Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:
Business Wins Its Battle to Ease A Costly Sarbanes-Oxley Rule [Wall Street Journal]
Summary: Business has won the battle to ease the most disputed section of the Sarbanes-Oxley corporate-reform law, which passed in 2004 in the wake of the Enron scandal: that companies must review their systems for ensuring accurate financial reports and then have them tested by outside auditors. The U.S. business lobby has complained the section is too broad, and results in huge expenses to document things that "have nothing to do with the integrity of their financial statements." A study documented that companies spent an average $3.8M in 2005 to comply. Section 404, as it's known, has been blamed for discouraging companies from going public in the U.S.; of 20 top IPOs this year, only three have been in the U.S. Of course some business have been netting huge profits helping big business comply with the law: The Big Four accounting firms (PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG); and IBM, Oracle, SAP AG and Microsoft have all released software to help businesses adhere to the rule. The SEC, which has admitted the law might be overly conservative, said it will unveil its changes next month; until then it remains to be seen just how broad they will be.
Related links: Commentary: Politics and The Market • Maybe Regulation Costs Aren't As Excessive As Everyone Thinks
Potentially impacted stocks and ETFs: International Business Machines Corp. (NYSE:IBM), Oracle Corp. (NYSE:ORCL), SAP AG (NYSE:SAP), Microsoft Corp. (NASDAQ:MSFT)
Seeking Alpha is not affiliated with Wall Street Journal.