On Thursday, members of the House Committee on Financial Services will hold a hearing on "The 10th Anniversary of the Sarbanes-Oxley Act.”

The assessment of that historic, and still controversial, legislation was conducted by the body's Subcommittee on Capital Markets and Government Sponsored Enterprises. The hearing begins at 9:30 a.m. in Room 2128 of the Rayburn House Office Building and will be accompanied by a live webcast.

Among those slated to testify are: Marie Hollein, president and CEO of Financial Executives International (FEI); John Berlau, senior fellow with the Competitive Enterprise Institute; Mercer Bullard of the University of Mississippi School of Law; John Coffee of Columbia University Law School; Mallory Factor, a professor at The Citadel; Michael Gallagher, chairman, Professional Practice Executive Committee, Center for Audit Quality; and Jeffrey Hatfield, CEO of Vitae Pharmaceuticals on behalf of the Biotechnology Industry Organization.

In written testimony available in advance of the meeting, Bullard pointed to some SOX provisions that haven't worked as effectively as planned.

Among them are whistleblower provisions that “have been substantially undermined by a First Circuit holding that they do not protect employees of nonpublic companies, even if the whistleblowing relates to a public company's compliance.”

Congress should amend Section 806 to clarify that public companies cannot evade whistleblower protections simply by retaining nonpublic companies for accounting and other compliance-­-related services, he says.

SOX Section 403 has “substantially mitigated” executive compensation abuses by requiring that executives report transactions in company securities within two business days. “This provision has been particularly effective in preventing fraudulent backdating of stock options,” Bullard says, adding, however, that “backdating continues to be a problem because a large percentage of executives are violating the two-day reporting requirement.”

“Enhanced enforcement and penalties should be considered to ensure compliance with this requirement,” he says.

A mandatory auditor rotation requirement was considered during the debates leading to the Act, but not enacted,” Bullard says, adding that “this proposal continues to have significant potential for improving auditor independence, especially in view of the decades-long tenure that some auditors have with their clients.”

“Since the enactment of Sarbanes-Oxley a decade ago, two theories have been regularly at war in legislative debates over financial regulation,” Coffee wrote in his testimony. “Theory One, which certainly underlies the recently enacted JOBS Act, is that our capital markets are buried under an avalanche of overregulation. Theory Two is that our capital markets are suffering from the loss of investor confidence.”

In his view, the latter is more accurate, especially in light of ongoing headlines about MF Global, LIBOR manipulation and a botched Facebook IPO.

He views some provisions of the JOBS Act, as “reasonable in updating or streamlining existing exemptions,” bit sees other aspects of the JOBS Act “as a major retreat from our longstanding commitment to principles of transparency and full disclosure.”

Likewise, H.R. 6161 (the “Fostering Innovation Act”) would further chip away at the intent of Sarbanes-Oxley and is a “proposed step in the headlong retreat from transparency.” That bill changes the definition of “accelerated filer” in SEC Rule 12b-2 so that companies that are neither “emerging” nor “growth” companies can also escape Section 404(b) of the Sarbanes-Oxley Act, which requires an annual audit of internal controls.

Coffee says that there remains “strong evidence “ that Section 404(b) “provides meaningful protections to investors.” Contrary to critics, he says it had “little or no effect on [firms'] decisions to go private or go dark.”

Hatfield, a proponent of the Fostering Innovation Act, offered a different take on the SOX legacy, in his advance, written testimony.

“In the biotech industry, an informed investor is a good one,” he says. “However, the information that these investors want and need does not always align with what is required by SOX. Section 404(b) requires an expensive external attestation of a public company's internal controls, to be disclosed to investors on an annual basis. The true value of a biotech company is found in scientific milestones and clinical trial advancement toward FDA approvals rather than financial disclosures of losses incurred during protracted development terms.”

Hatfield says that spending capital on regulatory burdens slows the development process, “increasing the time it takes to reach the important milestones that trigger new investments.”

“Without product revenue, biotech companies on the public market are forced to ask investors to pay for SOX reporting rather than scientific research,” he says.