There’s an old story about a championship basketball game in the animal kingdom between the Ants and the Elephants. Late in the game, with the Elephants up by one, the Ants had possession, and were heading down the court looking to score. As the star Ant dribbled forward, the Elephant guarding him lifted his foot and crushed the Ant. The referees blew their whistles, called a foul and one official asked: “What’s the big idea? What did you think you were doing, stomping on an opposing player?” The offending Elephant shrugged haplessly and said he wasn’t trying to crush the ant, “I was merely trying to trip him!”
A large number of small companies are feeling like the beleaguered Ants basketball team these days. Trying to make sense out of the current regulatory environment isn’t easy for anyone, but it’s especially difficult for small- and mid-cap sized public companies. When Sarbanes-Oxley was passed, Congress rejected the recommendation of the SEC and eschewed an approach of expressly allowing the SEC to tailor the Act’s requirements to different types of companies. It also declined to permit individual companies to tailor the Act’s provisions to each company’s specific circumstances, as it had done in the Foreign Corrupt Practices Act in 1977.
