Sarbanes Oxley and All Similar Legislation Should Be Repealed

First, some definitions. Sarbanes-Oxley Act: An act signed in 2002 mandating stringent and expensive corporate reporting standards for the sake of protecting investors. . http://en.wikipedia.org... Similar Legislation: Any other act mandating reporting standards for the sake of protecting investors. Social Benefit: A benefit to society as a whole external to a select group. Social Cost: A cost to society external to a select group. I have three reasons for believing that Sarbanes-Oxley and similar legislation should be repealed. First, the "social cost" of corporate failures are borne almost solely by the investors and the employees and therefore are not a concern of the people. Second, investors and employees are perfectly capable of policing said corporations without the help of the government, making government help in doing so something of a public subsidy to the corporate sector. Third, corporations that fail due to an inability to prevent fraud and negligence through organizational control or ability to boost morale and loyalty deserve to fail and should not be prevented from doing so by the government. My first point is that the costs of corporate failures are borne by a very select group of people, the employees of the failed corporations and their investors. The public does not really suffer from organizational collapses in anything but the short term. Factories are sold off, employees find new jobs, office buildings are re-branded. The fact that the suffering is limited to a select group of people would not, of course, normally stand on its own, since murder victims are also a select group of people. It is, however, substantially strengthened by my second point, that investors are perfectly capable of policing their investments themselves. Bernie Madoff's Ponzi scheme was flagged by a small investment advising firm called Aksia long before it collapsed. . http://www.bloomberg.com... This goes to show that investors have all the resources needed to ensure the soundness of their investments and then some. Of course, the fact that investors are able to defend themselves from fraud does not mean that the government shouldn't step in. After all, even if one carries a gun, one can still reasonably expect the police to help him if he is mugged or robbed. However, if one is to assume that the government should protect investments, where does it end? Should the government have a hand in making sure that employees spend their time as productively as possible, that secretaries don't make personal calls and swipe office supplies? Yes, embezzlement is theft, but technically, so is goofing off on "company time". And finally, corporations that are unable to prevent fraud, either through intelligent policy or through inspiration, should fail. In either case, the shareholders are simply incompetent. Incompetent people simply should not benefit from a capitalistic society, especially if they are at its apex. Corporate enforcement by the government is, in many ways, subsidized management. Corporations are meant to be self-interested capitalistic entities; they should not receive subsidies of any kind. Ultimately, the only real purpose Sarbanes-Oxley and other legislation of its kind really serve is that of legally cementing shareholder control. They transform the corporation, normally a free-market entity, into an authoritarian one. Actions that are normally motivated by rational self-interest become instead forced by law. The virtue of capitalism is that it ensures cooperation not through punishment, but through reward. To bring the legal system into the world of corporate governance is to betray this principle.