SEC Chairman Opposes Sarbanes Exemption

Securities and Exchange Commission Chairman Christopher Cox said Monday that small companies would not get an exemption from Sarbanes-Oxley rules that require independent auditors to certify they are complying with securities laws.

An SEC advisory panel recommended in December that only the largest 20% of public companies be required to have outside accountants certify their systems of protecting assets, reporting financial information and complying with regulations. The panel was set up to address concerns about costs of complying with the 2002 Sarbanes-Oxley law.

Cox, in his first public comments on the issue, ruled out a full exemption for small companies from the certification rules, known as Section 404.

“Our emphasis is on making 404 work and implementing it in a cost-effective and investor-protected way, rather than simply waiving it,” Cox told reporters after a speech to a Stanford Law School forum on corporate governance in Washington.

Business lobby groups including the U.S. Chamber of Commerce have been pushing for revisions, saying that smaller companies cannot afford to comply with the requirements. But three former SEC chairmen -- William H. Donaldson, Arthur Levitt and Richard Breeden -- recently spoke out against a blanket exemption for small companies.

The SEC has already given small companies more time to comply with the auditing requirement to satisfy opponents, including Financial Executives International, a professional group.

The SEC advisory committee is scheduled to present its recommendations on Sarbanes-Oxley revisions in a final report to the commission this month.