The Wall Street Journal has an editorial (subscrip. req’d) in today’s edition discussing the Bloomberg/Schumer report. The authors express surprise at Senator Schumer’s apparent support for tort reform, noting that he has not always voted that way in Congress. They also are skeptical whether, as suggested by Senator Schumer in his press conference, the problems associated with securities class actions can be resolved via SEC rulemaking.
Quote of note: “The true costs of [Sarbox’s liability provisions] have yet to be tested for the simple reason that it will take a recession or a stock-market correction to trigger the next round of attempts to turn corporate miscalculations into income redistribution opportunities. So far, this ticking bomb inside Sarbox has received little notice compared to the very real costs of compliance with Section 404 on internal controls. But we can expect to hear more about it after the first wave of Sarbox lawsuits starts hitting the papers. Until that happens, the current consensus that Sarbox is tolerable and the SEC merely has to enforce it more sensibly will remain the conventional wisdom.”