Sarbanes-Oxley Act of 2002 - SOX

An act passed by U.S. Congress to protect investors from the possibility of fraudulent
accounting activities by corporations.

(Sarbanes-OXley Act) Administered by the Securities and Exchange Commission (SEC)

in 2002, SOX regulates corporate financial records and provides penalties for their abuse.
It defines the type of records that must be recorded and for how long. It also deals with
falsification of data. Affecting data storage capacities and planning, SOX was enacted
after the Enron and WorldCom scandals of the early 2000s. The bill was sponsored by
Paul Sarbanes, Democratic Senator from Maryland and additionally authored before
passage by Michael Oxley, Republican Senator from Ohio.

The rules and enforcement policies outlined by the SOX Act amend or supplement
existing legislation dealing with security regulations.

The basic outline is as follows:

1. Establishment of a Public Company Accounting Oversight Board, where public

companies must now be registered.

2. Strict auditor regulation and control by means of auditing committees and inspecting
accounting firms.

3. Heightened corporate responsibility for any fraudulent actions taken.

4. Stricter disclosure within company financial statements, and ethical guidelines to

which senior financial officers must adhere.

5. Guidelines for analyst conflicts of interest.

6. Authorities available to the Commission and the Federal Court, as well as required
broker and dealer qualifications.

7. Enforcement methods available for punishment of activities deemed criminal by the

Act.