Sarbanes-Oxley Sponsor Defends Measure, Attacks Rollback
By SIOBHAN HUGHES
The Wall Street Journal
Friday, March 24, 2006
WASHINGTON -- Sen. Paul Sarbanes offered a sweeping defense
of the landmark corporate-governance law he co-authored and
suggested that efforts to roll it back are on shaky legal
"We need to remind those who complain that Congress
overreacted or overreached in passing Sarbanes-Oxley of
several crucial points," the Maryland Democrat said in
remarks to the Consumer Federation of America.
The Sarbanes-Oxley Act of 2002 created the Public Company
Accounting Oversight Board, bringing the accounting industry
under regulation for the first time. It also required public
companies to hire outside auditors to monitor their
processes for assuring the integrity of financial
statements. The law followed accounting scandals that led
Enron Corp. and WorldCom Inc., now part of Verizon
Communications Inc., to file for the largest bankruptcy
reorganizations in U.S. history.
Critics have asserted the law was enacted hastily and
created too many burdens for companies. A conservative group
has filed a civil lawsuit seeking to abolish the PCAOB. An
advisory panel created by the Securities and Exchange
Commission is calling for the exemption of the smallest 80%
of public companies from a key internal-controls requirement
of the law.
"It's asserted by some that the law was enacted in haste,"
Mr. Sarbanes said. "I think this is an affront to the hard
work and the common sense of the members of Congress who
shaped the legislation, moved it through their respective
houses and voted for it. We had an extremely thorough,
careful set of hearings."
Mr. Sarbanes -- who was chairman of the Senate Banking
Committee when the law was enacted -- took particular
exception to a lawsuit filed by the Free Enterprise Fund, a
Washington, D.C., nonprofit group, that seeks to have the
PCAOB declared unconstitutional.
"The structure was reviewed by the American law division of
the Congressional Research Service and several distinguished
professors of constitutional law," Mr. Sarbanes said, and
"all approved of the structure."
Siobhan Hughes at