A report released Monday by one of the nation’s most powerful business groups recommends six steps for the U.S. to remain competitive in the global financial markets.
The report, issued by the U.S. Chamber of Commerce, is part of a move in Washington, D.C., and elsewhere to roll back regulatory changes made in the wake of corporate scandals.
The report calls for federal regulators to have more leeway to exempt small companies from complying with a controversial section of the Sarbanes-Oxley Act; grant legal safeguards for large auditing firms; and encourage more employers to offer retirement accounts for workers.
Critics contend that undoing existing regulations would hurt investors, leaving them again vulnerable to financial blowups like those that occurred at Enron, WorldCom and others.
“The report misses the mark by a mile,” said Lynn Turner, the Broomfield-based director of research for Glass Lewis & Co., an investor advisory firm.
Turner, who has read the report, described some of the recommendations as “the business community’s Christmas shopping list.”
The changes would produce “a significant decline in investor protections,” said Turner, formerly the chief accountant for the Securities and Exchange Commission.
The report, titled “Commission on the Regulation of U.S. Capital Markets in the 21st Century,” will be featured during a panel discussion Wednesday in Washington.
Prospects are uncertain for the proposals in Congress.
“Politically right now, it would take a greater sense of national urgency than we now have” for the recommendations to be enacted by Congress, said Arthur Culverhouse, commission co-chairman, according to the Financial Times.
Wall Street executives, business groups and small public companies have said for years that regulatory tightening enacted by the Sarbanes-Oxley Act of 2002 is overly costly and time-consuming. Some companies, including at least one based in Colorado, have held initial public offerings overseas, pointing to Sarbanes-Oxley as the reason.
“The competitive position of our capital markets is under strain – from increasingly competitive international markets and from the need to modernize our legal and regulatory frameworks,” the report reads.
However, a report released last month by Goldman Sachs concluded that while government regulations are important, regulatory policy is not the main reason the U.S. share of the global market capitalization has declined since at least 1970.
“We see the growth of capital markets outside the U.S. as the natural consequence of economic growth and market maturation elsewhere,” according to the Goldman report.
Changes proposed in Monday’s report include:
Reform the SEC by folding its compliance division into its operating division.
Enact legislation that incorporates Sarbanes-Oxley into the Securities Exchange Act of 1934.
Encourage public companies to stop issuing quarterly guidance estimates, moving instead to yearly earnings estimates.
Consider safe harbor or damage limits for national audit firms.
Require employers with 21 or more workers to offer retirement plans.
Consolidate the various employer- sponsored retirement plans to encourage saving and reduce administrative costs.
Staff writer Will Shanley can be reached at 303-954-1260 or wshanley@denverpost.com.
