

Lessons from Bear on Sarbanes-Oxley: We didn't need it, and it didn't do any good - dpapathanasiou
http://busmovie.typepad.com/ideoblog/2008/03/lessons-from-be.html

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pohart
What's with all these speed limits? People still get murdered. There are two
lessons in this. We don't need speed limits, and they don't do any good

~~~
dpapathanasiou
Not exactly: if you go over the speed limit, you are _definitely_ increasing
the risk of an accident (people still do, and accidents happen, but that's
beside the point).

But did SOX show any red flags for Bear? None that I'm aware of.

If SOX was working according to how its authors intended, we would have seen
the warning signs much earlier.

As it exists now in practice, SOX is just a paperwork albatross.

~~~
pohart
What I'm saying is that just because a particular set of regulations didn't
help in a particular case doesn't mean that regulation is worthless. SOX was
created primarily intended to prevent the type of gross-mismanagement that
brought down Enron.

~~~
dpapathanasiou
_SOX was created primarily intended to prevent the type of gross-mismanagement
that brought down Enron._

That's right, that was the intention.

So what happened at Bear?

I doubt that SOX, in the way it's implemented now, will be useful in
preventing any future failures.

~~~
pohart
A different kind of gross mismanagement: One that involved less fraud, and
backroom transaction.

I agree that SOX is probably not particularly useful. Although it does target
some specific bad practices that were instrumental in Enron's collapse,
especially wrt off-balance-sheet transactions and auditor independence. Of
course mismanagement can cause businesses to fail, and can cause businesses to
fail spectacularly. SOX was designed around a particular model of failure and
it is disingenuous to claim that because there are other models of failure are
possible, SOX is a waste.

Again: SOX is probably not worth the expense, but the Bear collapse is
unrelated.

