NY lawyers call for more action to boost US market confidence

Manhattan capital markets partners say the decision by the Securities and Exchange Commission (SEC) last month to make it easier for foreign companies to de-list from US stock exchanges will increase the appeal of US markets, but more changes are still needed.

The SEC rule change, which will come into force in mid-June, allows companies to de-list if they can show less than 5% of their daily share trading involves US shares.

While the move is likely to lead to some companies de-listing to escape the high costs of compliance, the overall feeling among US securities lawyers is that the change will lead to more companies listing in the long term.

US lawyers are now calling for further changes to bolster New York's position in global capital markets work. New York has lost ground to London in recent years following the introduction of stringent post-Enron governance reforms.

Cleary Gottlieb Steen & Hamilton capital markets partner Andrew Bernstein backed proposals to allow European companies in the US to adhere to European reporting standards - which are far less stringent than they are in the US.

Morrison & Foerster's capital markets head, James Tanenbaum likewise called for a range of reforms to support the US markets.

The proposal that has received the strongest support from securities specialists is to relax rule 404 of the Sarbanes-Oxley Act, which requires an expensive audit of companies' internal controls, which can cost large companies tens of millions of dollars.

Both the SEC and the auditors' watchdog, the Public Company Accounting Oversight Board (PCAOB), are reviewing their stances on 404, which has been widely criticised by various quarters of the US business community.

It is not yet clear when the PCAOB will make its final decision but the SEC is scheduled to finalise its position by May.