Sarbanes-Oxley

Volcker and Levitt do not want it relaxed:

WSJ.com - Financial Stars Urge Regulators To Not Dilute Sarbanes-Oxley : A group of financial notables has urged regulators to reject a proposal to exempt thousands of smaller public companies from Sarbanes-Oxley-imposed rules on internal controls. Former Securities and Exchange Chairman Arthur Levitt and former Federal Reserve Chairman Paul Volcker and others warn in a Feb. 13 letter that such a rule relaxation is "misguided" and "simply goes too far" in addressing the concerns of small companies.... A section of Sarbanes-Oxley, a 2002 corporate-governance law, requires public companies to review their financial-reporting systems and safeguards -- so-called internal controls -- to ensure their financial statements aren't susceptible to errors or fraud. Hundreds of companies have spotted internal-control problems and many have had to restate earnings since the internal-controls rules went into effect in late 2004, but smaller companies have complained the rules are disproportionately costly and burdensome for them.

In response, an SEC advisory panel made a recommendation in December that would lead to exempting an estimated 80% of public companies from at least part of the rules. For example, companies with market values below about $125 million would be exempt from the rules entirely; others would face relaxed variations on the rules.... Exempting smaller companies from the internal-controls rules would be a mistake, according to the letter writers. "When new accounting and corporate-fraud scandals develop, as they surely will, people will ask who was responsible for a policy decision resulting in such sweeping exemptions," they wrote. The letter was also signed by John Bogle, the former chairman of Vanguard Group Inc.; John Biggs, the former chairman and chief executive of pension company TIAA-CREF; and Charles Bowsher, former U.S. comptroller general and former head of the Public Oversight Board, the PCAOB's predecessor in regulating the accounting industry...