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White House Move Bad News for Investors

It's trying to weaken protections put in place after Enron

By Kevin Spak,  Newser Staff

Posted Nov 3, 2009 11:23 AM CST
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(Newser) – Belying its reputation as financial regulatory crusaders, the White House is quietly working to weaken a protection for everyday investors. Rahm Emanuel is pushing lawmakers to back an amendment that would exempt smaller companies from audits of their internal controls, sources tell the Huffington Post. The stricter controls, established by Sarbanes-Oxley after the Enron scandal, are scheduled to kick in next year for companies with market caps under $75 million.

Emanuel is reportedly arguing that the small companies aren’t the ones causing the problems, and that by nixing the requirements Democrats could paint themselves as small-business heroes. But critics counter that the measure affects more than half of all publicly-traded companies—"They're not mom and pop shops," says one—and is important to individual investors. “This is something the Republicans could never have accomplished,” says one ex-SEC chief. “It makes a mockery of what the Democratic Party has always stood for—individual investors.”

Barack Obama meets with his Economic Recovery Advisory Board, Nov. 2, 2009, in the White House. Sitting behind him are Rahm Emanuel, left, and Valerie Jarrett.
Barack Obama meets with his Economic Recovery Advisory Board, Nov. 2, 2009, in the White House. Sitting behind him are Rahm Emanuel, left, and Valerie Jarrett.   (AP Photo/Pablo Martinez Monsivais)
White House Chief of Staff Rahm Emanuel, left, and Office of Management and Budget Director Peter Orszag, right, walk in the Capitol in this file photo.
White House Chief of Staff Rahm Emanuel, left, and Office of Management and Budget Director Peter Orszag, right, walk in the Capitol in this file photo.   (AP Photo/Manuel Balce Ceneta)
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COMMENTS
Showing 3 of 16 comments
Spudsy
Nov 4, 2009 4:32 AM CST
Bad move by the Dems. Small stocks are already so risky.
fancygapva
Nov 4, 2009 1:31 AM CST
Thank you. Very clear exposition of the situation/problem.
JoeQ
Nov 3, 2009 10:40 AM CST
A company that is publicly traded on a major exchange is not a mom and pop outfit, so this hardly helps them out. There are all sorts of small companies (penny stocks) offered on the OTCBB (Over The Counter Bulletin Board) that are badly affected by the Sarbanes Oxley Act, but most of them are crooked. The Obama administration should not be doing this, in my opinion. They might be able to improve on the efficiency of Sarbanes Oxley, but they should not weaken it.

 
Sarbanes Oxley • Rahm Emanuel • regulation • Obama administration • financial reform

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