The Supreme Case Against Sarbanes Oxley | Hacker News Reader

The Supreme Case Against Sarbanes Oxley

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16 pointsgrellas13 comments

The only people who like Sarbanes Oxley are those who are employed in order to comply with these regulations. The costs to private business aren't justifiable. Any public company can go bankrupt at any time just like Enron did. There's no sense in treating every corporation like criminals because some people lost some money in the stock market. I think the lesson here is that people need to become better educated in just how risky the stock market is and consider that before investing anything in it.

While I agree that Sarbanes-Oxley Act is a tremendous burden on business, Enron was criminal fraud perpetrated by the company's executives and the accounting firm that was supposed to be overseeing them. When a company fails transparently, it's typically not an overnight collapse that destroys the entire value of the company.

I think the lesson here is to find a balance between the overreaction that is Sarbanes-Oxley and the criminal frauds that were Enron/Arthur-Anderdon, WorldCom, etc.

I think that balance is prosecuting the fraudsters. There have always been laws against fraud. Locks keep out the honest people. The criminals are going to find ways around SOX too.

I think the real solution here is to stop treating corporations like individuals. Stop allowing them to contribute to political campaigns. End soft money. The enron guys were in bed with washington. You have to end that kind of relationship to prevent the power shift that pushed the balance to the corporations.

> I think the real solution here is to stop treating corporations like individuals. Stop allowing them to contribute to political campaigns. End soft money. The enron guys were in bed with washington.

Campaign contributions are the weakest way that corps influence DC. Ending it won't matter in the slightest, and neither will public financing.

The only way to keep corps from getting favors from DC is to make sure that DC doesn't have the ability to give favors. Regulatory capture is unavoidable.

I think preventing reciprocity for the behaviors that benefit corporations is a step in the right direction.

Nope - it's a waste of time to even try.

Your intent does not determine the effect of various measures. Regulatory capture does (at least in this domain).

Yes, even if it would be a small step.

The mere knowledge that Enron happened was enough for private actors to adjust their behavior, tilt a little more towards vigilance and skepticism, and thus prevent an exact repeat.

Sarbanes-Oxley was superfluous grandstanding -- the ritual enactment of an attractive but false narrative where regulators rush in as saviors -- except too late, too costly, and wasting attention on the last problem (Enron) instead of the next (subprime/Fannie/overleveraged banks).

The greatest favor the government could do would be adopt the discipline and restraint to say, "yes, sometimes markets blow up in new ways, but the lessons of the blow up may be enough for everyone to adapt and protect themselves -- new legislation isn't necessarily required by every boom-bust". (Unfortunately, the election/news political cycle makes this sort of calm, measured response almost impossible.)

The only people who like Sarbanes Oxley are those who are employed in order to comply with these regulations.

Hey, Sarbanes Oxley compliance auditors need to eat too.

> I think the lesson here is that people need to become better educated in just how risky the stock market is and consider that before investing anything in it.

Tell that to Warren Buffet.

Company financial statements are like porn to Warren Buffet (his words).

The average investor doesn't do nearly as much research or thinking about their investments.

Meanwhile, brokers and fund companies have a vested interest in making investing seem simple, predictable, and effortless.

Not to mention that Warrent Buffet rarely buys common stock on the open market, much less mutual funds.

Worse is Better

http://en.wikipedia.org/wiki/Worse_is_better

Does it suck that bad things happen sometimes (enron)? Yes, but the extra complexity is worse than the original problem.

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