Legal Experts: Regulations Leave U.S. at Investment Disadvantage
Wall Street is losing its competitive edge to foreign markets because of an increasingly tough regulatory environment, legal experts told CNBC's "Power Lunch."
"There is a tremendous expansion of our global capital markets," said Arlene Mirsky, a partner at law firm Sills Cummis. “To the extent that investors perceive a regulatory advantage in investing in London and a disadvantage in the United States, they are going to put their money elsewhere.”
The United States has lost a number of IPOs, many of which migrated to Europe and Asia, and an increased number of companies are choosing to go private, Mirsky said.
In response to such trends, the U.S. Chamber of Commerce on Monday called for an end to quarterly earnings guidance by companies, a restructuring of the Securities and Exchange Commission, protections for auditors and a restructuring of retirement savings plans. U.S. Treasury Secretary Hank Paulson will discuss regulatory issues on Tuesday with some big names in the financial world, including Warren Buffett and Alan Greenspan.
"One of the difficulties with Sarbanes-Oxley discussions is the law is still relativity new, so it is very hard to separate out the costs of converting to a new system from the costs [of] complying with it," said Sarah Teslik, senior VP of policy and governance at oil and gas exploration firm Apache Corp. "These are definitely questions worth asking."
Mary Ann Jorgenson, partner at law firm Squire, Sanders & Dempsey, said regulations are in place to protect investors.
"Yes, Sarbox has made it too expensive for companies that are ... public and in the lower-edge of the middle market, and we're working hard to normalize it, if you will," she said. "I don’t think that is the main reason the markets are having competitive issues, however."