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Sarbanes-Oxley Act

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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