Centerfield

Being somewhat familiar with SOX I have to say that you have to balance the costs of complince with additional productivity benefits that can be gained by having more accessible databases and the stronger controls on that data. For those involved in sales, the reporting and the required email and document archiving provides a lot of legal CYA that would otherwise not be there. One of my clients' software packages saved a puchaser 150,000 pounds(UK) because of one small group of messages that would otherwise have been deleted. And frankly, in this day and age, if you do not have a solid database infrastructure you are at a competitive disadvantage. That's the reality of today's business AND government.

In terms of brokerage firms and accounting firms I wonder how much of this is kvetching because business as usual is no longer accepted. The author's complaint about the reduction in regional brokerage firms and tying it to SOX is tenuous. I don't even know why he bothered. Investment will happen regardles of some of these hoops because people are always interested in making money. It's obvioous that cultural changes will be necessary and it's also obvious that opportunities for new brokerage businesses might arise. And as for analyst coverage, is it really a broken piece of machinery or am I missing something here? Brokerages are by no means the only source of research here. Banks do a ton of it. So do other financial institutions. It seems that just about every stock I look at has half a dozen analyst opinions. I welcome anyone to start cruising the yahoo stock sit and pick 10 stocks at random and see.

Finally, you also have to consider the cost of not have SOX and what happened to the economy and the markets with all the meltdowns that occurred due to crimminal behaviours. Enron was the largest but by no means the only criminal enterprise. Investor confidence is important. Remove that and you have people more adverse to investing in stocks and corporate bonds and that would significantly drag the economy. Could SOX use some tweaking? Sure but without the microscope on congress that followed the Enron collapse then what nasty little surprises would be sneaked in by the business lobbyists?

The article seems more like a boohoo pity the poor non-discount brokerage tantrum than anything else.

Me, I use Scottrade. I did use Dean-Witter for my first small stock purchases in the 70's (tech stuff). amazing what one could do then with a 7-11 income.
Now you need 5 just to pay the rent.

> One of my clients' software packages saved a puchaser 150,000
> pounds(UK)

That's nice. But we can be certain that compliance cost in the millions. Thus, overall, they lost money.

> And frankly, in this day and age, if you do not
> have a solid database infrastructure you are at a competitive
> disadvantage. That's the reality of today's business AND government.

You're talking about an email db. It's possible they were trying to be good employers and be friendly to their employees' privacy.

> Finally, you also have to consider the cost of not have SOX and what
> happened to the economy and the markets with all the meltdowns that
> occurred due to crimminal behaviours.

You're making a rather big assumption here, that SOX would've kept that stuff from happening. But the way they got away with it was by lying or spinning to their accountants. SOX just means a little more lying to the accountants.

I see evidence that lying continues in the wake of SOX. Fastow probably would just've seen SOX as a challenge.

the software cost:
Enterprise Vault 6.0 $3,360 for the base server. Adding Exchange mailbox archiving capabilities costs $11,359, PST Migrator costs an additional $3,410.

Effin cheap if you ask me

I have a great deal of admiration for anybody who can make anything work with Exchange email systems. And that IS pretty cheap.

But it's still peanuts compared to the overall SOX cost.

Jon,

You seem pretty sure that SOX cost vs beninit is a loser, any reserch on the subjuct? I mean I would shicked if any real analysis could be done that would be valid at this point since all the costs are up front and all the benifits would be over time.

SOX compliance has done wonders for my companies bottom line but we make tracking software so....

Sorry, long weekend.

Actually for this particular company they had to buy probaly another 15K worth of software since they ahve about 2K computers throughout their location. The above quote was for 500 terminals.
Still, as noted, productivity gains measured over time always seems to trump initial costs. Since much of SOX is really information handling and validation much of the cost is in hardware and software. What my client discovered and then publicized is that a number of their customers decided to not only buy the enterprise vault but the backup and system optimization and analysis software packages. Then a lot of them discovered that they didn't need to buy more servers or fewer servers, increase the robustness and availability of their systems(less down time) and were able to reduce IT personnel (or at least not hire any nore) ROI's were typically 18 months to 3 years, even with the software maintenance contracts. (you do have those don't you Rick?)

You betcha .... but more to the point, our software, which is more of an Identity Management solution then a monitoring solution, has been able to ID enormous abuse of storage usage, and cut down on the time needed and resources devoted to scheduled backups for many of our clients as well as track unauthorized usage if internet resources and automate provisioning. Many of these features are required by SOX but we didn’t even discover the uses of our software for that purpose until we were doing some follow-up work with a number of our clients and we discovered that it was being used to log SOX mandated information.

ahhh so you're one of my clients competitors.
Funny that you should mention the unauthorized use.
The same customer (boy was he sound-bite central)
said literally the same thing, that they were able to reduce backup times and reduce the need for servers by eliminatiing a host of unauthorized usage.

Technology marches on;

I guess they won't be able to download the latest version of "The Internet is for Porn"