From: James L. Saner, Sr.
To: SEC Advisory Committee on Smaller Public Companies
I am writing on behalf on MainSource Financial Group to comment on the Committee's draft report, which recommends the exemption and/or reduced standards for Sarbanes-Oxley ("SOX") compliance for smaller public companies. MainSource would fall under the proposed definition of a "smallcap company".
After complying for the past two years with the requirements of SOX, I can definitely say that the costs do not come close to justifying the benefits of compliance. The overall costs for our compliance with SOX has been more than $500,000. in additional hard costs and an additional $500,000. of time and effort devoted to the process by management and other internal personnel for each of the past two years. The first year our expenditure uncovered one significant deficiency which had very limited risk and management argued and disagreed with its outside auditors and this past year none. It appears that this additional layer of compliance and regulation does nothing but lower shareholder value as opposed to the thought behind SOX which was to ensure more control and safety in publicly traded companies. This expenditure of more than $1 million dollars per year represents 5% of our income and the costs just do not make any sense in this cost-conscious environment.
In addition to the cost and expense factor, the compliance with SOX has totally changed the relationship of our company's external auditors and management from a partnership to almost an antagonistic relationship. The external auditors are paid by our company but seemingly work for another body of people outside our company, supposedly protecting their investment. The process is not working and it was a total overreaction to the stupidity and neglect of a few companies.
On behalf of all smallcap and microcap companies, I ask you to please seriously consider the proposal and provide for the exemption and reduced standards for these companies.
Thank you for reading and consider my point of view.
James L. Saner Sr.