Mark Hynes - thoughts on corporate disclosure

Opinions on changing rules, changing best practices, and their effect on investor relations officers.

Tuesday, December 05, 2006

And the battle on US competitiveness rages on…

2 new developments

First, the private Committee on Capital Markets Regulation has released a report, arguing that regulation, enforcement and litigation have become a weighty burden on the economy. The committee – in its own words “dedicated to improving the competitiveness of the U.S. capital markets by reducing regulation and litigation while enhancing the rights of shareholders” claims evidence that America's capital markets have lost some of their appeal.

The report, rehearsing the regular arguments about competitiveness, warned that the U.S. is losing its dominant role in the launch of new public companies, saying "5 percent of the value of global initial public offerings was raised in the U.S. last year, compared with 50 percent in 2000."

It makes 32 recommendations, including the key “The SEC should adopt a more reasonable materiality standard both for internal controls and financial statements”. This appears to suggest that SOX should be modified. The report also specifically says that the SEC should offer guidance on what information is material (Rule 105-b), and hence should be disclosed.

Meanwhile the change in regulatory structure at NASD and NYSE, could signal a change of heart, leading to a lessening of obligations on listed companies. Under this change, the regulatory oversight of exchange members has been combined into a single organisation. The interesting point about this was that the SEC chaired the press launch of the announcement, showing its support.

Will this lead to a common – and potentially less invasive – regulatory structure for listed companies? There appear to be many who believe it should.


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