Most Louisville residents have never heard of the Sarbanes-Oxley Act that was signed into law by President George W. Bush back in 2002. But this comprehensive federal law — it has 11 sections — could indeed adversely impact your life if you wind up on the wrong side of the law with the Securities and Exchange Commission (SEC).
Its provisions both expanded and established requirements for public accounting firms, managers and public company boards here in the United States. Companies that are held privately may also be affected by some provisions, e.g., willfully destroying evidence that impedes federal investigations.
It was passed in the wake of several egregious scandals like WorldCom and Enron. As a result, criminal penalties were added that gave the SEC more authority to define the ways public corporations must comply with federal laws prohibiting misconduct.
At the time the bill was signed into law, President Bush stated that it was “the most far reaching reforms of American business practices since the time of Franklin Delano Roosevelt.” Indeed, the Act created reforms that strengthened the financial disclosures of corporate entities and made them more responsible for accounting fraud.
The Sarbanes-Oxley Act was also responsible for the creation of the Public Company Accounting Oversight Board (PCAOB), which oversees auditors’ activities.
Federal securities laws can be nuanced and difficult for lay persons to correctly interpret when determining whether their actions lie within or outside of United States laws. Individuals may learn that they inadvertently ran afoul of some laws that could land them in a federal penitentiary.
If you have any concerns or face prosecution for violations of this Act, you can seek guidance from a Louisville securities law and litigation attorney.