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Coalition of Biotech, High-Tech Industries Seeks to Protect Small
Businesses Through Sarbanes-Oxley Regulatory Reform
SEC Advisory Committee Accepting Comments on
Reforming Corporate Governance Act
WASHINGTON, Dec. 8 -- The Biotechnology Industry Organization
(BIO) and a coalition of biotechnology, healthcare technology, high-
technology
and venture capital industries today submitted a letter to an SEC
advisory
committee requesting reform to Section 404 (internal controls) of the
Sarbanes-Oxley Act of 2002.
"We're not proposing to change a single word of the Sarbanes-
Oxley
legislation. But, complying with the Sarbanes-Oxley external auditor
requirement can cost upwards of $1 million, often doubling a small
firm's
operating costs," said Jim Greenwood, BIO's president and
CEO. "Unintended
consequences of the cost burdens associated with a 'one-size-fits-
all'
approach to Section 404 continues to hamper small companies' ability
to invest
in research and development and to gain access to public capital
markets."
The coalition wants the Securities and Exchange Commission (SEC)
to ease
disproportionate financial burdens on small public companies.
Sarbanes-Oxley,
the corporate governance law, requires publicly traded companies to
adhere to
standards that broaden board members' roles in overseeing financial
transactions and auditing procedures.
Coalition members working with BIO include the National Venture
Capital
Association, TechNet, Advanced Medical Technology Association,
California
Healthcare Institute and SEMI. The coalition represents more than
5,300
companies from 50 states and around the world.
"We do not oppose government oversight, rather, we want to
ensure that
oversight is conducted in a manner that is fair to small biotech or
high-tech
businesses. Some of these cost burdens threaten to jeopardize the
competitiveness of smaller companies that are the growth engines of
the U.S.
economy," said Morrie Ruffin, BIO's executive vice president of
capital
formation and business development.
The SEC formed the Advisory Committee on Smaller Public
Companies to
consider ways of improving the impact of Sarbanes-Oxley on small
public
companies. The committee has been holding public hearings to seek
recommendations from stakeholders and will meet Wednesday, Dec. 14,
2005 to
review those recommendations and prepare draft proposals for the
SEC. The
meeting will be held in Multi-Purpose Room L006 of the SEC's
headquarters,
located at 100 F Street, NE, Washington DC, 20549.
The coalition recommends that smaller public companies be:
* Defined as the bottom 6 percent (based on a quarterly average)
of the
total U.S. public market capitalization or by a revenue
threshold set by
the average revenues of companies at the bottom 6 percent of
total
market capitalization;
* Exempt from having external auditors attest to internal
controls. This
would not exempt small public companies from complying with
Sarbanes-
Oxley as a whole.
* Allowed to take a risk-based approach to prioritizing their key
financial controls and be allowed to alternate the frequency
of control
testing to every second or third year.
A copy of the letter can be viewed by clicking on
www.bio.org/tax/issues/LettertoSEC.pdf.
BIO represents more than 1,100 biotechnology companies, academic
institutions, state biotechnology centers and related organizations
across the
United States and 31 other nations. BIO members are involved in the
research
and development of healthcare, agricultural, industrial and
environmental
biotechnology products.
SOURCE Biotechnology Industry Organization
Web Site: www.bio.org
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