Will Sarbanes-Oxley Hurt the Returns of non Hedge Fund Investors?

One area that non-hedge fund investors may miss out on are small cap growth stocks.

Because of compliance costs with Sarbanes-Oxley (which, ironically, was passed to “protect” investors - never mind that the Enron, etc. fraudsters were prosecuted successfully under the old laws), a lot of companies are delaying going public.

This means that, for example, if Microsoft was starting out now, itmay not have gone public at the point that it did, so public investors might not have had the same opportunity for return.

Hedge funds, on the other hand, could invest privately in the companies before they go public.