Thursday, March 31, 2005
Introduction
I am a full time trader and investor, and a part-time student of Objectivism. In the past few months several companies in which I hold long term investments have elected to de-list their stocks due to the exorbitant cost of SarbOx compliance. Having followed the companies over several years, I was quite sure that there was nothing wrong with the companies themselves, and I counted myself happy to own a part of their business. Moreover, as a long term investor, I found myself agreeing with their decision to de-list -- given that the compliance costs were effectively coming out of my own pocket, and the return on investment was minimal, if not negative. Nonetheless, I am worse off than had the regulations never come into effect, since my investments are now much less liquid, and I am deprived of the opportunity to invest in other companies who also have chosen to de-list.
This damage to me as an investor, from a bill touted to “protect” investors, first provoked my interest to look further into the details and implications of the Sarbanes-Oxley legislation.
As a student of objectivism I knew that in principle any government regulation is bad -- but as I looked into the details of the Sarbanes-Oxley Act, I was still staggered by the magnitude of the injustice perpetrated on corporate America (and by extension, on America itself).
Following my preliminary research, I decided to create a site to document the effects of the Sarbanes Oxley Act. My purpose is mostly personal – I want to see first hand, and in relatively real time, the effect, in all its gory details, of the government treating individuals as guilty until proven innocent and of needing protection from themselves. For those acquainted with the Objectivist concept of “chewing”, the site can be thought of as my attempt to chew the implications and effects of this Act in order to concretize the wider principles involved. And although eventually I hope to create a full-blown website documenting my findings and thoughts, in the interim I wanted to start this blog to assist me in keeping track of my research and to solicit comments to help sharpen my thinking on the issues.
The fact that I am focusing on Sarbanes Oxley does not mean that I think it is the most important issue extant. Rather I have chosen to focus on it because it is a relatively new bill, and as such I believe it will be easier to observe the effects as they unfold (as opposed to tracking the effects of Anti-Trust or the establishment of regulatory agencies such as the FDA).
A short survey of sites and editorials critical of the Sarbanes Oxley bill shows that the criticism is aimed mostly at the practical level of implementation, wording and cost-benefit analysis, with little emphasis on the moral or logical aspects. The thrust of this blog will be to show that the critically important aspects are precisely those that have been largely unaddressed, i.e. the danger of reversing the principle of “innocent until proven guilty” to “guilty until proven innocent” and the idea that it is the government’s function to protect citizens from themselves. However, in order to chew the principles properly, one must also observe and compile the actual effects flowing from the bad ideas, and so this blog will document the costs of the regulation, the number of companies dropping out of public markets, CEO’s and CFO’s quitting rather than assuming indefinable or incommensurate risks, etc.
As this blog develops, and with this introduction as context, any constructive comments or criticisms will be welcomed and can be sent to SarboxAsEvil@yahoo.com
This damage to me as an investor, from a bill touted to “protect” investors, first provoked my interest to look further into the details and implications of the Sarbanes-Oxley legislation.
As a student of objectivism I knew that in principle any government regulation is bad -- but as I looked into the details of the Sarbanes-Oxley Act, I was still staggered by the magnitude of the injustice perpetrated on corporate America (and by extension, on America itself).
Following my preliminary research, I decided to create a site to document the effects of the Sarbanes Oxley Act. My purpose is mostly personal – I want to see first hand, and in relatively real time, the effect, in all its gory details, of the government treating individuals as guilty until proven innocent and of needing protection from themselves. For those acquainted with the Objectivist concept of “chewing”, the site can be thought of as my attempt to chew the implications and effects of this Act in order to concretize the wider principles involved. And although eventually I hope to create a full-blown website documenting my findings and thoughts, in the interim I wanted to start this blog to assist me in keeping track of my research and to solicit comments to help sharpen my thinking on the issues.
The fact that I am focusing on Sarbanes Oxley does not mean that I think it is the most important issue extant. Rather I have chosen to focus on it because it is a relatively new bill, and as such I believe it will be easier to observe the effects as they unfold (as opposed to tracking the effects of Anti-Trust or the establishment of regulatory agencies such as the FDA).
A short survey of sites and editorials critical of the Sarbanes Oxley bill shows that the criticism is aimed mostly at the practical level of implementation, wording and cost-benefit analysis, with little emphasis on the moral or logical aspects. The thrust of this blog will be to show that the critically important aspects are precisely those that have been largely unaddressed, i.e. the danger of reversing the principle of “innocent until proven guilty” to “guilty until proven innocent” and the idea that it is the government’s function to protect citizens from themselves. However, in order to chew the principles properly, one must also observe and compile the actual effects flowing from the bad ideas, and so this blog will document the costs of the regulation, the number of companies dropping out of public markets, CEO’s and CFO’s quitting rather than assuming indefinable or incommensurate risks, etc.
As this blog develops, and with this introduction as context, any constructive comments or criticisms will be welcomed and can be sent to SarboxAsEvil@yahoo.com
