Passed in 2002, the Sarbanes-Oxley Act, frequently shortened to “Sarbox” or “SOX”, is a fderal law that was passed as a response to a series of high-profile financial scandals that occurred around the turn of the 21st century at companies including Enron, WorldCom and Tyco that shook investor confidence. The goal of SOX was to improve corporate oversight and accountability in the hope that similar scandals would not be repeated.

Since the passage of SOX, all public companies are required to comply with the provisions of the Act. Certain provisions of SOX, such as those dealing with the willful destruction of evidence to impede a Federal investigation, also apply to privately held corporations. SOX set new standards with regard to how a corporate board of directors must account to shareholders and how company records must be stored. In addition, SOX requires the Securities and Exchange Commission to create regulations to define how public corporations are to comply with the law and includes criminal penalties for certain corporate misconduct. Elements of the Sarbanes-Oxley Act include, but are not limited to, the following:

• Public Company Accounting Oversight Board (PCAOB) – the PCOAB provides independent oversight of public accounting firms providing audit services and creates a central oversight board.
• Auditor Independence — establishes standards for external auditor independence and sets new auditor approval requirements, audit partner rotation, and auditor reporting requirements.
• Corporate Responsibility – forces senior executives to take responsibility for financial reports as well as sets specific limits on the behaviors of corporate officers and describes specific forfeitures of benefits and civil penalties for non-compliance.
• Enhanced Financial Disclosures — enhanced reporting requirements for financial transactions and requires internal controls for assuring the accuracy of financial reports and disclosures.
• Analyst Conflicts of Interest — defines the codes of conduct for securities analysts and requires disclosure of knowable conflicts of interest.
• Commission Resources and Authority — defines the SEC’s authority to censure or bar securities professionals from practice.
• Studies and Reports — requires the Comptroller General and the SEC to perform various studies and report their findings.
• Corporate and Criminal Fraud Accountability — sets specific criminal penalties for manipulation, destruction or alteration of financial records or other interference with investigations as well as providing protections for whistle-blowers.
• White Collar Crime Penalty Enhancement — increases the criminal penalties associated with white-collar crimes and conspiracies.
• Corporate Tax Returns — states that the Chief Executive Officer should sign the company tax return.
• Corporate Fraud Accountability — identifies corporate fraud and records tampering as criminal offenses and joins those offenses to specific penalties.

If you have additional questions or concerns about the Sarbanes-Oxley Act contact the experienced Florida employment law attorneys at Celler Legal, P.A. by calling 954-716-8601 to schedule your appointment.

To learn more, please download our free Florida Sarbanes Oxley Act here.