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Some CEOs rebelling at new reform laws

By ASSOCIATED PRESS
Published January 16, 2007

Critics trying to build support for a rollback of corporate reform laws argue that they're way too costly and have taken all the fun out of doing business in America. Those are lame excuses.

The latest rant comes from Shutterfly Inc. chairman Jim Clark. He said he is leaving the online photo company because the Sarbanes-Oxley law has taken reform "too far" and was crimping his ability to lead the way he wanted.

Sarbanes-Oxley - or Sarbox, as it's come to be known - is despised in many corners of corporate America. The focus of Clark's ire is that the rules prevent him from doing his job as director because he owns 30 percent of Shutterfly's stock, making him its biggest shareholder.

"As I understand it, Sarbox dictates that I not chair any committee due to the size of my holdings, not be on the compensation committee because of the loan I once made to the company, not be on the governance committee, and it even dictates that some other board member must carry out the perfunctory duties of the chairman. What's left is liability and constraints on stock transactions, neither of which excite me," he wrote in a letter to the board.

Others think the problem is that U.S. markets are losing ground to competitors abroad because of increased regulation.

"Firms must choose to come to the U.S.; they do not have to come," the Committee on Capital Markets Regulation, a private group of academic and finance experts, said in a report issued late last year. "In the shift of regulatory intensity, balance has been lost to the competitive disadvantage of U.S. financial markets."

But consider what would happen if things went back to the old ways.

Recent research by the British accounting firm BDO Stoy Hayward found the annual reported instances of business fraud in the United Kingdom jumped by a third last year and the value of the reported fraud rose 40 percent.

Many of the listings who fled U.S. markets because of Sarbox have gone to the U.K.

U.S. accounting expert Jack Ciesielski points out that "you're known by the company you keep" - meaning those companies fleeing to less regulated markets may find themselves sinking to the level of their peers.

[Last modified January 16, 2007, 01:09:23]