"There must be some way out of here. . .

. . . . There's too much confusion, can't get no relief."

Former SEC Chair Harvey Pitt, writing in today's WSJ, suggests among other things that Congress address problems with SOX by kicking them to the SEC – specifically, by making SOX part of the SEA of 1934 and thereby clarifying application of the SEC's rulemaking and exemptive power.

This, of course, is politically easier than for Congress to actually figure out what needs to be done. Pitt points out that Sarbanes had rejected this when the bill was being considered (because of distrust of what Pitt would do with this power?).

Pitt's proposal would improve on the current mess. But without a change in the law, the SEC would face significant pressure from reformers and others not to exempt small firms. It also might lack the power to make meaningful revisions in 404 that apply to bigger companies. For example, one way out is to eliminate civil liability (i.e., fraud on the market class actions) for 404 violations. The SEC can't do that on its own.

Anyway, let the stickiness of this problem be a lesson for future regulatory panics – enact in haste, repent at leisure. Meanwhile, with foreign firms avoiding our shores and the costs piling up for US firms, the hour is getting late.