Document Type
Article
Publication Title
European Business Organization Law Review
Publication Date
2015
Volume
4
First Page
213
DOI
https://doi.org/10.1017/S1566752903002131
Abstract
(Excerpt)
After Enron, WorldCom, and other U.S. business scandals, politicians in Washington faced enormous pressure to take swift action to address seemingly widespread malfeasance at U.S. corporations. So only twenty-nine days from disclosure of the accounting irregularities at WorldCom, Congress passed with near unanimity the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley or the Act). When President Bush signed the law, he claimed it was one of “the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt.” The President significantly understated the case because the Act does much more than reform the laws applicable to U.S.- based issuers—a substantial number of the Act’s provisions reach overseas to affect foreign private issuers whose securities trade in the U.S.
Rather than exhaustively cataloging those changes, which have been described at length elsewhere, this article addresses two issues. The article first examines the applicability of U.S. securities regulations and Sarbanes Oxley to foreign issuers. Why did Congress choose to extend Sarbanes-Oxley to foreign private issuers when the U.S. Securities and Exchange Commission (SEC) had traditionally given such issuers special accommodations? It appears that Congress in its rush to legislate simply failed to give much consideration to the issue. The Act itself contains no explicit references to foreign issuers and one has to search long and hard for any reference to them in the legislative history. The inclusion of foreign private issuers was thus not the story of a deliberative legislative body evaluating after extensive debate the proper scope of U.S. regulatory power in a global market—Congress simply applied the Act to all reporting companies, with little apparent consideration of what that meant.
Comments
This version of the article has been accepted for publication, after peer review (when applicable) and is subject to Springer Nature’s AM terms of use, but is not the Version of Record and does not reflect post-acceptance improvements, or any corrections. The Version of Record is available online at: https://doi.org/10.1017/S1566752903002131.