Rep. Ed Royce (R-CA) highlighted the role Sarbanes-Oxley played in the deterioration of the U.S. capital market during today’s House Financial Services Committee hearing. Yesterday, Royce introduced legislation to provide some relief on this front – H.R. 3655, the Small Business Access to Capital Act.

"Over the last 15 years we’ve seen our capital markets deteriorate. If we take a hard look at what’s discouraging capital from coming to our markets, Exhibit A continues to be Sarbanes-Oxley. Sarbanes-Oxley compliance is the most often cited reason why companies chose to list elsewhere," Royce said.

Royce pointed out that in the early 1990s, American exchanges played host to half of the world's new public companies. Last year, it was just 11 percent.

In an effort to reverse this trend, Rep. Royce introduced H.R. 3655, the Small Business Access to Capital Act. Royce’s legislation permanently exempts companies with a market capitalization of less than $1 billion from Sarbanes-Oxley, Section 404(b) - something recommended by the president’s Jobs Council.

Royce’s legislation would also address a key component of the SEC’s study which shows the long-term burden on small companies is more than seven times that imposed on large firms relative to their assets.

"The costs of this legislation far outweigh its benefits to the investing public and we need to remedy this situation before the capital markets walk off from the United States and go overseas," Royce concluded.

NOTE: To watch Royce’s opening statement in its entirety, please click here.

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