Whilst US-listed firms battle to reduce the burden of Sarbanes-Oxley and Congressman Feeney states that the USA is throwing away a hundred years of supremacy in capital formation, the US regulators must be quietly feeling that, despite all the furore, they may have got it right and that, in the long term, history will show that Europe has got it wrong.
Michael Snyder is Chairman of the Policy and Resources Committee of the Court of Common Council of the City of London, responsible for strategy, resources and policy, as well as the City's relations with Westminster and Brussels. Writing in the Financial Times this Monday about corporate fraud, he says, "As the world's leading international centre of financial and business services (bigger in these terms than New York), London - and especially the City of London - risks being a honeypot for white-collar criminals. It is a billion-dollar problem rooted in our trillion-dollar success."
He observes that the UK's reputation for punishing fraudsters could be better. Mr Snyder asks, "How can it be that a serious fraudster who steals more than £1m is sentenced to an average three years in prison, well below the jail time served by a criminal using another sort of acquisitive crime to steal the same amount?" He goes on to say, "In the US, fraudsters and those accused of serious fraud are as likely to wear heavy chains on the way to court as Rolexes and cufflinks."
At the same time as these comments, the UK and European Union regulators are under continued lobbying pressure not to increase regulatory corporate governance obligations and to maintain a light, self-regulatory touch. The UK regulator has reacted by proposing a reduction in external audit obligations for small firms and European exchanges are becoming attractive havens for global companies seeking capital but wishing to avoid the obligations of Sarbanes-Oxley. Are we seeing a transatlantic divide regarding corporate crime and its punishments?
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