In The Wake Of The Massive Securities Fraud That Caused

1063 WordsApr 20, 20175 Pages
In the wake of the massive securities fraud that caused the collapse of Enron, WorldCom, Adelphia and other public companies, Congress hastily, and by an impressive margin (99-0 in the Senate and 423-3 in the House), passed the most sweeping securities legislation since the Securities Exchange Act of 1934. (Managers and the Legal Environment, 8th Edition, Strategies for the 21st Century, 2016) “The [Sarbanes-Oxley] Act effects dramatic change across the corporate landscape to re-establish investor confidence in the integrity of corporate disclosures and financial reporting.” (William H. Donaldson, 2003) The Sarbanes—Oxley Act of 2002 (SOX) contains eleven titles, which attempt to eradicate specific problems that Congress believed caused…show more content…
It extended the statute of limitations on certain actions brought by defrauded investors, and it provided that debts incurred from judgements or settlements relating to securities fraud are not dischargeable in bankruptcy. SOX also requires that auditors retain records relevant to financial audits for seven years after the completion of the audit. (Managers and the Legal Environment, 8th Edition, Strategies for the 21st Century, 2016), these records include an accounting firm 's work-papers and certain other documents that contain conclusions, opinions, analyses or financial data related to the audit or review. ( (William H. Donaldson, 2003) Whistleblower protection for employees of publicly traded companies The statutes enforced by OSHA contain whistleblower or anti-retaliation provisions that generally provide that employers may not discharge or retaliate against an employee because the employee has filed a complaint or otherwise exercised any rights provided to employees. Each law requires that complaints be filed within a certain number of days after the alleged retaliation. Complaints may be filed orally or in writing, and OSHA will accept the complaint in any language. (United State Department of Labor, 2017) Burdens of the Legislative Actions Understandably, most executives wondered why they should be subjected to the same compliance burdens as those who had been negligent or dishonest.
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