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MARSHALL, Mich., Sept. 3, 2003.—Despite the hullabaloo about new government regulations—specifically, the Sarbanes-Oxley Act (SOx)—not everyone agrees they've been a boon to investors.
Sid Cato, who monitors the world's annual reports full time here, said he thinks many corporations saw SOx, a response to last year's corporate corruption, as a way to protest their integrity while shortchanging the stockholder. He cites the record number of legalistic Form 10-Ks included in 2002 reports, a direct result of SOx—though, Cato says, "never intended for popular consumption; it's a legalistic document required for filing with the Securities and Exchange Commission, never intended for private individuals." He said one in five 2002 reports relied "in whole or in part" on the legalistic 10-K—and, what's more, "more than four of five (81.3%) failed to apprise stockholders that the document they were in receipt of was truncated, not intended for popular consumption." Cato said "Fuller disclosure hasn't materialized—on the contrary. By my standards, seldom have so many obfuscated so much." |