Lawmakers Propose Bill to Reform Section 404
May 18, 2006
A trio of Republican senators introduced a bill on Wednesday that overhauls a controversial portion of the Sarbanes-Oxley Act, known as Section 404.
The bill proposes an exemption for companies with a market value of less than $700 million from having to comply with the law.
The Competitive and Open Markets Protecting and Enhancing Treatment of Entrepreneurs (COMPETE) Act is proposed by U.S. Senators Jim DeMint (R-S.C.), Mel Martinez (R-Fla.), and John Ensign (R-Nev.), along with U.S. Representatives Tom Feeney (R-Fla.), Pete Sessions (R-Tex.), Candice Miller (R-Mich.) and Gregory Meeks (D-N.Y.)
"Instead of dealing with Section 404 of Sarbanes-Oxley, the legislation would allow smaller companies to voluntarily comply with standards that better fit their size while still insuring that they protect their investors," according to a statement posted on Sen. DeMint's Web page.
In addition, the act would instruct the Securities and Exchange Commission and Public Company Accounting Oversight Board "to clearly define terms that are ambiguous in current law and add to the confusion and cost of implementing Sarbox."
"Sarbanes-Oxley was well intended but it is actually crippling businesses across America," said DeMint. "In many cases the benefits to investors do not outweigh the costs to companies and their investors. By allowing small companies to live by auditing standards that fit their needs and by providing some clarity for business struggling to comply, the COMPETE Act would make it much easier to grow a business in America and attract capital to American markets."
Copyright 2006 Associated Press