Sarbanes-Oxley Act of 2002
Professor Melinda Gregg
November 9, 2015
A regulatory agency is a representation of a governmental body, which is produced by a legislature. Regulatory agencies are implemented to enforce laws of legislative functions, executive functions, and judicial functions. The regulatory agencies plays a central role in the operation of the financial sector. There are a numerous variances of regulatory agencies, which all serve a different purpose in business law enforcement. Some of which include the Environmental Protection Agency, Occupational Health and Safety Administration, and the Securities and Exchange Commission. For the ...view middle of the document...
The Division of Investment Management provides protection to investors promoting capital formation through oversight and regulation of America's $26 trillion investment management industry (SEC.gov, 2013). The Division of Enforcement recommends the commencement to investigate securities law violations and initiates civil and criminal actions. The Division of Economic and Risk Analysis assists the Commission in executing its mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation by integrating robust economic analysis and rigorous data analytics into the work of the SEC (SEC.gov, 2013).
The Laws Which Govern Securities
Securities Act of 1933, also known as the truth in securities law, has two basic objectives: investors receive financial and other significant information concerning securities being offered for public sale; and prohibit deceit, misrepresentations, and other fraud in the sale of securities (SEC.gov, 2013). The SEC Act of 1934 created the Securities and Exchange Commission, giving extensive authority over securities industry. Trust Indenture Act of 1939 applies to debt securities such as bonds, debentures, and notes that are offered for public sale (SEC.gov, 2013). The Investment Company Act of 1940 was established to regulate organizations of companies, to ensure minimal conflict of interest. The Investment Advisers Act of 1940 ensures that investment advisers register with the SEC and follow regulations designed to protect investors.
The Sarbanes-Oxley Act of 2002 mandated a number of reforms to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud, and created the "Public Company Accounting Oversight Board," also known as the PCAOB, to oversee the activities of the auditing profession (SEC.gov, 2013). Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 was established to reshape the regulatory system in areas such as: consumer protection, trading restrictions, credit ratings, etc. Jumpstart Our Business Startups (JOBS) Act states that the SEC must design rules and issue studies on capital formation, disclosure, and registration requirements (SEC.gov, 2013).
The Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 was signed by President Bush on July 30, 2002. The Sarbanes-Oxley Act was enacted in response to a series of high-profile financial scandals that occurred in the early 2000s at companies including Enron, WorldCom and Tyco that rattled investor confidence (SearchCIO.com, 2015). It was intended to improve corporate governance and accountability.
The Act was derived of sixty-six sections, each section dealing with a different part of the reporting cycle. Each section consist of eleven titles dealing with internal control. The eleven titles of SOX are as follows: Public Company Accounting Oversight Board, auditor independence, corporate responsibility, enhanced financial disclosures,...