Sarbanes Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 is a United States federal law enacted on 30th July 2002, also known as the Public Company Accounting Reform and Investor Protection Act of 2002 and commonly called SOX or Sarbox. This law was passed in response to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom. These scandals, which cost investors billions of dollars when the share prices of the affected companies collapsed, shook public confidence in the nation's securities markets. Named after the sponsors Senator Paul Sarbanes of the Democratic party of Maryland and Representative Michael G. Oxley of the Republican party of Ohio.
The program is critical to protecting investors and promoting the integrity and efficiency of the U.S. securities markets. Recent exposure of issues relating to research analyst reports, investment companies, investment advisers, and broker-dealer sales practices have highlighted major problems resulting from conflicts of interest inherent in the financial services business. Further, as illustrated by recent scandals in the areas of corporate accounting and auditing, as well as by the growth of online activity that affects investment decisions and by the expansion of international markets, the need continues for maintaining and enhancing a national program to prevent and suppress fraud.
Congress established laws designed to restore and maintain investor confidence in capital markets by providing structure and government oversight. Securities laws and regulations were established to deter fraud and misrepresentation in connection with the offer and sale of securities. This program is directed at detecting and sanctioning fraudulent activity in the securities markets, including fraud by brokers, dealers, investment advisers and investment companies, financial fraud by issuers of securities, fraud in securities offerings,...
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