Prior to Sarbanes Oxley Act, the Securities Act of 1933 was the leading controlling mechanism. The 1933 Act requires that investors obtain appropriate financial information on securities that were offered for public sale. It also bans dishonesty, misrepresentations, and some other fraud in the transaction of securities. The Security Exchange Commission imposes the 1933 Act mandating corporation to have the stock and securities registered that are offered to the public. The registration requirements includes audited financial statements certified by independent accountants and other disclosures that allow investors to obtain the proper judgment in purchasing securities.
At the beginning of 2000s, there were well known companies involved in a major scandal that has affected the consumers’ confidence in companies and this led to an investigation by the SEC. One of the companies involved in the scandal was the Enron Corp, which was one of the largest energy, commodities and service companies in the world. In 2001 the company suffered a collapsed which led to the largest bankruptcy in U.S. and a large number of lawsuit due to the violation of federal security laws. After the Enron’s collapse some other companies were investigated and charged by the SEC in 2002 and 2003 which include WorldCom Inc, Xeron Corporation, and Bristol-Myers Squibb. …show more content…
Their milestone was to ensure that corporate reporting were transparent and that executives and auditors assumed liability for such reporting. On July 30, 2002, President George W. Bush signed the Sox Act, which was meant to improve the accuracy and reliability of corporate disclosures and was supposed to protect
At the beginning of 2000s, there were well known companies involved in a major scandal that has affected the consumers’ confidence in companies and this led to an investigation by the SEC. One of the companies involved in the scandal was the Enron Corp, which was one of the largest energy, commodities and service companies in the world. In 2001 the company suffered a collapsed which led to the largest bankruptcy in U.S. and a large number of lawsuit due to the violation of federal security laws. After the Enron’s collapse some other companies were investigated and charged by the SEC in 2002 and 2003 which include WorldCom Inc, Xeron Corporation, and Bristol-Myers Squibb. …show more content…
Their milestone was to ensure that corporate reporting were transparent and that executives and auditors assumed liability for such reporting. On July 30, 2002, President George W. Bush signed the Sox Act, which was meant to improve the accuracy and reliability of corporate disclosures and was supposed to protect