Sarbanes Oxley And The Oxley Act

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In the early 2000’s there were a series of financial scandals that took place by large companies such as Enron, Tyco, and WorldCom. The impact of these scandals was significant. Investors lost large amounts of money. Employees of the scandalous companies not only lost their jobs but lost their life savings. The financial scandals that had taken place were so severe that an Act was created in response to them in hopes to prevent these scandals from happening. The Sarbanes-Oxley Act, also referred to as SOX or Sarbanes-Oxley, was created by Senator Paul Sarbanes and Representative Michael Oxley and was signed into law by President George W. Bush on July 30, 2002. The creation and passing of the act was so tremendous that “in the opinion of most observers of securities legislation” Sarbanes-Oxley was “viewed as the most important new law enacted since the passage of the Securities and Exchange Act of 1934” ( 2008). The Sarbanes-Oxley Act was devised and designed to protect shareholders, as well as the public, from errors in corporate accounting and fraudulent business practices. All publicly traded companies, no matter their size, are required to comply with the terms of the Act. The Act was not only created to regulate corporate business practices, but also was created with the intention to help gain back the public’s trust in large, publicly traded corporations. The Act helps the Security Exchange Commission (SEC) in regulating companies and making sure these

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