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What is the Sarbanes-Oxley Act and Why Do I Care? (Part Two)

What is the Sarbanes-Oxley Act and Why Do I Care? (Part Two)

 

Photo Credit: SqueakyMarmot

As we learned in our last post, the Sarbane’s Oxley Act is a piece of legislation set forth to help maintain and promote a high level of integrity when it comes to financial reporting. We have already discovered details about the first five titles within the act but with eleven total titles we still have plenty to share. Just to review, the first five titles involved the public company accounting oversight board, auditor independence, corporate responsibility, enhanced financial disclosures and analyst conflicts of interest.  The titles that we will cover in part two are equal in importance and help create a positive and responsible financial environment.
The remaining six titles are as follows:

 

6. Commission Resources and Authority: The sixth title of SOX maps out the SEC’s ability to bar securities professional from practice and further defines the ways that other professionals like brokers, advisors and dealers can also be barred from practice.

 

7. Studies and Reports: This title requires the SEC and Comptroller General to create multiple studies based on various financial findings. Examples of these studies would include studies on consolidation, credit rating agencies and various scandals like Enron and Global Crossing.
8. Corporate and Criminal Fraud Accountability: In its entirety, this title includes the specification of penalties for financial crimes like manipulation and destruction of records while also placing a level of protection on any reporter of a financial crime.

 

9. White Collar Crime Penalty Enhancement: Title 9 of SOX increases the penalties for anyone associated with conspiracies and white collar crime. It recommends stronger sentencing and clearly defines certain practices as criminal.

 

10. Corporate Tax Return: This being one of the simplest titles to understand defines signing responsibility and states that the CEO should be the signer of all federal tax returns.

 

11. Corporate Fraud Accountability:  The final title defines various aspects of fraud as criminal offenses (e.g. tampering) and identifies the penalties of those crimes. This title also gives the SEC authority to temporarily freeze suspicious payments for investigation.

 

As you can see, the eleven titles included in the Sarbanes Oxley Act map out a wide array of issues that have effected financial and corporate crime in the past. While it is a hard topic to understand, here at Stock Connections, we do specialize in SOX and SEC compliance, if you have any questions, please feel free to contact us. We are happy to help.

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