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US regulators and supervisors this week called for changes in the forthcoming US regulatory landscape. The Securities and Exchange Commission (SEC), America's financial supervisor, has called for a further one year delay in the implementation of Sarbox Section 404 for small businesses. Additionally, the Federal Deposit Insurance Corporation (FDIC) suggested that changes to the liquidity risk aspects of the New Basel Accord (Basel II) may be needed in the aftermath of the sub-prime crisis.
In his testimony to the US House of Representatives Committee on Small Business, SEC Chairman, Christopher Cox said that the SEC planned to conduct a cost benefit analysis of Section 404 and that he intended to propose to the SEC that they authorised a further one-year delay in implementation for small businesses so that they could base any decisions on the results of the analysis.
Cox concluded by saying “The reforms we have made to the SOX 404 process will be of direct benefit to America's small businesses. We're re-orienting 404 to focus on what truly matters to investors. We've wrenched it away from expensive and unproductive make-work procedures that waste investors' money and distract attention from what's genuinely material. And still, we intend to be cautious and attentive to real-world cost data before phasing in the final compliance requirements for smaller companies.”
The new date, if the delay is agreed, will mean small businesses will have to have applied Section 404 to those accounting years terminating on December 15th 2009.
Also this week, FDIC Chairman Sheila Bair told a risk management conference that supervisory intervention could be needed on managing liquidity. Bair drew short of criticising Basel II, agreed by the FDIC and the three other US national regulators last month, but said that some “mid-course adjustments” may be needed.
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