A handful of boldface names from the financial world lent their signatures to a letter to federal regulators, asking that no public company be exempted from the internal controls provisions of the Sarbanes-Oxley Act.Former Securities and Exchange chair Arthur Levitt, former Federal Reserve chair Paul Volcker and former comptroller general Charles Bowsher joined John Biggs, former chair and chief executive of TIAA-CREF, and John Bogle, former chair of the Vanguard Group Inc., in signing the letter. The Feb. 13 letter was addressed to current SEC chair Christopher Cox and the acting chair of the Public Company Accounting Oversight Board, William Gradison.
Smaller companies have complained that the rules under SOX Section 404 are disproportionately costly and burdensome for them. Last December, an SEC advisory panel recommended a change to the provisions exempting an estimated 80 percent of public companies from at least part of the rules. Companies with market values less than $125 million would be exempted from the rules.
"Such a recommendation simply goes too far," the group wrote. "When new accounting and corporate-fraud scandals develop, as they surely will, people will ask who was responsible for a policy decision resulting in such sweeping exemptions."
