sarbanes oxley act section 404_______________________________________Advertisement There are many people today who instead of focusing on the positives of the sarbanes oxley act section 404 Act of 2002, choose instead to see only the disadvantage of sarbanes oxley act section 404. To clearly see the disadvantage of Sarbanes Oxley you need to understand the basic idea behind why it was passed and what it was meant to do in execution. sarbanes oxley act section 404 was passed in 2002 after the many stock market scandals involving the securities trade. In seemed in the early 2000’s there was scandal after scandal involving CEO’s of major companies such as Adelphia and Enron. What was basically happening is that these big businesses were aware that share values were going to drop in their portion of the securities market, and so instead of taking the hit, were engaging in hedge trading and insider trading the night before the value drops would hit the stock market. Thus the companies would profit, and the shares would drop even lower, so that only the public patrons who owned stock would take the hit, and it was a much more massive hit due to the inside trading that was occurring. Many citizens lost their retirement funds including their 401ks and IRA’s. The government stepped in to solve this problem and prevent it from happening again by creating the sarbanes oxley act section 404 Act as a general set of rules and regulations for big business in the securities market that would protect the public and outlaw clearly this type of behavior. However, many people say that the huge control the government took over big business was a disadvantage of sarbanes oxley act section 404 because it was too restrictive and therefore does not allow businesses to compete internationally with other companies in the securities market. The opponents complain that the disadvantage of sarbanes oxley act section 404 is that it should in theory help rebuild the securities market for the general public, but that business needs to be less legislated in order for this to happen. Opponents also argue that it is a huge disadvantage of Sarbanes Oxley to place such close legislation holding CEO’s responsible directly for their businesses financial statements, because this paves the way for the government to be allowed to take too much control of the business sector of the USA. Since FDR’s time period, there has always been a debate about government control in business reform, and opponents claim that the disadvantage of sarbanes oxley act section 404 is that now the government will place its reigns too tightly around more businesses as time goes on. |