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
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)
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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.”