The landmark Sarbanes-Oxley Act–passed this summer in the wake of the deluge of Enron and Worldcom-like scandals–was hurriedly put together, and much of the corporate world was left reeling, wondering what was now acceptable and what wasn’t.

But the prevailing mindset at the somewhat sparsely attended Securities Industry Association seminar on corporate governance Thursday was not fear of the Sarbanes-Oxley Act–but the SEC’s interpretation of it. As speaker Meyer Eisenberg, SEC deputy general counsel, tried to reassure, "I’m from the government. I’m here to help you."

Attendees and other speakers at the conference at the Westin Hotel in Times Square in New York were hard-pressed to agree. Michael R. McAlevey, partner with Alston & Bird, said, "it seems the SEC it taking things that Sarbanes-Oxley encouraged, and mandating them. There are many, many instances where the SEC has gone far beyond what Sarbanes-Oxley required them to do."

The Sarbanes-Oxley Act was passed less than a year after it was proposed–often legislation was written in while testimony in the Enron case was still going on–and was called by SEC commissioner Harvey J. Goldschmid "the most important piece of economic legislation since the New Deal." The target for its arrows is corporate governance, a law signed in specifically to avoid another Enron scenario.

But a common concern was that Sarbanes-Oxley handed over too much power to the SEC, a department that has certainly had its own fair share of problems of late. The budget for the department has been raised from $467 million to $776 million, and, according to Goldschmid, "the SEC now has quite formidable powers. It gave us the power to set national rules." (The White House recently tried to cut the budget again.)

Several speakers picked out specific aspects of Sarbanes-Oxley that the SEC overstepped, including wide five-year rotations of each company’s auditors (a law many felt would force smaller audit firms out of business) and the specific designation and qualifications of a "financial expert"–with the SEC the ultimate arbiter–on each company’s independent audit committee. (See the SEC’s interpretation of Sarbanes-Oxley’s "financial expert" provision here: http://www.sec.gov/news/press/2002-150.htm) In fact, many speakers, when discussing SEC interpretations of Sarbanes-Oxley edicts–the SEC provisions have yet to be formally ratified–predicted, almost incredulously, that the SEC would have to back off a little from its demands.

Not to mention, that the SEC, flush with all this new power, still has no chairman–Harvey Pitt resigned on Election Day. Rep. Michael G. Oxley (R-Ohio), delivering the conference’s keynote address, predicted a nominee would emerge by the end of the year, with confirmation when Congress reconvenes in February. Oxley in part defended the SEC, saying, "we switched, rapidly, to a nation of investors from a nation of savers. I think maybe [the SEC] weren’t able to stay ahead of that wave."

Another hotly debated topic was the so-called "whistleblower" statute of Sarbanes-Oxley. Aimed at encouraging employees (like brokers) knowing of wrongdoing to inform authorities immediately, the law states that it is illegal for any company to fire or "discipline in any way" an employee who is thought to be in possession of any particularly incriminatory information. Many panelists felt this was another example of Congress passing reactionary legislation without regard to its potential consequences.

"What I think will happen is that there will be a lot of protectoral claims," said Joseph Polizzotto, general counsel at Lehman Brothers. "Someone gets a bad review, or doesn’t get a bonus they were expected, next thing you know, two months later, they’re raising their hand, claiming technical violations." Noting such "discriminatory" claims are required by Sarbanes-Oxley to be filed to the Department of Labor, Polizzotto asked rhetorically, "Is the Department of Labor ready to deal with this, particularly in a down economy where many people will be laid off?" Polizzotto said.

Oxley, in his brief address, defended the SEC against its problems of the past.