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Sarbanes-Oxley Acts

Hello Rahul,

As always, thank you for your help. I have a new short essay I need help with.

Thank you very much!!

Here are the directions for the essay:

During the last few years there have been a number of public corporations that have gone bankrupt at the expense their investors. Most would say an investor should expect to lose their money since there is a certain element of risk whenever you invest in the stock market. But in these high profile cases many of the investors were in fact employees of the firm who were investing in the firm through their 401K funds retirement programs.

The Sarbanes-Oxley Act has been passed to help cut down on some of the risk to investors whether they are company employees or pure and applied investors.

Define the Sarbanes-Oxley Act with special emphasis on the purpose of this legislation, how the act has been implemented, documented success of the act to this point. Evaluate if more regulations or laws are needed on the books.

Argue whether rank and file employees who are simply building up their savings should be considered and protected as another class of investor. As a specific example of this, one Enron Lineman had a 401K pension fund of $341,000 and in three days his pension fund was worth $1,200. Is it ethical to work all your life to arrive at this point or are these simply risks each investor takes. Do we have an ethical right to protect these investors?

Finally, does putting white collar criminals away for long periods of time seem like the best answer? Should they be working to repay their victims?

Solution Preview

As always, thank you for your help. I have a new short essay I need help with. As in the previous cases, it should be roughly ~2,000 words and address all the points mentioned in the statement. I need it for next Wednesday.

During the last few years there have been a number of public corporations that have gone bankrupt at the expense their investors. Most would say an investor should expect to lose their money since there is a certain element of risk whenever you invest in the stock market. But in these high profile cases many of the investors were in fact employees of the firm who were investing in the firm through their 401K funds retirement programs.

The Sarbanes-Oxley Act has been passed to help cut down on some of the risk to investors whether they are company employees or pure and applied investors.

Define the Sarbanes-Oxley Act with special emphasis on the purpose of this legislation, how the act has been implemented, documented success of the act to this point. Evaluate if more regulations or laws are needed on the books.

Argue whether rank and file employees who are simply building up their savings should be considered and protected as another class of investor. As a specific example of this, one Enron Lineman had a 401K pension fund of $341,000 and in three days his pension fund was worth $1,200. Is it ethical to work all your life to arrive at this point or are these simply risks each investor takes. Do we have an ethical right to protect these investors?

Finally, does putting white collar criminals away for long periods of time seem like the best answer? Should they be working to repay their victims?

Define the Sarbanes-Oxley Act with special emphasis on the purpose of this legislation, how the act has been implemented, documented success of the act to this point. Evaluate if more regulations or laws are needed on the books.

The recent debacle of various organizations likes ENRON, WorldCom and also there was questionable role of financial reporting. These companies have shown all of us how the dishonest, corrupted the business world has become and the men that lead these companies are clear examples of what you do not want to become. Executive position begat power and if it is not handled correctly that power will begat corruptive disaster. (Nahavandi, 2003) Sarbanes-Oxley Act of 2002 was passed by congress to "improve corporate governance, restore investor confidence and promote ethical business practices, represents the most far-reaching legislation to affect corporate boardrooms in decades" (Proctor). SEC sets deadlines for compliance and publishes rules on requirements.
Its officially titled the Public Company Accounting Reform and Investor Protection Act of 2002 and commonly called SOX or Sarbox, it was signed into law on July 30, 2002 by President Bush. The act covers issues such as establishing a public company accounting oversight board, auditor independence, corporate responsibility and enhanced financial disclosure.
The Sarbanes-Oxley Act's major provisions include:
? Certification of financial reports by CEOs and CFOs
? Ban on personal loans to any Executive Officer and Director
? Accelerated reporting of trades by insiders
? Prohibition on insider trades during pension fund blackout periods
? Public reporting of CEO and CFO compensation and profits
? Additional disclosure
? Auditor independence, including outright bans on certain types of work and pre-certification by the company's Audit Committee of all other non-audit work
? Criminal and civil penalties for violations of securities law
? Significantly longer jail sentences and larger fines for corporate executives who knowingly and willfully misstate financial statements.
? Prohibition on audit firms providing extra "value-added" services to their clients including actuarial services, legal and extra services (such as consulting) unrelated to their audit work.
? A requirement that publicly traded companies furnish independent annual audit reports on the existence and condition (i.e., reliability) of internal controls as they relate to financial reporting.
Thus the Sarbanes-Oxley Act is created to protect investors by improving the accuracy and reliability of corporate disclosures. It attempts to provide fundamental mechanisms ...

Solution Summary

During the last few years there have been a number of public corporations that have gone bankrupt at the expense their investors. Most would say an investor should expect to lose their money since there is a certain element of risk whenever you invest in the stock market. But in these high profile cases many of the investors were in fact employees of the firm who were investing in the firm through their 401K funds retirement programs.

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