Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 (HR3763), signed into law on July 30, 2002, is considered the most significant change to federal securities laws since the New Deal. It came in the wake of a series of corporate financial scandals, including those affecting Enron, Arthur Andersen, and WorldCom.
Its major provisions include:
- Certification of financial reports by CEOs and CFOs
- Ban on personal loans to Executive Officers and Directors
- Accelerated reporting of trades by insiders
- Prohibition on insider trades during pension fund blackout periods
- Disgorgement of CEO and CFO compensation and profits
- Additional disclosure
- Auditor independence, including outright bans on certain types of work and pre-certification by the company's Audit Committee of all other non-audit work
- Criminal and civil penalties for securities violations
Whilst addressing a number of domestic concerns, the Act has been criticised by foreign regulators for seeking jurisdiction over their national affairs.
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Referenced By
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