Sarbanes refugees heading for AIM

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The burden of red tape is forcing publicly traded companies to abandon Wall Street in favour of the London Stock Exchange.

The Independent on Sunday has learnt that a number of US companies are currently considering quitting the New York Stock Exchange in favour of the LSE's Alternative Investment Market for smaller stocks.

"Because of the lighter touch of regulation, there are at least a dozen companies that are looking to leave the US and want to come to London," said one source close to the process. "Despite the heavy cost of a delisting, it is far more cost-effective in the long run."

Following a spate of scandals, notably Enron and WorldCom, the US authorities cracked down on Wall Street, and the far-reaching Sarbanes-Oxley Act was introduced to raise standards of corporate governance. Compliance has led to a plethora of red tape and increased costs.

Delphine Currie, a corporate finance partner at the UK law firm SJ Berwin, said she had been in talks with several US-listed stocks that wanted to move to the LSE. "These companies are in the preliminary stages of preparing to shift their listing to AIM," she added.

The LSE has been taking advantage of the heightened regulation by aggressively marketing AIM to smaller companies for the past two years, and next month it will take a roadshow to Philadelphia, Chicago, Boston and New York. It is also due to hold events in Texas and on the West Coast later this year.

There are now 51 US-based companies quoted on AIM, 17 of which joined this year.

The rivalry between US exchanges and the LSE is fierce. Although the LSE is aggressively marketing to smaller companies, the Nasdaq has hit back by repeatedly pointing out that it continues to attract a number of overseas companies, despite Sarbanes-Oxley.