Companies 'Go Dark' to Avoid SOX Compliance

The Sarbanes-Oxley Act, enacted in 2002 in the wake of corporate scandals that rattled America's capital markets, was supposed to give more protection to investors.

But the higher costs that accompany increased disclosure and stiffened internal controls appear to be driving a growing number of companies to simply withdraw from the major exchanges.

Some are going private and others "going dark," that is, deregistering their stock with the Securities and Exchange Commission. Instead, their shares are listed on the "Pink Sheets," an electronic quotation medium for companies not listed on stock exchanges.

These companies don't have to meet listed companies' disclosure requirements. So instead of providing more information to investors, they provide none.