SarbOx and jobs: Disappearing Act?

US regulators are about to announce reforms to the country's Sarbanes Oxley Act. They may not bode well for jobs in the City of London.

"There is a direct link between the liberal nature of the UK market and the number of jobs available here," says Chris Rollason, head of the corporate finance division at Collins Stewart. He adds: "Sarbanes Oxley has been a major factor contributing to the popularity of the AIM market, and without a doubt that has had a positive impact on jobs."

The Sarbanes Oxley Act ('SarbOx') requires companies listing in the US to meet stringent (and costly) auditing requirements. Bald statistics suggest it has been a boon for London.

Before the legislation was passed in July 2002 there were only 50 foreign companies listed on London Stock Exchange's Alternative Investment Market (AIM) - of which only a handful were American. Today there are 283, and 53 come from the US.

Rollason says the cost of listing and meeting ongoing auditing requirements in the US under Sarbanes Oxley is partly to blame: "We've seen many companies put off by the level of regulation it imposes." Thanks to the resulting increase in business, he says Collins Stewart is in the process of expanding its corporate finance headcount by 10-15%.

If the Act is reformed, will these new roles go the way of the triceratops?

For this to happen, Rollason says the revisions would have to be pretty dramatic: "If the changes were considerable, the US market could become more attractive."

Others are not so sure, however. A spokesman for AIM, says SarbOx is only one of a number of factors contributing to the market's recent success. Other plus points are said to include the large number of international equity funds under management in London, which encourages overseas companies to list in the City.

Early indications are that the reforms to Sarbanes Oxley will, in any case, not be particularly breathtaking. The US Public Company Advisory Board is said to be dithering about changes to the particularly burdensome Section 404 of the legislation. Jobs may be safe for now.