SEC Reforms May Initiate Movement Back to the US Markets


It has now been five years since the adoption of the US Sarbanes-Oxley Act. Although the corporate scandals that spurred the introduction of the Act have receded somewhat from the headlines, Sarbanes-Oxley and the compliance requirements it imposes remain fresh in the minds of

non-US companies and their advisors. Concerns about US regulation have arguably resulted in fewer non-US companies accessing the US public markets. Certainly, the statistics have shown a clear decline in US exchanges’ market share of IPOs by non-US companies. But recent reforms may stem this decline.

For some time after Sarbanes-Oxley was passed, there was more action simply to implement the law than to address the concerns about its implementation. As non-US companies continued to avoid the US markets and domestic market participants struggled to deal with new regulations,

however, complaints about the US regulatory regime gained momentum. In particular, the past 12 months have seen members at the highest levels of government call for reforms. In addition to initiatives by the Bush Administration, the US Congress has held a number of hearings, and earlier this year Senator Charles Schumer and New York Mayor Michael Bloomberg issued an extensive

report calling for action.

A series of recent initiatives by the US Securities and Exchange Commission (SEC), the main US market regulator, shows that it takes these concerns seriously. These actions could make it much easier for non-US companies to tap the US markets, and might especially benefit small- to mediumcapitalisation entities. Some of the more significant recent proposals include:

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