US regulators have moved to ease the burdens of Sarbanes-Oxley after a barrage of complaints that the anti-fraud rules were too onerous and were putting Wall Street at a financial disadvantage.
The proposed revisions to the 2002 legislation, introduced after the scandals at WorldCom and Enron, will relax the requirements for smaller companies, which will no longer have to test all their internal controls. The concern over regulatory complexity is understood to be one of the reasons why many companies have chosen to float in London or Hong Kong in recent years, rather than on the New York Stock Exchange.
The Securities and Exchange Commission also moved yesterday to address the rising incidence of fraud in the burgeoning hedge fund industry, proposing to raise the minimum financial requirements for individuals wanting to invest in the high-risk pools.
At present an individual must have at least $1m (509,000) in net worth or annual income of $200,000. Investors can include the value of their home within the $1m figure. Under the proposals, an individual's assets must be at least $2.5m in investments and cannot include a primary residence.
US hedge funds, now numbering more than 9,000 with assets estimated to exceed $1,000bn, traditionally catered to the rich as well as pension funds, but are luring the less wealthy, some of whom have been badly burnt.
The funds operate with minimal government supervision. Since 2001, the SEC has brought more than 60 cases charging hedge fund managers with defrauding investors of more than $1bn.
In another proposed change, the SEC plans to allow companies to provide shareholders with online delivery of the proxy materials about issues being put to a vote at annual meetings. This is expected to save businesses $500m a year.
© The Daily Telegraph
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