The
Sarbanes-Oxley Act of 2002 (HR3763) 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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