National Venture Capital Association Statement on the Interim Report From the Committee on Capital Markets Regulation

Association Asserts Recommendations Fall Far Short of Meaningful Progress



30 Nov, 2006, 00:00 ET from National Venture Capital Association (NVCA)

    WASHINGTON D.C., Nov. 30 /PRNewswire/ -- The following statement
 represents the position of the National Venture Capital Association (NVCA).
 Comments may be attributed to Mark G. Heesen, President of the NVCA:
     Today's Interim Report from the Committee on Capital Markets Regulation
 confirmed several of the premises that the National Venture Capital
 Association has been asserting for some time. First, the benefits of
 Sarbanes Oxley Section 404 are uncertain. Second, the costs of implementing
 that section have been dramatically higher than originally estimated. The
 Committee estimates the cost at 35 times higher. Finally, Sarbanes Oxley
 404 has been disproportionately burdensome to small companies.
     Given such compelling evidence, it is surprising that the reforms
 suggested by the Committee did not go further to relieve the SOX 404 burden
 for smaller companies. As currently written, the Committee's
 recommendations are not sufficient and will do little to support the
 emerging enterprises we are trying to protect. Specifically, under the
 Committee's recommendations, the scope of small businesses that would be
 included in relief measures is much narrower than recent proposals made by
 the SEC Committee on Smaller Public Companies. The Committee specifically
 limits continued deferral of compliance to non-accelerated filers, which is
 a very small subset of those companies requiring relief. Further, the
 Committee suggests either subjecting small companies to the same (revised)
 404 requirements as large companies or asking Congress to reshape an
 exemption for small companies. Such a recommendation lacks a sense of
 understanding or urgency as to what needs to be accomplished. Lastly, the
 Committee's hasty dismissal of the "design audit" proposal eliminates what
 could be a viable reform measure.
     While we appreciate the Committee's efforts and recognize that these
 recommendations were developed in an inordinately short time frame, the
 NVCA believes, in most instances, the recommendations are a step backwards
 based on work and recommendations that have already been put forth. We
 believe the SEC fully understands the challenges associated with Sarbanes
 Oxley reform and is working in good faith alongside the PCAOB with a
 broader range of stakeholders.
 
 

SOURCE National Venture Capital Association (NVCA)
    WASHINGTON D.C., Nov. 30 /PRNewswire/ -- The following statement
 represents the position of the National Venture Capital Association (NVCA).
 Comments may be attributed to Mark G. Heesen, President of the NVCA:
     Today's Interim Report from the Committee on Capital Markets Regulation
 confirmed several of the premises that the National Venture Capital
 Association has been asserting for some time. First, the benefits of
 Sarbanes Oxley Section 404 are uncertain. Second, the costs of implementing
 that section have been dramatically higher than originally estimated. The
 Committee estimates the cost at 35 times higher. Finally, Sarbanes Oxley
 404 has been disproportionately burdensome to small companies.
     Given such compelling evidence, it is surprising that the reforms
 suggested by the Committee did not go further to relieve the SOX 404 burden
 for smaller companies. As currently written, the Committee's
 recommendations are not sufficient and will do little to support the
 emerging enterprises we are trying to protect. Specifically, under the
 Committee's recommendations, the scope of small businesses that would be
 included in relief measures is much narrower than recent proposals made by
 the SEC Committee on Smaller Public Companies. The Committee specifically
 limits continued deferral of compliance to non-accelerated filers, which is
 a very small subset of those companies requiring relief. Further, the
 Committee suggests either subjecting small companies to the same (revised)
 404 requirements as large companies or asking Congress to reshape an
 exemption for small companies. Such a recommendation lacks a sense of
 understanding or urgency as to what needs to be accomplished. Lastly, the
 Committee's hasty dismissal of the "design audit" proposal eliminates what
 could be a viable reform measure.
     While we appreciate the Committee's efforts and recognize that these
 recommendations were developed in an inordinately short time frame, the
 NVCA believes, in most instances, the recommendations are a step backwards
 based on work and recommendations that have already been put forth. We
 believe the SEC fully understands the challenges associated with Sarbanes
 Oxley reform and is working in good faith alongside the PCAOB with a
 broader range of stakeholders.
 
 SOURCE National Venture Capital Association (NVCA)