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December 1, 2002

Sarbanes-Oxley Law a Hit with Europeans

By Gregory Bresiger

Let the reader beware: Don't believe everything you read in the media. And be especially suspicious when reading about a supposed controversial new law.

Citigate Financial Intelligence (CFI), an investor relations consulting firm, found that most U.S. listed European companies overwhelmingly will comply with the new Sarbanes-Oxley law, which requires CEO/CFO certification of earnings, the creation of the independent audit committee and the elimination of loans to officers.

Positive Outlook

"We found that most companies in Europe will comply, are already complying or would like some clarification or partial exemption so they can comply with the law," John McInerney, senior managing director for CFI, told Traders Magazine.

Surveying 50 of the some 300 of Europe's U.S. listed companies, CFI found that 78 percent of the companies intended to comply with Sarbanes-Oxley as well as new requirements recently imposed by the Big Board and Nasdaq.

"Some of these companies, especially the German and Swiss, will need guidance and will need to work out a middle ground with the SEC on some of these rules," McInerney added. For example, some Dutch officials want to have a clearer definition of what constitutes a loan to a corporate officer, according to the poll.

"But most respondents said that they have every intention of complying," McInerney said. He added that some Swiss and German companies might need to alter their corporate structure or need a waiver because CFO/CEOs sometimes don't sit on the board so they would not be in a position to certify results. But, he added that these problems should be hammered out in discussions with the SEC because the poll showed companies are cooperative.

Euro Opposition

Earlier this year there were reports of widespread opposition among European officials of U.S. listed companies to the various reforms, which were enacted as a result of the Worldcom/Enron accounting scandals.

CFI polled 15 companies in the United Kingdom, nine each in France and Germany, four each in the Netherlands and Switzerland. It also spoke to companies in Finland, Spain, Italy, Sweden, Belgium and Hungary.