Krugman was noting a position of Republican Presidential candidate Ron Paul, a libertarian type from Texas. Apparently Paul is/was against Sarbanes-Oxley and lobbied against it. Krugman digs this up from the New York Times:
In a statement, the congressman said the provision “has raised the costs of doing business, thus causing foreign companies to withdraw from American markets and retarding economic growth.”
He then goes on to comment: "What's that about?" and discusses the actual provisions of Sarbanes-Oxley, which provides for special rules with respect to corporate audits, internal controls, disclosure, etc. The provision is meant to fight against fraud and abuse, and avoid Enron-type situations. Certainly a laudable goal.
All that being said, Ron Paul is of course correct is his characterization of Sarbanes-Oxley. I'm not a securities lawyer, and I do not work on a lot of equity market projects, but even so I have heard countless stories about Chinese companies who decide to list in London or Hong Kong because Sarbanes-Oxley is seen as too burdensome. The transaction costs are incredibly high for compliance, and therefore companies just go elsewhere.
Now, you can still argue that Sarbanes-Oxley is worth it, or you can propose alternative legislation (Ron Paul didn't, but should have), but taking Ron Paul's statement and then calling him a friend of corporate fraud goes a bit too far.