Sarbanes-Oxley Disclosure Law Targeted by Starr in Factor Suit

[Judi Lynn]

Sarbanes-Oxley Disclosure Law Targeted by Starr in Factor Suit

April 3 (Bloomberg) -- Mallory Factor, who is suing to abolish the U.S.'s auditing-oversight board, doesn't hide his real target: the 2002 law aimed at preventing accounting frauds like the ones that brought down Enron Corp. and WorldCom Inc.

The law, called Sarbanes-Oxley for its co-sponsors, ``is purely and simply government at its worst,'' says Factor, the founder of New York merchant-banking firm Mallory Factor Inc.

Factor has assembled a Republican dream team of lawyers including Kenneth Starr, the former independent counsel who investigated President Bill Clinton, to press his case. Their goal is to prompt Congress to scale back the law and reduce compliance costs for companies.

``They are formidable and they are very fine lawyers, and I think they and their lawsuit have to be taken seriously,'' says Harvey Pitt, former chairman of the U.S. Securities and Exchange Commission.
(snip/...)

http://quote.bloomberg.com/apps/news?pid=10000103&sid=a1PTkMJnKKCQ&refer=news_index

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An all-star challenge to Sarbanes-Oxley Act
By Robert Schmidt Bloomberg News

MONDAY, APRIL 3, 2006

WASHINGTON Mallory Factor, who has sued to abolish the U.S. auditing- oversight board, does not hide his litigation's real target: the Sarbanes-Oxley Act.

Sarbanes-Oxley, a 2002 law aimed at preventing accounting frauds like the ones that brought down Enron and WorldCom, "is purely and simply government at its worst," said Factor, the founder of the New York merchant- banking firm Mallory Factor Inc.

Factor has assembled an all-star Republican team of lawyers including Kenneth Starr, the onetime independent counsel who investigated the former president Bill Clinton, to press his case. Their goal is to prompt the U.S. Congress to scale back the law and reduce compliance costs for companies.

"They are formidable and they are very fine lawyers, and I think they and their lawsuit have to be taken seriously," said Harvey Pitt, a former chairman of the U.S. Securities and Exchange Commission.

The suit is being financed by the Free Enterprise Fund, a Washington-based policy group led by Factor that advocates small government and free markets. Factor is also a Republican fund- raiser.
(snip/...)

http://www.iht.com/articles/2006/04/02/bloomberg/bxsuit.php

[Orrin_73]

1. Sarbanes-Oxley law is a thorn in the eyes

of the libertarians and other free traders for a long time now. They are trashing it in every outlet they have.

[drm604]

2. God forbid that the government try to keep them honest.

:eyes:

[rfranklin]

3. A guy named after a duck? Quack!

And Ken Starr should be disbarred and put behind bars.

[WhiteTara]

15. especially after his conduct in the

capital murder case of (? rapist/murderer of 15 year old in CA) where he introduced phoney documents and affadavites. That was beyond the pale.

[xchrom]

4. the corporate branch of government in action.

we don't elect them -- but they run our lives.

[yellowcanine]

5. Once again Ken Starr weighs in on the dark side. One wonders how

he is able to look at himself in the mirror in the morning and not puke his guts out.

[RUMMYisFROSTED]

14. No problem. He doesn't cast a reflection.

[cleofus1]

6. the only thing these people care about

is money position and power...everything else is just a means to an end...

[Canuckistanian]

7. I took a course in Sarbanes-Oxley ethics compliance once

They showed several "what-if" scenarios and all the possible violations of Sarbanes-Oxley.

These were not trivial crimes -lying to federal agents (Martha Stewart did time for this one), forging financial documents, unfairly profiting from inside knowledge, etc, etc.

I was surprised that these things weren't a automatic crime BEFORE Sarbanes-Oxley. It was just up to a prosecutor whether he decided to indict or not.

If anything, S-O is the bare minimum needed to keep these increasingly criminal corporate executives honest.

[underpants]

9. Yeah *but* S-OX is extremely expensive and time consuming.

I know several people who deal with this directly and the drain on management and personnel is almost punitive.

I am no big fan of most of the management (good old boy prep school network) but many of the big firms are hemorrhaging money to keep up with S-OX.


I just wanted to offer that perspective.

[Canuckistanian]

10. How expensive is it to investors who get ripped off?

Or to employees of companies that go bankrupt? I understand that this is an added layer of bureaucracy and paperwork to companies, but Enron, HealthSouth, Tyco et al have made this kind of regulation necessary.

Almost every kind of industry has it's regulations to comply with. Why not the business and accounting methods used by the companies?

To me, this is the cost of doing business in this world. I know that business leaders want to return to the "wild west" method of self-regulation, but these days, it's almost impossible to control the ones who want to "cut corners".

S-OX was a response to wide-spread corruption and plundering. I really don't care if it's expensive. The alternative is far more damaging.

[underpants]

11. I completely understand

that is basically my response to the complaints I hear about it.

"Why do they think WE are doing something crooked?"

is the basic argument but then everyone says it just like everyone would love for their to be no oversight.

The cost, as I have heard it, can be as much as 30% of the uppermanagement operating expenses prior to S-OX coming into effect.

[CTD]

16. I am a corporate accountant/controller

And a liberal.

And I'll tell you that SOx does not and will not prevent another Enron. If someone wants to cook the books, there is nothing in this law that will prevent it.

Just like the Patriot Act, this legislation was a knee-jerk response by legislators which does nothing to address the real problems. They could claim they "did something" but, in the end, they've created this beast that is ruining the quality of life for the thousands of us working to comply with it.

It is NOT a good law. Please don't allow your anti-corporatism to automatically assume anything that corporations oppose is automatically good. This POS is bad for everyone.

[patcox2]

8. The "Full employment for auditors Act"

Ya'll should be more cynical about this, Sarbox was passed by a republican congress and lobbied for by the major accounting firms, who are the ones getting rich off it. Its no jewel, and it imposes huge costs even on small companies, there's no common sense to it, it imposes the same burden on a $10 million a year company as it does on a $500 million a year company. My wife's company spent $600,000 just last year on SarbOx compliance alone, and they're not a huge company.

[unblock]

12. agreed, it's a mixed blessing. a first real crack at true accountability

it gets a few things right, like putting senior corporate officials really on the line for their statements.

like most first cracks at anything, it's flawed, but it's a necessary first step. the problem right now is that no one wants to be the test case or poster child for sarbox non-compliance or malfeasance. so everybody's overenforcing everything, to a point where it often does make no sense.

but this shall pass. eventually the people involved settle into a workable standard whereby certain things that are uniformly too hard or punitive will be exempted and they'll start to stick to the more important things.

which will make things more manageable. and, of course, it will also make it easier once again to cheat the system as it becomes more predictable. but such is the way of all government oversight....

[lovuian]

13. How can a law be ilegal after Congress made it a law???

I'm so confused!!!

If I was an European investor know way would I invest...