Don't Hurt The Entrepreneurs
from the so-it-goes dept
Rich Karlgaard is afraid that the current climate where politicians are looking to appease an angry public about all the various corporate fraud stories is going to harm our entrepreneurial spirit. He has no problem with laws that stop large public companies from doing ridiculous things, but most of these laws will apply to small private startup companies as well - making it much more cumbersome to start a company and grow it. As he says, companies are going to have to get rid of a few engineers to make room for lawyer fees. He also points out that, specifically, the proposed Sarbanes-Oxley Act talks about fraud and misconduct without clearly defining what they mean. He's afraid that an entrepreneur touting his or her "vision" for the future will later be held accountable for "lying" when that vision doesn't come true exactly. It seems, as with just about everything, when the backlash comes, it overreacts to the opposite extreme.
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Spirit vs Letter
Sarbanes-Oxley are speaking in spirit. They're getting at the nonsense of what took place at Enron & Worldcom. They're expecting that people will have enough common sense to know that those situations were less than proper. Sarbanes-Oxley places too much faith in people. It has to spell out every fraudulent act and every possible misconduct that could ever possibly happen. Otherwise people will sue the manufactuer of the Segway if IT doesn't change the way cities are build. Executives will claim that they were unaware that buying cut rate electricity from California during a crisis, piping it out of the state and piping it back in at much higher prices was bad.
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