Sarbanes And The States
Mondaq Business Briefing › Switzerland Law Articles in English (2004)
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Sarbanes And The States
By Professor Stephen J. Redner
Copyright 2003The year that has passed since the passage of the Sarbanes-Oxley Act of 2002 ("Sarbanes"), and subsequent Securities and Exchange Commission ("SEC") interpretive rules, permits sufficient perspective for an initial examination of its effect throughout the various states. Fifteen states have seriously considered adoptive legislation only to permit the particular bills to be largely tabled, rejected, or watered-down. The major objection to adaptation of Sarbanes is that it would be overly burdensome and oppressive on smaller businesses. This objection is understandable given the applicability of Sarbanes to only corporations with over 500 shareholders. Some state legislators have suggested that a reasonable standard for private businesses with fewer shareholders would be to apply the equivalent state statutes to businesses with more than 20 employees. But even in these cases the Sarbanes and subsequent SEC rules were considered too burdensome and irrelevant to the requirements of small businesses.States which have considered such legislation are: California, Colorado, Connecticut, Florida, Illinois, Kentucky, Maryland, Massachusetts, Montana, New Jersey, New Mexico, Ohio, New York, Texas, and Washington. Progress in each of these states will be examined, and in the process the general tenor and philosophy of the legislatures should become evident. (See http://www.aicpa.org/download/statelegis/state_acctg_reform_legislation.pdf for regularly updated information.)CaliforniaOne would expect pathfinder California to lead the national trend. If so, there is trouble afoot for those wishing a cascading effect of Sarbanes upon state securities and accountancy laws. Reality and hea...See the full content of this document
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