Comments on: Can the SEC Exempt Small Companies From Sarbanes-Oxley 404? http://truthonthemarket.com/2006/01/17/can-the-sec-exempt-small-companies-from-sarbanes-oxley-404/ Academic commentary on law, business, economics and more Wed, 15 Feb 2012 08:05:47 +0000 hourly 1 http://wordpress.com/ By: TRUTH ON THE MARKET » Update on the SEC’s Authority to Exempt Small Issuers from Section 404 Compliance http://truthonthemarket.com/2006/01/17/can-the-sec-exempt-small-companies-from-sarbanes-oxley-404/#comment-5178 Fri, 21 Apr 2006 15:44:01 +0000 http://www.truthonthemarket.com/2006/01/17/can-the-sec-exempt-small-companies-from-sarbanes-oxley-404/#comment-5178 [...] The momentum seems to be building among legal academics that the SEC may lack the authority to exempt small companies from SOX 404 compliance.  As many may recall, Bill previously analyzed this issue in the inagural post of this blog and concluded that the SEC most likely did not have the requisite statutory authority (he provided a follow-up analysis here).  Larry Ribstein shares this sentiment.  Apparently, they are not alone.   [...]

]]> By: TRUTH ON THE MARKET » Can the SEC Exempt Small Companies from Sarbanes-Oxley 404? (Part 2) http://truthonthemarket.com/2006/01/17/can-the-sec-exempt-small-companies-from-sarbanes-oxley-404/#comment-5177 Mon, 27 Feb 2006 23:01:02 +0000 http://www.truthonthemarket.com/2006/01/17/can-the-sec-exempt-small-companies-from-sarbanes-oxley-404/#comment-5177 [...] Back on the first day of TOTM’s existence, I raised the question of whether the SEC has the authority to exempt small companies from SOX 404 compliance as proposed by the SEC Advisory Committee on Smaller Public Companies (see here). I stated that “[i]t’s not clear to me that [the SEC has] the legal authority to do so.â€? The committee addresses the authority issue in footnote 96 on page 44 of its latest draft report (HT: Bainbridge) and asserts that the SEC does have the authority. Specifically, it points to Section 3(a) of SOX which gives the SEC broad authority to promulgate “such rules and regulations as may be necessary or appropriate in the public interest or for protection of investors, and in furtherance of this Act.â€? I’m certainly no expert on statutory interpretation, but I have a hard time accepting that this language empowers the SEC to adopt rules that essentially negate SOX provisions. When Congress has intended to grant the SEC exemptive authority in the securities area, it has done so expressly (see, e.g., Securities Act Section 28 and Exchange Act Section 36). Regardless, how exactly would exempting small companies from SOX 404 be in furtherance of SOX? [...]

]]> By: TRUTH ON THE MARKET » The Ban on General Solicitation and Advertising http://truthonthemarket.com/2006/01/17/can-the-sec-exempt-small-companies-from-sarbanes-oxley-404/#comment-5176 Wed, 25 Jan 2006 21:06:54 +0000 http://www.truthonthemarket.com/2006/01/17/can-the-sec-exempt-small-companies-from-sarbanes-oxley-404/#comment-5176 [...] I blogged last week about the recommendations concerning Sarbanes-Oxley 404 adopted by the SEC Advisory Committee on Smaller Public Companies at a meeting on 12/14/05 (see here).  The transcript of the meeting is now available on the SEC’s website (click here).  Today I want to talk about a different recommendation adopted by the committee that has not received much if any attention but is arguably more important for small companies (at least small emerging companies) than the proposed S404 exemption.  I’m referring to the recommendation to “[a]dopt a new private offering exemption that does not prohibit general solicitation and advertising for transactions with certain purchasers.â€?  This is something I’ve argued for in the past (see my article, Relaxing the Ban:  It’s Time to Allow General Solicitation and Advertising in Exempt Offerings).  Basically, studies have indicated that there is a funding gap for emerging companies seeking start-up and early-stage private equity.  The funding gap persists notwithstanding large inflows into venture capital funds because as funds have gotten bigger they have by necessity shifted to later-stage and larger deals (see here).  Angel investors could fill this gap but the ban on general solicitation/advertising greatly impedes this.  Hence, my proposal to “relax the ban.â€? [...]

]]> By: Ideoblog http://truthonthemarket.com/2006/01/17/can-the-sec-exempt-small-companies-from-sarbanes-oxley-404/#comment-5175 Tue, 17 Jan 2006 14:01:56 +0000 http://www.truthonthemarket.com/2006/01/17/can-the-sec-exempt-small-companies-from-sarbanes-oxley-404/#comment-5175 Amending SOX 404 for small companies…

Bill Sjostrom has an inaugural post up on TOTM in which he doubts the SEC has the authority to adopt its small business advisory committee’s recommendation to exempt small businesses from Sarbox 404, that Congress should give the SEC the…

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