SARBANES- OXLEY (SOX) - FINANCIAL RULES THAT ARE KEY

SARBANES- OXLEY (SOX) - FINANCIAL RULES THAT ARE KEY

SUMMARRY OF KEY PROVISIONS - FINANCIAL

Section 3: Commission Rules and Enforcement.
A violation by any person of the Sarbanes-Oxley Act, any rule or regulation of the Securities and Exchange Commission (SEC or the Commission) or any rule of the Public Company Accounting Oversight Board (PCAOB or the Board) is treated as a violation of the Securities and Exchange Act of 1934, giving rise to the same penalties that may be imposed for violations of that Act.

Section 302: Corporate Responsibility For Financial Reports.
The CEO and CFO of each issuer shall prepare a statement to accompany the audit report to certify the "appropriateness of the financial statements and disclosures contained in the periodic report, and that those financial Statements and disclosures fairly present, in all material respects, the operations and financial condition of the issuer." A violation of this section must be knowing and intentional to give rise to liability.

Section 305: Officer And Director Bars And Penalties
In any action brought by the SEC for violation of the securities laws, federal courts are authorized to "grant any equitable relief that may be appropriate or necessary for the benefit of investors." The SEC may issue an order to prohibit, conditionally or unconditionally, permanently or temporarily, any person who has violated section 10(b) of the 1934 Act from acting as an officer or director of an issuer if the SEC has found that such person's conduct "demonstrates unfitness" to serve as an officer or director of any such issuer.


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Title VIII: Corporate and Criminal Fraud Accountability.
It is a felony to "knowingly" destroy or create documents to "impede, obstruct or influence" any existing or contemplated federal investigation.
Auditors are required to maintain "all audit or review work papers" for five years.
The statute of limitations on securities fraud claims is extended to the earlier of five years from the fraud, or two years after the fraud was discovered, from three years and one year, respectively. Employees of issuers and accounting firms are extended "whistleblower protection" that would prohibit the employer from taking certain actions against employees who lawfully disclose private employer information to, among others, parties in a judicial proceeding involving a fraud claim. Whistle blowers are also granted a remedy of special damages and attorney's fees.
A new crime for securities fraud that has penalties of fines and up to 10 years imprisonment.


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Title IX: White Collar Crime Penalty Enhancements.
Maximum penalty for mail and wire fraud increased from 5 to 10 years.
Creates a crime for tampering with a record or otherwise impeding any official proceeding. SEC given authority to seek court freeze of extraordinary payments to directors, offices, partners, controlling persons, agents of employees.
U.S. Sentencing Commission to review sentencing guidelines for securities and accounting fraud.

SEC may prohibit anyone convicted of securities fraud from being an officer or director of any publicly traded company. Financial statements filed with the SEC must be certified by the CEO and CFO. The certification must state that the financial statements and disclosures fully comply with provisions of the Securities Exchange Act and that they fairly present, in all material respects, the operations and financial condition of the issuer. Maximum penalties for willful and knowing violations of this section are a fine of not more than $500,000 and/or imprisonment of up to 5 years.

MAKE SURE YOUR COMPANY IS COMPLIANT! If you do not know what this is all about - I suggest you start looking at this ASAP.