Small Firms Denied Break on Sarbanes-Oxley
Despite growing expectations, small public companies will not be getting a break on strict financial regulations under the Sarbanes-Oxley Act, the Securities and Exchange Commission announced Wednesday.
Instead, the SEC will offer better guidance in implementing the rules, which were created in response to scandals at Enron, WorldCom, and other corporate giants in 2002.
The commission also vowed to "improve" section 404, which enforces internal reporting requirements, and to further postpone the compliance deadline for small companies, the regulator said.
Large companies already are subject to the regulations.
The decision comes despite recommendations in April by an SEC advisory panel that smaller companies be exempt from Section 404, which critics say is disproportionately costly and unnecessary for smaller firms.
"As we go forward, we will consider the special concerns of all companies that fall under our jurisdiction -- large and small, foreign and domestic," SEC Chairman Christopher Cox said in a statement.
On Monday, Republican lawmakers said they plan to introduce legislation this week allowing companies with less than $125 million in revenue to opt out of section 404.
"Many of these costs were spent by companies that pose little risk to investors," Rep. Tom Feeney (R-Fla.) said in a statement.
A similar bill is also expected in the Senate.