Usha, I think you've woven together several threads that need to be separated analytically.

1. SOX in general doesn't address board issues. Specifically, Section 406 is not a directive to the board, but to the issuer, and the statute literally applies only to a code of conduct for financial officers (the principal financial officer and the principal accounting officer). In adopting regulations for disclosure in Reg S-X and S-K, the SEC expanded this to CEOs, but in no event does it apply generally to related party transactions, say of the board.

2. I haven't looked at NASDAQ in a long time, but the only place you find regulatory directives to the board is in the listing requirements of NYSE 303A, which dictate that a majority of the board be independent, and define director independence, inter alia, in terms of there not being related party transactions in excess of a certain amount.

3. The point is that it's hardly surprising to me that you haven't found many Section 406 waivers. Director related party transactions are far more common than CEO or CFO related party transaction, but Section 406 only deals with the latter. Indeed, it is reflective generally of SOX's idiosyncratic genesis (see Roberta Romano's exhaustive "The Making of Quack Governance" and my more ethereal "Sarbanes Oxley, Jurisprudence" piece in the Wayne Law Review) that it took aim at the Enron pathologies - notably Fastow's deals and the trading during blackouts - not because they were endemic problems, but because they were the specific things at issue in Enron.

4. In short, you likely don't see the remedy much at work, because there never was much of a problem the remedy was designed to cure. It was a pile driver aimed a walnut, albeit a big and well-publicized walnut.

I should add that SOX has directives to the audit committee of the board (its make-up in terms of independence and expertise, as well as its duties), but not to the board as a whole.

Jeff,

Thanks for your comments--I knew I was being a bit sloppy in my description, and I've edited the post a bit to reflect that. Like you, I had the sense that the provision wasn't engineered to provide much meaningful disclosure. I think there may be more going on with the waivers, though. I'll keep you posted on what I find.

I think it's easier to use LivEdgar (now Westlaw Business) and search by 8-K Section (5.05). Instead of taking a sample, this will allow you to search every filer. There are a lot of false hits doing this, but by searching the word "waiver" (somewhere other than the title, which is where all the false hits are), I found 5 in 2008 alone.

Loopholes are everywhere, oft in the eye of the beholder.

First, how shall we define loopholes?

Second, how shall we monitor their use?

Third, what shall we do with that data?

Tax lawyers understand all this at a visceral level.

Chris,

Thanks for your comment. We've done this search as well. You can't be entirely sure that you're getting the full universe, unfortunately, because of the ability of corporations to post waivers on their websites. But it gets us some data, at least.