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April 05, 2006

Why SOX Will Lead to the Demise of U.S. Markets

Everyone should read this article from the CEO of Nasdaq. He is properly concerned that the overly bureaucratic Sarbanes-Oxley (SOX) processes could lead to the end of global domination by the U.S. capital markets. Ironically, the two gentlemen that created SOX did it with the intention of “preserving” U.S. capital market leadership. Their fear was that people viewed our markets as too risky, and so they created SOX to ensure that investors would “trust” our markets.

It turns out that SOX is doing the opposite – it is ensuring the demise of the leadership of U.S. capital markets. New up and coming companies outside the U.S. are now shunning the U.S. markets in mass. Let us not forget that the Nasdaq has and as always had “weaker” listing requirements that the NYSE. And eventually, the then new and up and coming companies like Microsoft, Cisco, and Intel eventually came to dominate the Fortune 500 – and they all started as emerging companies that preferred the Nasdaq. Now companies are going to “prefer” other markets with requirements that are less stringent than the SOX laden U.S. markets.

This is a HUGE issue. I applaud the Nasdaq BOD for going after the LSE, and I have to wonder whether Mr. Sarbanes and Mr. Oxley have any idea that they will go down in history as the specific architects of the demise of U.S. capital market leadership.

Posted by Bill Gurley on April 5, 2006 at 10:02 AM | Permalink

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Comments

Sorry for my post, teenstitsandass, =[[[,

Posted by: postyourgirlpostyourgirls homepage | Mar 3, 2009 4:55:53 AM

Bill,

I saw you in September 2005 and you gave an interesting presentation. Any thoughts on new technologies or MMORPGs?

Posted by: Anon... | Apr 12, 2006 8:05:33 PM

Bill:

So there is a problem with SOX's I can agree with you on that. Do you have a solution to the problem or just a problem with the problem?

Obviously you have strong feelings about it, you havent blogged forever and then you come out with this.

Ryan

Posted by: RMoney | Apr 6, 2006 1:53:01 AM

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DISCLOSURE: The information contained Above the Crowd has been obtained from sources believed to be reliable but is not necessarily complete, and its accuracy cannot be guaranteed. Any opinions expressed herein are subject to change without notice. The author is a general partner of Benchmark Capital, a venture capital firm in Menlo Park, Calif. Benchmark Capital and its affiliated companies and/or individuals may have economic interests in the companies discussed herein. © J. William Gurley 2005-2006. All rights reserved.