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U.S. Securities and Exchange Commission

Responses to ACSPC Request for Public Input

General Impact of Sarbanes-Oxley Act

Question 8. Has the current securities regulatory system had an impact on the amount and type of litigation to which smaller companies are subject? Has the overall impact on companies, investors and markets taken as a whole been positive or negative? Please explain.

The following answers have been received:

08/02/2005 13:57:44   No discernable effect on litigation so far that I can tell.

08/02/2005 17:44:12   It will be a field day for attorneys once lawsuits start happening. It makes it difficult to get independent directors and to retain executives.

08/03/2005 01:39:17   It is difficult to know at this time. However, without tort reform to reduce lawsuits, our entire system is very vulnerable to defensive activities by all parties in our system. At this time audit firms are taking this audit process to lengths very few can imagine, perhaps in either their fear of lawsuits or their self-serving interests.

08/03/2005 07:01:34   i dont think so...maybe time and statistics will determine that..

08/03/2005 08:55:04   I really do not know. Have not been affected.

08/03/2005 10:40:26   No, we never had any issues as related to litigation. We still have CPA prepared financial statements and internal auditing done. We just spend 5 times the amount of money to get it done. The overall impact on small companies has been negative.

08/03/2005 11:03:25   Not for us, possibly for CPA firms.

08/03/2005 12:17:58   look at all the small coompanies that want out of the dtcc due to naked shorting and the so called stock loan program. it is ruining companies and destorying shareholder value. shame shame

08/03/2005 13:55:42   Negative.

08/03/2005 15:01:40   I do not have enough information to determine the answer to this question. I do think there should be a limit that lawyers can collect in class action litigation against a public company. Investors get nothing and lawyers make fortunes in many of these cases.

08/03/2005 15:22:49   Our company has had no investor litigation.

08/03/2005 18:01:35   Please look into item no 29

08/03/2005 18:30:29   x

08/03/2005 19:54:33   The current regulatory system has made it necessary for the company I know about, to hire several very expensive lawyers to try to first, understand what it is the SEC wants from the company, and second, to try to find knowledgeable experts to prepare and deliver the items the SEC is demanding. This extra expense takes money directly away from the production activities of the company, and channels it into extraneous, unrelated functions which will provide the company woith zero return on investment (except for the fact that the SEC will be satisfied). Overall, the impact on the company appears to be negative. The insiders appear to be frustrated in trying to find appropriate knowledgeable experts to complete the materials the SEC demands. There have been indications that someone from the SEC has actually been interfering with this process, making it even more difficult to fulfill. The investors are anxious, angry, and frustrated with anything having to do with the company and the SEC. Although it appears to be an SEC issue, the company has also made mistakes in this process. The fact that the company is naked shorted to prices per share that simply cannotr go lower, is the only reason the shareholders have not sold and left this company. The investors's attitude is, "can't lose any more, so might as well ride this one out". Of course, this attitude will make it impossible for the market makers to cover their naked short positions without a short squeeze of historic proportions...unless the SEC steps in and revokes the company's trading status. Most shareholders I talk with believe the SEC is working in concert with the market makers and hedge funds to coordinate just such a sequence of events. This will relieve the market makers from having to find cover, keep the hedge funds from losing potentially trillions of dollars, and put the "uppity" company out of business.

08/03/2005 19:55:50   ANY SERIOUS LITIGATION IS WELCOME!!!!

08/04/2005 09:37:56   Litigation was minimal and the effect has been negative

08/04/2005 09:39:15   No

08/04/2005 10:40:16   It appears that instead of shoring up confidence in companies, this has had the effect of causing a lot more litigation. Even companies not in litigation have to have a confidence problem with the volume of activity.

08/04/2005 12:09:05   Whether litigation is true or perceived I have no idea. With the fear of SOX, consultant make lots of money on our fears. They have seminars and they take one example of litigation related to SOX, and they twist it so that it scares the Heck out of everyone. Fear and confusion has filled lots of peoples pockets.

08/04/2005 13:38:24   I haven't seen this impact yet, but I can see where it would.

08/04/2005 14:20:27   I cannot honestly answer this question.

08/04/2005 18:05:44   Limited impact on smaller companies

08/05/2005 10:54:31   I do not think that the regulatory system has had an impact on litigation.

08/05/2005 12:38:34   It would appear not! See Item #5 above. I have been a stockholder in Daleco Resources Corp for 22 years and the fraud is on going! I have been a stockholder in Regency Affiliates, Inc. for 7 years and the case has been dismissed from Federal Court in Nebraska & Delaware and is now floundering in state court in Delaware!

08/05/2005 12:44:28   I have not experienced this situation.

08/05/2005 15:34:53   We do not believe their will be any change in litigation in our company. The impact on us has been negative. We have incurred more expense, added more work, and have not created anything from it. I believe the market impact is also negative. Many honest companies added cost and time and for what?

08/05/2005 15:43:46   No data.

08/05/2005 16:45:38   I think the impact is positive overall, as investors who can be confident in the system will invest, but investors who see wholesale market freebooting and piracy by out of control executives will find other avenues to invest - usually overseas in foreign capital markets. Honesty, accuracy, transaparency and integrity reward us with a healthy economy, while disingenuous behavior will be transparent to investors, and they will move funds elsewhre. better to serve the markets with integrity and regualtion than to allow the return of out of control freebooting in the market.

08/05/2005 19:33:08   Probably does not increase litigation but might make defending yourself more difficult because of seperaton of responsibilities.

08/06/2005 13:52:06   It is too early to tell. Major recent change is SOX, and that litigation has not really started.

08/08/2005 11:39:29   I am unaware of any direct impact of litigation on smaller companies. The most obvious indirect impact is that of audiors and others afraid of lawsuits. This fear results in more work and distrust between the auditor and client and more billable hours for the auditor.

08/08/2005 14:06:10   I can see a scenario where the proverbial mountain gets made out of a molehill as a direct result of SOX 404. A company gets sued for what ever reason. The SOX 404 work will in, most cases become discoverable. The company may have had internal control issues and may have even had a material weakness or two or, worse yet, an adverse opinion. It may well be that any or all of the deficiencies noted in the SOX 404 report would have nothing to do with the actual facts and circumstances of the case. This of course has never stopped the plaintiff's bar from making wild claims and stringing together a fact pattern wherein they use the results of the SOX report against the company. I see that as a real possibility and again it's just one the many unintended negative consequences that SOX 404 brings on.

08/08/2005 15:43:24   Probably not to date. But it will. Attorneys can have a field day every time the stock drops and a material weakness is disclosed.

08/08/2005 21:39:10   While we have not had any legal issues related to being public, being public does expose companies to additional litigation risk. We believe that this threat serves to keep companies forthright about their activities.

08/09/2005 09:30:31   Yes. Most smaller companies have a good relationship with shareholders. Current law changes our ability to speak with them without fear of using the wrong words.

08/09/2005 16:26:34   We have not seen any change in the litigation area...just noise. Again, we see marginal value to the SOX 404 process that is significantly exceeded by cost and effort.

08/09/2005 17:25:10   I don't beleive it has.

08/10/2005 09:04:41   no comment

08/10/2005 16:00:18   Sure! The current environment seems to presume all of us are guilty of something and it's just of matter of time and enough "digging" before it's found. All the regulations make us seem less sensitive to our shareholders, not more. The environment seems to want to believe the relationship between shareholders and executives is an adversarial one.

08/10/2005 17:18:15   No comment

08/10/2005 22:09:27   I think CEO's and Presidents are less likely to make forward looking statements that we used to make. I think that hurts the company and therefore the investor.

08/11/2005 20:27:22   Overall, the impact would have to be negative, the more regulation (ie..FD)the more amunition the security lawyers have to commence legal action. Most companies usually settle litigation or threat of litigation rather than contest issues. Insurance costs have substantially increased during the past 10 years, thanks to our lawmakers!

08/12/2005 13:12:10   I believe it has because it provides another bullet for the dissenting, disgruntled, or unreasonable shareholder to spend. I believe it has been negative for smaller companies because of the heavy cost associated with its' blanket application, and in the case of banks, its' redundancy.

08/12/2005 14:46:45   Not in our case. As stated above we had a strong risk management program in place and will continue to do so.

08/12/2005 16:35:01   We have not had a litigagtion impact under our currrent system.

08/13/2005 12:39:43   DON'T KNOW

08/15/2005 13:08:27   Securities litigation is, for the most part, an industry. I haven't noticed a change.

08/15/2005 14:27:30   In my experience, there has been something of a resurgeance in silly securities litigation based on SOX disclosures and the general feeling that juries are likely to distrust corporate management. Thank God for the PSLRA!

08/15/2005 15:10:05   It was too expensive because auditors are not used to being able to THINK on their own in the field about how to use a risk based approach...they're used to the National Office giving them a stict checklist of how to audit. Until a little more guidance is given, either on what a risk based approach means or given flexibility to apply judgement the high costs will continue and it will be a negative reg well into the future.

08/15/2005 15:13:01   I view the potential ligitagation impact very seriously. So much so that this will be the last public company that I work for (unless the job of a career presents itself of course). The litigation exposure is just not worth it in my opinion.

08/15/2005 15:14:45   Yes, we believe so. Cannot judge the overall impact.

08/15/2005 16:33:43   No effect on our company thus far.

08/15/2005 16:41:14   From our very limited perspective, impossible to determine.

08/15/2005 18:59:52   I haven't seen any litigation problems.

08/16/2005 09:51:21   Yes.

08/16/2005 10:10:36   Unknown.

08/16/2005 10:21:17   No Impact.

08/16/2005 10:26:28   we have no litigation ongoing or new

08/16/2005 10:27:48   I think the more burdensome of environment you create, the more opportunistic litigants will become. It is systematic of our culture and legal system.

08/16/2005 10:42:02   Don't know...

08/16/2005 10:44:16   Cant speak to this. We have not seen it.

08/16/2005 10:45:16   no

08/16/2005 11:18:54   We have not been subject to litigation but I suspect that the current regulatory encourages more litigation. It seems like now all management decisions are subject to second guessing and litigation.

08/16/2005 11:52:16   We have not seen an increase in litigation directly tied to the regulations of SOX.

08/16/2005 12:14:10   Overall this may be a positive, it is too soon to measure, but it should be helpful to note the additional checks and information.

08/16/2005 12:15:34   Unkown (we have had no change)

08/16/2005 12:40:54   Negative. I speak to a lot of company founders. All want to quit sell out or go private. No one knows what the lawyers will do to the founder CEO who makes an innocent mistake or has to restate earnings

08/16/2005 12:42:56   Too early to tell, but how could it be positive?

08/16/2005 13:04:14   No opinion.

08/16/2005 13:12:04   I am not sure of ths; we have not seen the litigation threats materialize because we are trying very hard to meet the spirit and intent of SOX. However, I believe that in time we will look back and say that SOX was one of the greatest transfers ever of wealth from shareholders to the legal and financial profession.

08/16/2005 13:19:29   Not that I am aware of.

08/16/2005 13:20:23   Not yet. I expect this to increase as the number of reported internal control deficiencies and restatements increases

08/16/2005 13:25:32   We have not witnessed a tremendous amount of litigation among smaller companies. The larger impact has been the fear of litigation that diminishes our pool of potential outside directors.

08/16/2005 13:27:00   No.

08/16/2005 13:30:33   No opinion

08/16/2005 14:08:05   The rash of lawsuits stemming from restatements is proof of the negative impact on companies. Additionally, many good companies have been delisted because of late filings caused by their not being able to comply with regulatory requirements.

08/16/2005 14:23:10   Securities regulatory system clearly exposes all companies to more litigation. The potential claims are more evident for smaller companies than larger companies because information is disclosed in a more granular level of detail. The risks for large companies may be burried in some accounting accounts with very large balances that may be difficult for the class action lawyers to disect until the discovery process after a business failure.

08/16/2005 15:15:12   The current securites regulatory system has had no effect on our current or pending litigation. (We have very little litigation to worry about). So, from a litigation standpoint, securites regulation has had neither a negative or positive impact.

08/16/2005 16:08:50   The current system has had a negative impact on smaller companies and their investors. Securities litigation is too easy to file with out having any basis except for a spike in the company's stock price and can be filed by "day traders" who no one would call investors. The costs to companies to defend themselves against these claims is huge.

08/16/2005 16:09:47   No opinion

08/16/2005 16:16:04   No litigation impact to date. However, companies trying to legally avoid 404 compliance with reverse splits to reduce shareholders and eliminate reporting requirements could spawn litigation issues and unwarranted liablity to management and their board of directors.

08/16/2005 16:45:09   Smaller companies are involved in less litigation as the rewards of litigation won by plaintiffs is less attractive. The complexity of the regulatory process on the one hand creates more litigation based on technicalities rather than substance. On the other hand, current regulation does not effectively punish very obvious wrong doers as we have seen from a number of high profile cases.

08/16/2005 18:35:41   No litigation impact to my knowledge. I cannot discern an impact on markets and investors taken as a whole.

08/16/2005 19:18:56   I do not know what impact the current regulatory system has had on litigation at smaller companies. All I will say is that with so many new rules and so many lawyers my guess is that it has not been good for small companies. But I do not know what the impact has been. I believe that the overall cost of compliance on companies, investors and markets taken as a whole has been negative. I believe that the staggering costs of compliance have hurt the U.S economy.

08/16/2005 21:29:07   Uncertain.

08/16/2005 21:40:38   after complying with all these new regulations, companies are still not protected from frivilous class action litigation. Why not rely on SOX compliance? If you want companies to follow all these rules and regs, why not give them immunity from Lerach & co. in return?

08/17/2005 10:59:57   No.

08/17/2005 12:28:22   No impact on litigation for us. Negative impact for us, see above.

08/17/2005 12:36:00   We have not experienced any litigation, but its obvious our directors and management are open to many more avenues of litigation through recent changes. A negative reaction has been the difficulty in finding competent directors who are willing to serve and in having to increase compensation of those who will serve.

08/17/2005 12:48:33   Negative. Gives an aggressive litigator more cause for legalized blackmail.

08/17/2005 18:49:20   As to the second question, I believe based on my experience that investors, not sure about the "market" has seen a very positive impact from SOX. The playing field is more level in terms of the rules that all public companies need to abide by as it relates to financial statements, disclosure and controls.

08/17/2005 18:49:27   we certainly act today like we are much more likely to get sued WHEN WE HAVE DONE NOTHING WRONG. I am not talking about getting sued for genuine wrongdoings (not that we have had any), but we now act, to some extent in a climate of fear of getting sued, even for doing the right thing, if that thing could be perceived badly in hindsight should the stock price drop. We have had to try to protect decisions we have made by making detailed memoranda on what we know as of a certain date precisely to defend ourselves should a lawsuit arise. This is not a good use of time.

08/17/2005 19:31:08   I have not seen an impact one way or the other on the amount and type of litigation to which smaller companies are subject. Therefore, I don't offer an opinion as to the positive or negative impact.

08/17/2005 21:27:12   Unsure.

08/17/2005 22:55:14   It is yet to be seen what the impact of SOX will be on litigation agaisnt small companies. I expect it will provide opportunities for more litigation. I think visible enforcement of the exisitng securities laws in place before SOX would have had a significant positive effect on market confidence without the costs and burdens of SOX.

08/18/2005 08:03:31   Not Applicable

08/18/2005 15:26:25   It has made a litigious investor community more litigious

08/19/2005 02:56:12   We've seen no change, but we rarely have any securities litigation. Again, the SOX rules were a reaction to the 1% of abusive companies with 99% of companies paying the price. If auditors had been doing their job to start with, the Enron's and other corporate failures wouldn't have occured. The payment of huge salaries to audit partners and their own poor ethics have contributed more to poor auditing and lack of independence than any other factor. With over 20 years of audit and corporate experience, none of the SOX rules affected how I interact with auditor independence - We've always followed both the spirit and letter of the law even when Deloitte encouraged us to do otherwise. The whole concept of capital markets is risk and return. Yes, investors were stung by Enron and WorldCom, but that's part of the risk of investing and part of the responsibility of being an investor. SOX attempts to remove all risks, but that isn't consistent with capital markets. Investors should accept more responsibiltiy for their investment choices.

08/19/2005 11:44:44   Obviously becoming a public company opens a board of directors up to possible shareholder suits, but I'm not sure if that's a result of the current system or not.

08/19/2005 13:49:01   The current regulatory environment has not resulted in any increased level of litigation for our company at this time; however, periodicals indicate that the amount of litigation is on the rise as a result of the empowerment created by recent regulations. Whether this will be positive or negative will depend on the magnitude of frivolous cases that arise.

08/19/2005 14:40:28   I have not seen any evidence, either way, regarding the impact on litigation. Investors view the new regulations positively. Management at all levels of public companies, are faced with many more challenges under the new regulatory environment. In the pre-implementation stages of SOX, I have witnessed public companies forego better business or operational opportunities to ensure that resources were readily available for compliance efforts.

08/19/2005 14:50:07   For the community banking sector, I doubt if SOX has had a measurable positive benefit.

08/19/2005 17:03:28   The overall impact has been positive. Smaller companies are less likely to go public, and larger companies that can support the cost are becoming more transparent.

08/21/2005 03:34:34   It is a littler too soon to know, as the litigation has a natural delay, but there are certainly more technical areas where small companies can be cought breaching, which does not necessarily are the important or criminal issues.

08/21/2005 04:46:26   I do not see a change caused by regulations.

08/21/2005 22:19:50   We haven't experienced increased litigation. However, I think that opportunities still exist to educate the market on the requirements of sox so they don't overreact.

08/22/2005 14:21:23   I don't know about litigation but I believe the overall effect on small companies has been negative.

08/22/2005 15:47:02   I have no idea.

08/22/2005 15:47:34   No. I assume this question asks if the current disclosure system provides an enhanced opportunity for investors or others to bring lawsuits based on some perceived shortcoming in the disclosure. The jury is still out on that one (no pun intended). I'm waiting to see what happens this year with companies that have had difficulties with compliance.

08/22/2005 17:54:28   SOX will certainly increase litigation, and will significantly erode any defenses that might have existed. This will be especially dangerous for small companies, who have little margin for legal attacks. While this effect is not yet large, it will have an overall negative result.

08/22/2005 17:56:59   Not as far as we are concerned. Overall so far has been positive.

08/22/2005 19:27:18   Certailny if a company is found not to comply they will be the target of unhappy shareholders who will use it against them evn if it has no ultimate impact on what has been r4eported inthe financials.

08/22/2005 20:10:17   The overall impact has been negative. Due to the "fear" of lawsuits, we hesitate to take the company private, but the heavy hand of SOX and 404 will make it almost impossible to be in compliance. Ergo, posibility of lawsuit. And MUCH higher costs of D&O insurance. 4 times what it was 3 years ago. Bottom line affected substantially.

08/23/2005 00:42:38   no view on this

08/23/2005 07:47:56   too much litigation to everyone

08/23/2005 15:56:30   We have seen no change in litigation - only escalating CPA fees incurred to offset their own litigation risk.

08/23/2005 16:49:34   Don't have a opinion.

08/23/2005 18:10:00   Not sure.

08/23/2005 21:11:03   The impact of SOX will have an impact on litigation opportunities, how much is yet to be determined. The first of shareholder lawsuits assocaited with SOX are just beginning. The reality is that most regulatory requiremetns of the current act do not scale down efficiently. There is a higher hurdle, i.e "cost of being public", that has all the negative and non of the positive of being public.

08/24/2005 11:28:21   N/A - we are a private company and have not been subject to any shareholder litigation.

08/24/2005 12:24:07   The current system has dramatically increased the perceived risk of the CEO and CFO to risk of litigation. This has negative impacts in terms of the pool of available talent and the compensation required to hire them. The impact on the markets has been negligible in terms of benefit from increased financial accuracy, and negative in terms of general entrepreneurial climate.

08/24/2005 14:30:13   I believe so. There are still many companies being sued under class action suits by various attorneys who all they do is look issues when stock prices fall or jump and find a class that they can sue with. When you are a small company, you're stock can be very volatile especially when you are newly public company.

08/24/2005 16:19:27   Investors are more apt to threaten a lawsuit. The legislation combined with the various big court cases has caused tarnished the images of public companies.

08/24/2005 16:26:56   No opinion.

08/24/2005 16:54:47   don't know

08/24/2005 20:16:09   We have seen no evidence of any impact on litigation relative to small community banks.

08/25/2005 15:23:41   Due to the relief of filing for smaller companies, shareholder litigation related to SOX 404 issues has not occurred yet. However, from publications it appears that an investor does not value down Companies with SOX compliance issues.

08/25/2005 17:02:43   I don't believe we have enough information to make that determination yet. I believe we need to see the fallout following potential business failures for accelerated filers who have been subject to 404 reporting requirements.

08/26/2005 12:41:42   To the extent there are more regulations to deal with - this gives attorneys more opportunities to seek trumped up damages.

08/26/2005 13:07:22   No Comment

08/26/2005 15:31:29   Don't know.

08/26/2005 16:22:08   I'm not sure.

08/26/2005 17:46:13   It looks to me like the regulartory system encourages litigation. Obviously the impact on companies and investors is negative, and it adversly affects the markets as well.

08/26/2005 19:53:54   It has been definitely negative as the SOX requirements makes it an "ambulance-chaser" mentality where people are trying to find any reason at all to sue a company.

08/27/2005 11:21:03   Probably not. Virtually all 'fraud' at the smaller company level surrounds stock trading and misleading announcements and promotions. More accountants as needed because of SOX have no impact on these areas. Whether the quality of financial statement reporting improves is still an open question (this will take years), but even improved reporting won't change the areas where fraud occurs.

08/28/2005 23:37:43   Not that I have seen.

08/29/2005 07:07:37   Can't say.

08/29/2005 10:21:15   We have seen no significant impact on litigation to date. The overall impact has been minimal to this point with respect to investors and markets. However, the full impact will not be known until the major expenses have an impact on the financial statements and investors have an opportunity to evaluate.

08/29/2005 10:21:25   We have seen no significant impact on litigation to date. The overall impact has been minimal to this point with respect to investors and markets. However, the full impact will not be known until the major expenses have an impact on the financial statements and investors have an opportunity to evaluate.

08/29/2005 11:21:29   More regulation means we are open to more and more litigation. Don't get me wrong, regulations are needed, controls are needed, but what are we in business to do? Are we here to help customers and make a profit for our shareholders or are we here as compliance officers for regulatory authorities?

08/29/2005 14:18:47   I have no impression to share on this question.

08/29/2005 15:31:21   According to our external auditors, we are subject to litigation at every turn, and this will only get worse with the implementation of SOX 404 requirements.

08/29/2005 16:10:53   Probably one of the most interesting questions. From our point of view....no, because we are so highly regulated already. From the attorney point of view---watch what happens----This is the attorney's full employment act!

08/29/2005 16:20:53   I think it increased the possibility for litigation because of the possibility of inadequate or inappropriate disclosures and everyone seems lawsuit happy. I also believe the overall impact has been negative as it affects the bottom line and productivity of companies. I don't believe the average investor and probably the average investment representative knows much about SOX.

08/29/2005 17:09:27   It certainly has the potential to create more liability and/or litigation.

08/29/2005 17:12:26   No opinion.

08/29/2005 17:36:32   We live in virtual fear of having overlooked a requiirement to file something with SEC. It is too expensive to have lawyers on stanby for every las little detail to keep us compliant

08/29/2005 19:02:32   We have become much more concerned about litigation than in the past with anything we publish. We used to be concerned only with the accuracy of historical statements. Now we are to make forward looking statements, any one of which could have a sizable effect on the business if wrong. We must be very conservative in our statements. I believe more information was available before.

08/29/2005 21:00:01   There's the potential for additional litigation, although I haven't been tracking non-compliance with SOX and related litigation. Even with the potential for additional litigation, I think the overall impact has been positive. Tighter controls and stricter regulations are a positive with investors - as long as the regulations mitigate a potential risk. Unfortunately, with SOX, the same set of principles, documentation, monitoring, testing has been applied at both small and large companies. The potential risks have not been appropriately identified for smaller companies. There could actually be much more benefit, and much lower costs, if the correct risks were identified.

08/30/2005 15:04:16   Yes -the rules are onerous and increase risks. As such, small companies must make access to legal counsel more often - and incur much greater legal costs. The alternative is to face more litigation. Thus, SOX is again a -lose-lose scenario.

08/30/2005 15:07:00   I don't believe there is a significant impact on the type of litigation from the current securities regulatory system.

08/30/2005 16:27:18   The overall impact has been negative ... see above comments.

08/30/2005 17:08:46   We believe that SOX 404 requirements expose smaller public companies to additional litigation without commensurate identifiable and measurable benefits to shareholders. The overall impact of SOX compliance has been negative on the financial results of companies due to the high cost of compliance. The impact of such costs on the operating results of smaller companies is more significant than for larger companies because smaller companies generally have fewer internal resources and as a consequence need to hire additional resources to assist with SOX compliance. Presumably the overall poorer operating results due to the additional SOX compliance costs have had a negative impact on the perceived value of smaller public companies by investors.

08/30/2005 18:26:14   N/A

08/30/2005 18:48:02   Yes, SOX opens the door for lawsuits against the top officers of a company because it makes them personally liable, which maybe they should be at a big company. This means officers and directors liability insurance will go up. It is not a huge problem for a big company but is difficult for a small company. The overall impact has been more positive than negative for larger companies but has a big negative impact on smaller companies.

08/30/2005 18:51:48   We have not had any experience with this type of litigation.

08/30/2005 19:47:16   At least the threat of litigation for small companies has increased, if not the actual amount of litigation. With so many rules, it is easy to make a mistake or have some attorney find a rule he believes the company has not complied with---all of this scares away individuals who would be good board members and drives up insurance costs.

08/30/2005 21:07:56   nO.

08/30/2005 21:39:41   We believe that the current regulatory system has increased the risk of securities related litigation claims against smaller companies. As discussed above, the overall impact of SOX has been negative to our Company. We believe the long term goal of improving controls and operations will benefit the company, but not in relation to substantial costs of compliance.

08/30/2005 23:57:28   I do not foresee any impact on the amount and type of litigation in current securities regulatory.

08/31/2005 08:31:59   Its too early to tell.

08/31/2005 09:09:25   There does seem to be more class action lawsuits.

08/31/2005 10:19:14   No comment.

08/31/2005 10:21:37   Not that I am aware.

08/31/2005 14:00:16   Conceptually, anytime regulation is increased, the likelihood of litigation increases. There's a direct coorelation between regulation and litigation. The more rules in effect, the more likely one will be broken. Increased litigation for the sake of litigation can not be considered a positive. Litigation should be the norm for thos companies that have demonstrated questionable motive and actions.

08/31/2005 14:25:37   You can find the answer to this question by looking at the whistleblower cases filed since SOX, or call me and I will send you a copy of a memo from Welch v. Cardinal Bankshares Corporation (the first suit to go to court), that says if you pay me I will go away.

08/31/2005 15:19:27   I don't beleive so, the attorneys are still after the deep pockets. I think that the initial reaction from the market was positive for SOX type legislation, but as more and more investors are not seeing any tangible benefits coupled with diminishing investment returns due to reduced bottom lines as a result of SOX costs, it is hard to still be positive.

08/31/2005 16:05:33   I really have seen no changes as far as litigation goes. The impact on companies has been negative because of the huge costs involved with SOX compliance.

08/31/2005 16:13:45   There has been some increase in litigation but not a significant amount. While the cost and regulatory burden has increased for companies the benefit to investors has not increased.

08/31/2005 16:16:33   No comment.

08/31/2005 16:29:59   Negative impact more means more potential litigation.

08/31/2005 17:16:33   I have no comment on this issue.

08/31/2005 18:22:30   Our public client base has not experienced a change in the amount of litigation. Those clients consist of approximately 1/4 smaller accelerated filers and 3/4 non-accelerated filers, and have been largely free of securities litigation. The current system is familiar, and has been generally useful. Most of our clients undertake 1933 Act filings less than once a year.

08/31/2005 18:23:08   Litigation seems to be on the increase due to the regulatory burden and potential liability. Also, it may make it difficult to find directors to serve due to liability for non-compliance.

08/31/2005 19:16:05   8. The risk of criminal prosecution is certainly increasing, but it seems that larger corporations are really wearing a bull´s eye on their back. At this point, litigation seems to aim at the highest potential reward, which probably will leave larger companies as more obvious targets.

08/31/2005 20:55:07   Not sure. But the lawsuits will follow dollars.

09/01/2005 14:30:54   This respondent has not had any litigation (yet) that could be blamed on SOX. However, management is keenly aware that additional time, accounting and legal expense are necessary to avoid litigation. We have a relatively simple business model, but have experienced increases in expenses and demands on management time.

09/01/2005 17:12:34   It probably helps in terms of safe harbors.

09/04/2005 07:42:16   N/A. The period is too short in order to assess

All Survey
Main Survey


Modified: 10/13/2005