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Sarbanes Oxley Act Of 2002

1308 words - 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 ...view middle of the document...

The nation’s securities exchange has went global for profit competitors, so there is greater need for sound market regulations, “And the common interest of all Americans in a growing economy that produces jobs, improves our standard of living, and protects the value of our savings means that all of the SEC's actions must be taken with an eye toward promoting the capital formation that is necessary to sustain economic growth” (The Investors Advocate, 2013).
“The laws and rules that govern the securities industry in the United States derive from a simple and straightforward concept: all investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it, and so long as they hold it (The Investors Advocate, 2013) ”. To make sure this happens, the SEC requires that all public companies to make all meaningful financial and other information available to the general public. This gives knowledge for all investors to use to judge for themselves whether they want to buy, sell, or hold a particular security. This will also help the public to make timely, comprehensive, and accurate sound investment decision (The Investors Advocate, 2013). “The result of this information flow is a far more active, efficient, and transparent capital market that facilitates the capital formation so important to our nation's economy (The Investors Advocate, 2013)”. The SEC is continuing to work with all major market participants to insure that this objective is always being followed. The SEC makes a point to listen to the investors in our securities markets, about their concerns and they take these concerns and learn from their experience (The Investors Advocate, 2013).
“The SEC oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds (The Investors Advocate, 2013)” The SEC is mainly concerned with promoting the disclosure of important market related information and maintaining fait dealing; protecting against fraud. 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...

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