A group of financial industry dignitaries is urging the Securities and Exchange Commission to drop plans to require only the top 20% of companies to have their internal controls approved by auditors. In a letter sent by a group including former Federal Reserve Chairman Paul Volcker and former SEC Chairman Arthur Levitt, the signatories stressed that to exempt 80% of all companies – namely those with under $700 million in stock value -- would leaves Sarbanes-Oxley Act practically toothless by tampering with a measure intended to protect against accounting and other types of fraud.
The commission’s Advisory Committee on Smaller Public Companies reportedly will recommend the change in the rule this spring.
In its letter, the group stated, “It would be unfortunate now if the SEC and [the Public Company Accounting Oversight Board] undercut the effectiveness of congressional legislation through misguided regulator action.”
Other members of the letter-writing group include John Biggs, former chairman and chief executive of TIAA-CREF; John Bogle, founder and former chairman of The Vanguard Group; and former U.S. Comptroller General Charles Bowsher.