TheStreet.com TV Recap: Sarbanes-Oxley Has Worked

The idea that the IPO market has shrunk in the U.S. because firms don't want to comply with Sarbanes-Oxley and are going overseas is a "red herring," Jim Cramer said on the TheStreet.com TV's Wall St. Confidential video Webcast Friday.

After a lot of initial public offerings last year, the pipeline has been emptied and now the IPOs are of "lower quality," he told Aaron Task, the host of Wall St. Confidential. This, Cramer continued, happens periodically, as it is a cyclical business.

"We'll recharge and some companies will maybe come to market next year," he said. But, as for now, Cramer sees very little that he likes here.

Concerning Sarbanes-Oxley, he said he believes the act is doing a "great thing."

"I think it has served as a barrier the Securities and Exchange Commission always should have had," Cramer said. "The SEC's view is that everything can come public, provided that you disclose," which is not protective of anyone.

He said he sees the SEC's job as being twofold: to stop corruption in the system and to shine light on whatever the corruption is. However, Cramer does not feel disclosure kept "crummy companies" from coming public in 1999 and 2000.

When Task asked if the venture capitalists are more inclined to be owners now because of Sarbanes-Oxley, Cramer said they want whatever can make them cash out easiest, regardless of whether the quality of the IPO is good or not.