Sarbanes - Oxley Act of 2002

1275 Words Nov 2nd, 2013 6 Pages
In this paper the author will describe the main aspects of the regulatory environment which will protect the public from fraud within corporations. The author will pay special attention to the Sox requirement; along with evaluating whether Sox will be effective in avoiding future frauds.
Regulatory environment consist of several laws and regulations that has been developed by federal, state, and local governments in order to limit control over business practices. The regulatory environment plays an important role in the positive operation of the financial sector and in the efficient management and integration of capital flow and domestic savings. “The value of the claims of financial institutions on borrowers is dependent upon the
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Every year the SEC brings hundreds of civil enforcement actions against individuals and companies for violations of the securities law. Some of the main infractions are: trading, accounting fraud, and providing false or misleading information about the securities and the companies that issue them.
“The SEC works closely with many other institutions, including Congress, other federal departments and agencies, the self-regulatory organizations (e.g. the stock exchanges), state securities regulators, and various private sector organizations. In particular, the Chairman of the SEC, together with the Chairman of the Federal Reserve, the Secretary of the Treasury, and the Chairman of the Commodity Futures Trading Commission, serves as a member of the President's Working Group on Financial Markets (The Investors Advocate, 2013)”. The SEC is one of the main sources that helps protect the general public form fraud within a corporation. However, the Sarbanes - Oxley will play an important role with the SEC to help protect the public form fraud within corporation.
On July 30, 2002, the Sarbanes – Oxley Act was developed to help protect the public from fraud within corporation. However, it was created because positive solutions were needed after the issues from fraudulent accounting practice. For example the Enron, Tyco, and WorldCom scandals and the questions concerning governance in American Corporations that occurred in
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