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Sarbanes-Oxley Sponsor Defends Measure, Attacks Rollback Effort
By SIOBHAN HUGHES
The Wall Street Journal
Friday, March 24, 2006

WASHINGTON -- Sen. Paul Sarbanes offered a sweeping defense of the landmark corporate-governance law he co-authored and suggested that efforts to roll it back are on shaky legal footing.

"We need to remind those who complain that Congress overreacted or overreached in passing Sarbanes-Oxley of several crucial points," the Maryland Democrat said in remarks to the Consumer Federation of America.

The Sarbanes-Oxley Act of 2002 created the Public Company Accounting Oversight Board, bringing the accounting industry under regulation for the first time. It also required public companies to hire outside auditors to monitor their processes for assuring the integrity of financial statements. The law followed accounting scandals that led Enron Corp. and WorldCom Inc., now part of Verizon Communications Inc., to file for the largest bankruptcy reorganizations in U.S. history.

Critics have asserted the law was enacted hastily and created too many burdens for companies. A conservative group has filed a civil lawsuit seeking to abolish the PCAOB. An advisory panel created by the Securities and Exchange Commission is calling for the exemption of the smallest 80% of public companies from a key internal-controls requirement of the law.

"It's asserted by some that the law was enacted in haste," Mr. Sarbanes said. "I think this is an affront to the hard work and the common sense of the members of Congress who shaped the legislation, moved it through their respective houses and voted for it. We had an extremely thorough, careful set of hearings."

Mr. Sarbanes -- who was chairman of the Senate Banking Committee when the law was enacted -- took particular exception to a lawsuit filed by the Free Enterprise Fund, a Washington, D.C., nonprofit group, that seeks to have the PCAOB declared unconstitutional.

"The structure was reviewed by the American law division of the Congressional Research Service and several distinguished professors of constitutional law," Mr. Sarbanes said, and "all approved of the structure."

Write to Siobhan Hughes at siobhan.hughes@dowjones.com

http://online.wsj.com/article/SB114316488995807047.html?mod=home_whats_news_us