Corporate reform law defended

The authors of the Sarbanes-Oxley corporate reform law defended it Monday from criticism that it was hurting the country’s capital markets.

Former Sen. Paul S. Sarbanes (D-Md.), who wrote the law with former Rep. Michael G. Oxley (R-Ohio), said at an event in Washington to mark its fifth anniversary that it should not be amended.

“Our goal was to restore investor confidence” after a wave of corporate scandals that began with the 2001 collapse of Enron Corp., Sarbanes said. “That’s what we did.”

Business groups say the act has saddled companies with unnecessary costs and discouraged risk-taking.

Critics have especially derided Section 404 of the law, which requires corporate managers to assess whether they have sufficient safeguards to catch fraud and bookkeeping errors. They must also have those protections certified by an outside auditor.

Some critics also complain that Sarbanes-Oxley is driving public stock offerings away from the U.S. But Sarbanes said that a shift to overseas markets had been occurring before the act was passed and that this was a natural consequence of economic growth worldwide.