WASHINGTON, D.C. (September 13, 2006) – Jim Greenwood, president and CEO of the Biotechnology Industry Organization (BIO), issued the following remarks regarding comments submitted Tuesday by BIO and a group of organizations representing high-growth industries to the Securities and Exchange Commission (SEC) concerning burdens created by Section 404 (internal controls) of the Sarbanes-Oxley Act:
“BIO, along with healthcare, high technology, communications and information technology, and electronics and semiconductor industries strongly urge the SEC to adopt Section 404 reforms expeditiously based on a framework that is cost-effective, ‘scaled’ and ‘proportional’ to the size and complexity of corporate structures.
“For high-growth industries, the implementation of Section 404 will have a significant impact on the long-term competitiveness of American companies and the U.S. capital markets. Section 404 has imposed cost burdens on high-growth companies and their management far beyond what Congress intended and what is needed to protect investors against corporate fraud.
“Four years after enactment of the Sarbanes-Oxley Act, it is necessary to correct sections that are creating unforeseen, detrimental effects on smaller public companies. We support reforms that enable emerging companies to remain competitive and do not force companies to divert valuable research and development dollars to administrative tasks,” Greenwood said.
BIO and the group stated these points in formal comments submitted to the SEC in response to the commission’s Concept Release Concerning Management’s Reports on Internal Control Over Financial Reporting, published in July, and the Internal Control Over Financial Reporting in Exchange Act Periodic Reports Non-Accelerated Filers and Newly Public Companies, published in August.
In their comments, BIO and the other organizations stated their support for the SEC’s proposal to extend the deadline for smaller public companies to comply with Section 404. Under the proposal, non-accelerated filers (companies with less than $75 million in market capitalization) would not be required to comply with the costly external auditor attestation requirements in Section 404 until Dec. 15, 2008. The group also supports the SEC’s recommendation for a transition period for new public companies, which would delay Section 404 compliance requirements to the date of the company’s second annual report.
BIO and the group also expressed support for the SEC Advisory Committee on Smaller Public Companies’ vote (18-3) in April that favored scaled reform recommendations for Section 404.
Joining BIO in submitting comments were TechNet, Telecommunications Industry Association, Electronic Industries Alliance, Semiconductor Industry Association, Advanced Medical Technology Association, Medical Device Manufacturers Association, Association of Bioscience Financial Officers and the California Healthcare Institute.
The SEC is expected to publish final reforms on the Concept Release and further reporting delays for non-accelerated and newly public companies later this fall.
To view comments, click on http://www.bio.org/tax/sox/.
BIO represents more than 1,100 biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and 31 other nations. BIO members are involved in the research and development of healthcare, agricultural, industrial and environmental biotechnology products. www.bio.org