Criminal Liability Under the Sarbanes Oxley Act - Explained
What is Criminal Liability under the Sarbanes-Oxley Act?
Written by J. Mance Gordon
Updated at April 21st, 2024
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What is the Sarbanes-Oxley Act?
The Sarbanes-Oxley Act (SOX) is a set of federal laws addressing criminal and unethical conduct of public company boards and management. It also addresses the accounting and auditing practices of firms servicing these public companies.
What are the criminal provisions under the Sarbanes-Oxley Act?
The criminal sanctions under the Sarbanes-Oxley Act (SOX) Act are as follows:
- Title VIII & XI - This portion of SOX contains the "Corporate and Criminal Fraud Accountability Act of 2002". It provides criminal charges for the creation or destruction of fraudulent corporate records. It generally addresses fraud through the use of corporate records and provides established ranges of criminal penalties. It also establishes protections against retaliation for those reporting such activity.
- Title IX - This portion of SOX is called the "White Collar Crime Penalty Enhancement Act of 2002. It provides criminal charges for illegal and unethical conduct by officers and managers that harms the public. It specifically requires corporate managers to certify that records are true and accurate.
SOX was passed in the wake of numerous corporate scandals that rocked the financial markets, such as World Com, TyCo, Enron & Arthur Andersen.
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