As Congress continues to work on overhauling the regulatory system in response to the financial crisis, it was timely to hear a reformer from the past financial crisis speak today at a key meeting of actuaries. In a luncheon speech at the Casualty Actuarial Society (CAS) annual meeting in Boston, Senator Paul Sarbanes, former U.S. Senator and co-author of the Sarbanes-Oxley Act of 2002 (or SOX, as it is better known) made clear that he stands by the law that he helped craft. Senator Sarbanes noted that the latest financial crisis was a breakdown in risk management and regulatory oversight, neither of which SOX was designed to address. Ã¢â‚¬Å“This crisis was not a breakdown in financial reporting. In fact, the legislation (SOX) has helped us avoid a crisis involving both risk management and financial reporting,Ã¢â‚¬ he said, adding: Ã¢â‚¬Å“SOX never mandated against bad business judgments which are what we have seen take place.Ã¢â‚¬ At the same time, Senator Sarbanes addressed concerns over Section 404 under SOX which requires companies to assess the adequacy of internal controls. This provision has proved controversial because some businesses say the cost of compliance is far too great. Senator Sarbanes said he is not in favor of an amendment that would exempt small-cap companiesÃ‚ under $75 million from auditing requirements under SOX. Ã¢â‚¬Å“My strong view is that we should address the complaint about the cost, but every public company that gets listed on an exchange ought to have a certified system of internal financial controls.Ã¢â‚¬ There you have it Ã¢â‚¬“ directly from a reformer of the previous financial crisis. Check out further I.I.I. information on regulation modernization and insurance.