rushed" and included "excessive" corporate reforms [JURIST report]. A GAO report earlier this year noted that an increasing number of small businesses are going private [JURIST report] in order to avoid disproportionately higher costs of complying with the law, prompting several senators to urge regulators to find ways to make it less onerous for smaller companies to comply. The Financial Times has more.

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