The Sarbanes-Oxley (SOX) Act passed in 2002 in response to major corporate accounting scandals. SOX set new and enhanced regulatory standards for all U.S. public companies and includes a number of mandates for oversight of public companies including improved reporting of financial transactions and requirements for external audits. While Section 404(b) of SOX is intended to prevent future accounting improprieties, the implementation of this requirement has, unfortunately, caused problems for many emerging biotechnology companies, including confusion and substantially greater than expected compliance costs.

Sarbanes-Oxley in Financial Services Compromise: Sarbanes-Oxley 404(b) Legislative Text in the Wall Street Reform and Consumer Protection Act of 2009
BIO advocated for a provision in financial services reform that would ease regulatory burdens for small public biotechnology companies. The provision would permanently exempt companies with market capitalizations of $75 million or less from Section 404(b) of the Sarbanes-Oxley Act of 2002 (SOX). BIO has advocated strongly on behalf of this provision, which would become law if the current compromise passes both chambers of Congress. The House passed the financial regulatory reform compromise on June 30 by a vote of 237-192 and the Senate is expected to vote on the measure after the July 4th recess.
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Sarbanes-Oxley in Financial Services Compromise : Joint Explanatory Statement of Sarbanes-Oxley 404(b) Provision
The Joint Explanatory Statement of the managers of the House and Senate compromise provide a description of the Sarbanes-Oxley provision found in the House and Senate compromise on financial regulatory reform
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Sarbanes Oxley 404(b) recommendations made by the 2009 Government-Business Forum on Small Business Capital Formation
The 2009 Government-Business Forum on Small Business Capital Formation recommended a permanent exemption for small companies from Section 404(b) of Sarbanes-Oxley. Additionally, they recommended that the SEC increase the public float threshold for being a small reporting company from having a public float of less than $75 million to less than $250 million.
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