WASHINGTON, May 17 /PRNewswire/ -- Jim Greenwood, President and CEO of
the Biotechnology Industry Organization (BIO), joined a press conference on
Capitol Hill today at which Senator Jim DeMint (SC), Representative Tom
Feeney (FL), Representative Gregory Meeks (NY), Senator Mel Martinez (FL),
Representative Candice Miller (MI) and Representative Pete Sessions (TX)
announced the bipartisan introduction of the Competitive and Open Markets
that Protect and Enhance the Treatment of Entrepreneurs "COMPETE" Act. This
legislation would provide needed relief from the provisions of Section 404
of the Sarbanes-Oxley Act for smaller public companies.
As the recent GAO report found, the one-size-fits-all approach of
Section 404 is particularly burdensome for smaller companies. This is the
case for smaller biotechnology companies that have limited resources to
deal with the high implementation costs related to Section 404. This often
means redirecting funds from research and development -- delaying
cutting-edge research into the therapies and cures of tomorrow -- in order
to cover the costs of auditing fees.
"I support strong laws to deter fraud and reinforce good corporate
governance and confidence in our capital markets," Greenwood stated.
"However, Section 404 of SOX is placing a considerable unintended cost
burden on smaller public companies. In the biotechnology industry, this
means that companies are forced to divert their limited resources away from
research on innovative therapies to reduce human suffering and into
auditing fees which are unnecessarily burdensome for small companies."
Under the COMPETE Act, companies with product revenue of less than $125
million would be allowed to voluntarily opt-out of the burdensome and cost-
prohibitive internal control requirements of Section 404. This legislation
recognizes that product revenues drive the complexity of corporate
structures and the corresponding need for controls to protect against
financial fraud. The COMPETE Act will begin to address the disproportionate
cost burdens of Section 404 requirements that continue to hamper smaller
companies' ability to invest in research and development, to gain access to
public capital markets, and to remain competitive.
"In many cases the benefits to investors do not outweigh the costs to
companies and their investors," stated Senator DeMint, lead Senate sponsor
of the COMPETE Act. "By allowing small companies to live by auditing
standards that fit their needs and by providing some clarity for businesses
struggling to comply, the COMPETE Act would make it much easier to grow a
business in America and attract capital to American markets."
"The high burden of regulation and compliance is outsourcing America's
lead in world capital markets. More companies are increasingly turning to
London or Luxembourg instead of New York to raise capital," stated
Representative Feeney, lead House sponsor. "It is time to review the
effects of Sarbanes-Oxley and keep that which is a net advantage to the
investor and reform those provisions that put investors, companies, and the
American economy at a disadvantage."
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.
SOURCE Biotechnology Industry Organization
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Related links:
http://www.bio.org/
CONTACT:
Stephanie Fischer of Biotechnology Industry
Organization, +1-202-312-9263
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