Risk & Compliance

GM Finance Chief Rails at Sarbox

Increased red tape will make it hard for private companies to go public and raise the needed capital to grow, says General Motors' Devine.
Stephen TaubMarch 10, 2004

General Motors CFO John Devine said that regulation under the Sarbanes-Oxley Act had gone too far, frightening company management and threatening U.S. competitiveness overall.

Executives are focusing on compliance to the detriment of their corporations’ core business operations, he said in an interview with the Financial Times at the Geneva motor show. “You will find companies climbing into a foxhole and hiding rather than trying to be competitive in the marketplace,” Devine said. “I don’t think it is good for consumers, for the companies or for the countries involved. The pendulum has swung too far.”

Devine stressed that he agrees there should be legal reaction to the past abuses. At the same time, he said, “we frequently go overboard. That can result in reduced competitive position.”

The Sarbanes-Oxley Act will make private companies less likely to attempt to go public, the CFO said, noting that that could curb their access to the capital needed for growth. “If you were a private company contemplating going public, you would certainly think twice about it now,” he told the paper.

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