Where was SOX?

Larry Ribstein and Henry Butler ask a good question, in the wake of huge investment firms collapsing and now the 50 billion Madoff ponzi scheme.:

The crisis shows that SOX did not have the advertised payoff of flushing Enronesque risk out of the market. Firms now collapsing from risks hidden in their walls and foundations were subject to SOX. What, exactly, did SOX accomplish other than imposing huge costs and giving us a false sense of security for six years?

This is a good question by itself. But the solution offered is very insightful and deserves serious attention: why not let the shareholders make adopting SOX optional?

But many of the smaller and newer firms may decide that SOX's costs outweigh its benefits. Allowing them to opt out would be like giving a tax break to entrepreneurs to help restart the economy.

Comments

[Charlie Poole]

Amazingly, Sox was given to Bettie Curry (Sp?), Clinton's former secretary. It turns out that the Clintons didn't really care about Sox. Very sad.