Freeman on Sarbox

James Freeman (JF) blasts Sarbox at the WSJ, 7 December 2009: http://online.wsj.com/article/SB10001424052748704431804574539921864252380.html. JF notes, "On the other hand, news of potential relief from the law pushes up American stock prices. That's not a vote of confidence from the people supposed to benefit from the law". No it isn't. Cost-benefit analysis anyone? Nah, just say the mantra, "internal controls good. Lack of internal controls bad".

"As the CEO of a small bank, I know first-hand that internal and external audit costs for Sarbox compliance can easily reach six figures. ... The questions the [SEC] should be asking are: Would any of these accounting and disclosure regulations help discover or prevent the massive big bank and Lehman Brothers failures or AIG's near collapse? Do small companies under the SEC represent the real risk to our financial system and economy? I suspect the answer is a resounding no", Allen Sterling letter to the WSJ, 16 December 2009: http://online.wsj.com/article/SB10001424052748704869304574596441223615728.html.

Yes Sterling.