US - Regulations in the US are too overbearing and stifle small companies, according to Russell Cleveland, CEO and president of Renn Capital Group.
“If I were to point out a barrier or a stumbling block to investing in US small caps, it would be the regulatory environment of the US,” said Cleveland.
“We have bureaucratic nonsense like Sarbanes Oxley - there is some good there, but there is also a terrible burden on small companies.”
Jeff Nipp, director of investment manager research Watson Wyatt said he did not view the regulatory environment as harmful to small caps. “You hear a little about Sarbanes Oxley and the burden it puts on small companies, but it has not seemed too bad,” he said.
There were just marginal issues that alone were not going to put people off investing in US small caps. “The government does not want to put small companies out of business,” he said.
But Cleveland disagreed, claiming there was sentiment in the US that the regulation was due to high profile cases such as Enron, and this was hurting small companies “a great deal”.
However, he added that the situation was improving: “It’s like the way a pendulum swings - you completely overdo things, then you come back to something that makes some sense, and I think that is where we are in the [US] today.”
“We have a new chairman of the SEC and there is a committee listening to lots of business leaders and making recommendations that I think are favourable to business. Whether they come through, I don’t know.”
By Damian Clarkson
This week's edition of Professional Pensions is out now
Collective defined contribution (CDC) schemes will need clear and transparent governance frameworks, as well as effective communication strategies, to be a success, the Work and Pensions Committee (WPC) has been told.
The aviation sector's constant evaluation of mistakes to improve safety should be applied to defined benefit schemes, as too many are making the same mistakes again and again, latest research shows.
A month of strikes are due to hit 64 universities from tomorrow over major reforms to the Universities Superannuation Scheme (USS).