FOR IMMEDIATE RELEASE
ICBA Asks Congress to Adopt SEC Advisory Committee Recommendations on SOX 404
Washington, D.C. (May 3, 2006)—The Independent Community Bankers of America (ICBA) strongly urged Congress to support the final recommendations of the SEC Advisory Committee on Smaller Public Companies because they will reduce the burden on community banks, allowing them to better serve their customers and communities.
“The Advisory Committee's Final Report provides an excellent roadmap for the SEC to adopt a system of scaled or proportional securities regulation of smaller public companies,” said Mark Schroeder, ICBA board member, and president and CEO of German American Bancorp in Jasper, Ind., a publicly traded community bank holding company with approximately $1 billion in assets. “This relief would significantly benefit hundreds of publicly held community banks and holding companies, like German American Bancorp, that are struggling with the high costs of complying with the internal control requirements of SOX Section 404 and enable them to devote more of their resources to lending and providing banking services to customers in their local communities.”
Schroeder, who testified before the House Small Business Committee hearing on Sarbanes Oxley Section 404, said that with the exception of its recommendation to interpret “held of record” to mean “held by beneficial holders” when determining whether a company meets the 500 shareholder threshold for registration, ICBA endorses all of the recommendations made by the Advisory Committee.
“We strongly support exempting micro-cap companies from the internal control audit requirements of SOX Section 404 and exempting small-cap companies from the external audit requirements of that section,” said Schroeder.
Schroeder told Congress that the cost to German American to comply just with SOX Section 404 during 2005 was $500,000, or approximately five cents per share. Although this was less than what was spent last year, Schroeder said that these costs fail to take into account the internal operating inefficiencies that have been created by SOX 404. “The cost of this inefficiency is impossible to measure, but it is significant and is at a minimum equal to or in excess of the measurable indirect internal costs,” said Schroeder.
ICBA's full testimony is available at www.icba.org.