FOR IMMEDIATE RELEASE
ICBA Thanks House Financial Services Committee for Exempting Small, Publicly Traded Community Banks From SOX 404
Washington, D.C. (November 4, 2009)—The Independent Community Bankers of America (ICBA) today praised the House Financial Services Committee on the passage of an amendment, sponsored by Reps. Scott Garrett (R-N.J.) and John Adler (D-N.J.), to the Investor Protection Act (H.R. 3817) that would exempt small, publicly traded companies with a market cap below $75 million from reporting requirements under Sarbanes-Oxley Act Section 404(b). Since the inception of Sarbanes-Oxley, ICBA has urged lawmakers and regulators to exempt community banks from the measure.
“Community banks and other smaller public companies have been disproportionately impacted by the auditing expenses and the regulatory burden associated with SOX 404. Because community banks already fall under a rigorous examination process for their internal controls over financial reporting, a permanent exemption is appropriate,” said Karen Thomas, ICBA executive vice president for government relations. “The average community bank that is a smaller public company will save approximately $100,000 per year in auditing and regulatory expenses if this amendment becomes law. Community banks are already overburdened with regulation. This exemption will help ease their overall regulatory burden and allow them to focus resources on serving their communities during these challenging economic times.”
The Garrett-Adler amendment also calls for the Securities and Exchange Commission and the comptroller general to jointly conduct a study to determine how the SEC could reduce the burden of complying with SOX 404(b) for companies whose market capitalization is between $75 million and $250 million. The study will consider whether any methods of reducing the compliance burden, or a complete compliance exemption for these companies, would encourage companies to list on exchanges in the United States in their initial public offerings.
ICBA thanks Reps. Garrett (R-N.J.) and Adler (D-N.J.) for proposing this amendment and Chairman Barney Frank (D-Mass.) and the committee for advancing it. ICBA looks forward to working with the House and Senate to ensure that this important community bank exemption is included as the legislation moves forward.