Sarbanes Oxley and All Similar Legislation Should Be Repealed

Thank you. Your points are marked as >>. >>Why must those statements be honest by law? Is it because they are economically potent? Then pretty much every advertisement would be banned. Are you saying that there should be no law against falsifying financial statements? Advertisements employ the art of persuasion, where rhetoric and innuendo are appropriate. Financial statements should be factually accurate by law because altering them with incorrect information and causing people to invest money based on that false information is exactly the kind of thing which people should be prohibited from doing. >>Some companies fail because of corporate malfeasance, but not all of them. In fact, the vast majority of them don't… [a]nd when one corporation fails, its productivity in society doesn't evaporate forever. I understand that most corporate failures don't occur from corporate malfeasance. In fact, I spoke on that point in the first round. I also understand that economies eventually recover and that successful businesses absorb their weaker and defunct competition. However, just because corporate fraud doesn't affect every company does not mean it should be left unregulated by law. >>I do not think it is the business of the government … to manipulate what people feel, period. To say otherwise is paternalistic and naive at best, totalitarian at worst. I never said or implied that the government should manipulate the way people feel. I was discussing the social harm associated with the dishonest and fraudulent activity of corporate executives – which you argue does not exist because Corporate America is not homogeneous? You argued in the first round that corporate failures do not cause a social harm. Your blanket assertion did not distinguish between the different causes of those failures. However, even if you intended to limit your argument to corporate failures caused by white collar crime, my position still holds. Corporations are connected to every part of society in some form or another. A corporate failure creates problems for society beyond its employees and investors. Corporations are suppliers, distributors and manufacturers of goods and products that keep society going. The effects of corporate failures, without distinction, are not isolated to investors and employees. A failure caused by white collar dishonesty just brings a criminal element into the mix and that is why SOX is there. SOX is not intended to protect investors from corporate failure; it is intended, in part, to protect investors from crooked practices. >>This current economic crisis is occurring for reasons that have nothing to do with embezzlement and everything to do with inflated government credit. I did not address the causes of the current economic crisis in the first round. I discussed the current economic crisis in the context of social harm, specifically in connection with Corporate America, which includes banks, car manufacturers and finance companies. You claim that a social harm does not exist. When businesses fail, it affects more than just the investors and employees, who make up a large portion of society anyway. It affects consumers, related businesses and economies as well. This effect equates to a social harm. >>[I]t is sufficient that investors detect "red flags[.]" Sufficient for what? Early detection of a dubious investment is a utopian notion. In reality, deception often goes undetected for a substantial period of time or occurs after a period of ostensibly legitimate activity and practices. Such was the case in all of the pre-SOX corporate debacles. Red flags don't just pop up at the first instance of fraudulent activity. By the time they do, it may already be too late. To equate spotting a crack-head on the edge of a sketchy neighborhood to recognizing sophisticated and surreptitious white collar crime is a bit of a stretch. >>Whose interests do these concerns serve if not those of shareholders? Who would care about any of this besides the shareholders? SOX serves the interests of people who disagree with the notion of getting ripped off, which includes me, the government and an overwhelming majority of the country. >>There are many ways for smart shareholders to protect themselves from liars and crooks. They can run the companies themselves, they can gather enough competent, trustworthy contacts to fill those positions, etc. Why should the government have a hand in this? Assuming it should, what are the limits of their involvement? A large number of shareholders cannot practically or effectively run a corporation without delegating certain roles to certain members. SOX sets a legal standard for these trusted positions, as it should for the power they hold. It is not an intrusion into capitalism. It is a barrier to crooked capitalism. It is a response to the pattern of corrupt and selfish behavior of Corporate America where criminal minds use numbers as weapons. The government should "have a hand in this" because it carries the authority of law and the teeth of enforceability. Businesses cannot put people behind bars. >>When you own a company, that company is yours. At the same time, a corporation is not nearly as concrete or vital to the owner's survival as, say, a house. You live in your house; your house is necessary for your warmth and protection, and so the police help protect it. The same is not true of a corporation. Are you saying the law should only protect property that is necessary to survival? The law protects me from someone stealing my wallet, even if I only had $1 in it. So why shouldn't it protect me from someone stealing my investments? In the context of Corporate America, SOX decreases the incentive, opportunity and means to cheat the public and allows for the harsh punishment of those who attempt to do so. I see nothing wrong with that purpose, and I support the government's role in effecting that goal.