Sarbanes-Oxley law has been a pretty clean sweep

— -- Investors who got a midsummer haircut last week during the Dow's 735-point drop from 14,000 probably aren't singing Happy Birthday for the Sarbanes-Oxley Act, which is 5 years old today. But maybe they should be.

If you think last week's sell-off was bad, recall the summer of 2002. Enron had imploded, WorldCom admitted to fabricating billions of dollars in earnings, and prosecutors were swirling around Tyco and Adelphia. From May 24 of that year to July 23, the Dow dropped from 10,104 to 7,702, a plunge of 24%.

That wasn't a haircut, or a correction. It was a full-blown crisis. The public, and even the White House, demanded action.

In response, Congress passed the Sarbanes-Oxley Act on July 30, 2002. The law forced public companies to spend much more money having their books thoroughly audited, and it increased the penalties for executives who defrauded investors. Since the bill's passage and implementation, nervous investors who had yanked trillions of dollars from the market have returned.

Yet now, despite the law's apparent success, some powerful members of the financial community have spoken out against it. The most prominent are U.S. Treasury Secretary Henry Paulson, New York Stock Exchange CEO John Thain and former AIG chief Maurice "Hank" Greenberg. All three have warned that the regulatory environment in the USA threatens its competitive position in the global marketplace.

But their voices appear to be isolated.

Charles Niemeier, a member of the Public Company Accounting Oversight Board (PCAOB) — which was created by Sarbanes-Oxley — says the law has been a huge success for the average investor.

"Instead of the sky falling, it's just the opposite," he says. "I see it as a clear, blue sky. We're in a better place today, but we're not willing to admit it."

"It's a terrific piece of legislation," says Chuck Bowsher, former U.S. controller general and a longtime accounting industry watchdog. "It's worked very well."

"We're in much better shape today than we were prior to Sarbanes-Oxley," says Harvey Goldschmid, who served as an SEC commissioner from 2002 to 2005. "The markets were in turmoil, corporations were in disrepute. There was a real fear that the lack of trust in the markets could create long-term problems."

Christopher Cox, the current SEC chairman, says, "Sarbanes-Oxley helped restore trust in U.S. markets by increasing accountability, speeding up reporting, and making audits more independent."

Like any landmark piece of legislation, Sarbanes-Oxley Act sparked controversy. From Corporate America as well as the nation's auditing firms, complaints poured in during the early days. But after the market digested the changes, the law wound up helping public companies vet their own financial statements.