Wall Street's regulator has agreed to relax the anti-fraud measures introduced in the wake of the Enron and WorldCom scandals, saying that an "obsessive-compulsive mentality" that was damaging American business had crept into checking company accounts.
The Securities and Exchange Commission voted yesterday to make changes to the implementation of the hated Sarbanes-Oxley laws, which are blamed by many financiers for deterring foreign companies - particularly small companies - from listing in New York.
The SEC said yesterday that companies would no longer have to produce vast documentation on the internal controls they use to ensure the accuracy of their accounts, and auditors will no longer have to check and approve so many of those internal company procedures.
These provisions, set out in section 404 of the Sarbox laws, have added millions of dollars to the cost of running a public company in the US. The SEC said yesterday that a more relaxed interpretation of Section 404 would lead to simpler, cheaper audits.
Christopher Cox, the SEC chairman, said the new guidance represented a good balance.
An SEC commissioner, Paul Atkins, said an "obsessive-compulsive mentality" on 404 compliance needed to be stopped.
Yesterday's SEC meeting also voted to allow companies to send out reports to shareholders by e-mail, cutting $500m a year from printing and postage costs for American companies.
And new rules were adopted to push unregulated hedge funds out of the reach of the average investor. Anyone interested in buying into a hedge fund will have to have assets of $2.5m, on top of their main home, rather than the $1m required at present.