SOX Summary
Jason Garrett
LAW/421
1/12/2014
Instructor: JANE SCHNEIDER

The Securities and Exchange Commission was created to hold companies accountable for reporting their current state of financial information on a statement to give the market and investors a snap shot of the company health. This basic legislation of 1933-1934 Securities Act was very basic when you fast forward six or several decades later since that Act there were legislation drafted twice one in 70’s and in the other in the early 90’s. They were introduce to improve on the Securities Acts of ’33 and ‘34 to curt tail newly created unethical practices the rear their head over the course of time but with no new legislative to combat it when it occurred there was no way to control them either. These drafts of new financial regulations were created to add on to the previous Acts to control these new and various forms fraud, falsifying and manipulations by corporations.
The draft act of ‘70 did not see the day of light but the one draft in the ‘90s almost made it but was pulled at the last minute and boy that was the one that could have changed what would later change the course of financial history. Unfortunately these legislatives never passed mainly due to the climate in the mid-nineties when making money was so easy from loading up corporations, dotcoms and startups, no one from CEO’s to most politicians did not want more financial regulations. In the late 90’ going into ’00, or before the Sarbanes-Oxley Act of 2002, The Sweeney (2012) website, more than 150 companies who engaged in the manipulation of stock-option grants, taking advantage of lax reporting rules, grantees cherry-picked the lowest stock price during the previous 90 days before cashing out at higher stock prices and maximizing their take.
According to the article, The Sweeney (2012) website, there was a spate of corporate fraud and fraudulent accounting statements, to accomplish massive fraud, corporate schemers invented fictitious sales and bogus revenue streams, concealed losses, inflated inventories and manufactured phony profits.

Change is caused by an event whether it is a miracle or a tragedy and usually it comes with a price like war for example there is a loss of life, loss of land and financial ruin. In this case it was a financial crisis and the cost was a lot of other people’s money, and in a sense it also cost lives to be forever ruined. The cause and effect made individuals to participate in unethical practices and ruthless behavior in accounting Eron for example was the end all be all, it was the elephant in the room the amount of money that was vacuum up in falsehood. Of course there was many company’s involved with this corporate scandal and they all exercised or went beyond limits to land the biggest earning potential but none where bigger than Enron. They cooked the books without having any books to cook and according and article from the The Sweeney (2012) website, Peter Henning, a Wayne State University law professor and an expert to white-collar crime was what actually put an end to the practice. that is when a the snow ball effect caused senators to first look at legislation for a new oversight board using the SEC draft with its 30 year old roots.
The death blow to this particular activity, Henning reports, was dealt by reporting requirements contained in the Sarbanes-Oxley Act of 2002. Under Section 403 of the law, senior executives must notify the U.S. Securities and Exchange Commission within three days of receiving, buying or selling stock, including stock options Sweeney (2012).
“If you look at the cases of stock-option backdating,” Henning says, “they all occurred before 2002. It’s likely the practice would have continued had not Sarbanes-Oxley stopped it dead in the water.” One huge effect of Sarbanes-Oxley was that it developed according to, The Fass (2003) website, the Public Company Accounting Oversight Board, a private, nonprofit corporation, to ensure that financial statements are audited according to independent standards. Sarbanes-Oxley also holds chief executives and chief financial officers directly responsible for the accuracy of financial statements. Penalties run up to $5 million in fines, a 20-year jail term or both. The law seeks to rule out conflicts that would make securities analysts less than objective and gives board audit committees–rather than CEOs or chief financial officers–full control of auditors.

Reference Page Entry
Sweeney, P. (2012). Sarbanes-Oxley — A Decade Later. Retrieved from http://www.financialexecutives.org/KenticoCMS/Financial-Executive-Magazine/2012_07/Sarbanes-Oxley--A-Decade-Later.aspx#axzz319yhjfOE
In-Text Citation 1. Insert the paraphrased material (Sweeney, 2012). 2. The Sweeney (2012) website Insert the paraphrased material. 3. Sweeney (2012), "Insert the quotation” (para. 1,2,3,4).

Reference Page Entry
Fass, A. (2003). One Year Later, The Impact Of Sarbanes-Oxley. Retrieved from http://www.forbes.com/2003/07/22/cz_af_0722sarbanes.html
In-Text Citation 1. Insert the paraphrased material (Fass, 2003). 2. The Fass (2003) website Insert the paraphrased material. 3. Fass (2003), "Insert the quotation” (para. 1,2,3,4).