SEC Considers Easing Rules for Foreign Firms

The Securities and Exchange Commission is considering softening corporate governance rules to ease the burden on foreign companies, Chairman William H. Donaldson said in a speech at the London School of Economics on Tuesday.

Donaldson used his remarks to outline some suggested concessions on the Sarbanes-Oxley Act, which some European companies have criticized as cumbersome and costly.

“In the short term, I expect several initiatives that should ease some of the concerns that foreign private issuers may have about reforms now being implemented in U.S. markets,” Donaldson said.

The Sarbanes-Oxley Act, which was passed by Congress two years after a series of corporate accounting scandals including the Enron Corp. collapse, requires chief executives and chief financial officers to personally certify the company’s books.

Due to come into force for European companies in mid-2005, it applies to U.S. and foreign companies whose stock is listed in the United States. Critics say the cost of requirements to prove the adequacy and effectiveness of internal controls each year will outweigh the benefits.