U.S. Chamber Welcomes SEC Delay on SOX 404b

Says Decision will Provide Relief for Small Businesses

WASHINGTON, DC—The Chamber's Center for Capital Markets Competitiveness (CCMC) today commended the U.S. Securities and Exchange Commission for delaying compliance for smaller public companies required under Section 404(b) of the Sarbanes-Oxley (SOX) Act of 2002.

"We commend the SEC for taking action to provide relief for small public companies and their investors during this period of economic recovery," said David Hirschmann, president and CEO of the CCMC. "Small businesses are already facing many economic and regulatory headwinds including trouble accessing capital and credit markets. The substantial compliance cost associated with this provision would have saddled small companies with even more economic burden."

In June, the CCMC requested a one-year extension for nonaccelerated filers to comply with the auditor attestation requirements in section 404(b) of SOX. Small public companies were already incurring costs and engaging auditors to comply with 404(b) while the cost benefit analysis was still taking place.

The CCMC also commended the SEC Office of Economic Analysis on the release of its study on internal control provisions of SOX 404. The CCMC has supported the SEC's commitment over the last year to conduct an appropriate analysis of the costs and benefits of public company compliance with SOX section 404.

The study recognizes that companies bear some fixed start-up costs of compliance that are not scalable, regardless of company size. Some of these costs are recurring fixed costs, while others are one-time start-up costs borne in the first years of compliance that tend to dissipate over time. The CCMC continues to support the objectives of SOX, including improved internal controls. At the same time, the CCMC has also been a strong advocate for minimizing the disproportionate cost burden of Section 404(b) on smaller public companies.

"The current economic environment made this delay critical for small companies," said Hirschmann. "Without this delay, these companies would have been faced with significantly increased compliance costs during the worst economic crisis in 75 years."

The U.S. Chamber is the world's largest business federation representing more than 3 million businesses and organizations of every size, sector, and region.

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