SOX research
I. Background on SOX
The Securities and Exchange Commission was created in 1934 to police the U.S. financial markets. The pioneers of the Securities Exchange Act of 1934 saw a close connection between protecting investors and maintaining a healthy economy. In the past years, the SEC did not provide the regulation and control that might have prevented the worst results of the first decade of the twenty-first century. Its failures were of two kinds. First, succumbing to the deregulatory environment that pervaded the government since the 1980s, the SEC dismantled crucial parts of the regulations established to protect investors and the markets. Second, the SEC failed to detect and stop widespread abuses by securities firms, costing investors billions of dollars. Many congressionalist introduced bills to reform the SEC to prevent such scandals to happen. However, new reforms was not as a concern because everyone was making money, the markets was good and nobody was complaining. The ignorance of the cooking of the books a deregulatory was definitely another one of Wallstreet’s quiet before the storm. (1)
Currently, the Securities and Exchange Commission continues to create legislation tightening reporting standards and providing more transparency. Unfortunately, then SEC increasing standards came after a failure of the system. The Sarbanes-Oxley Act of 2002 is a primary example of legislation following financial market failure. Then came a second wave of scandals, led by WorldCom and Adelphia in the summer of 2002. As the stock market continued to plummet only a few months before the fall elections, Congress and the White House saw the need for action. This time, Congress rushed to pass the complicated Sarbanes-Oxley Act before the August recess. The previously controversial proposal had suddenly become very popular, passing 99-0 in the Senate and 423-3 in the House. President Bush, who had earlier expressed skepticism about some of the bill’s main provisions, signed
The Securities and Exchange Commission was created in 1934 to police the U.S. financial markets. The pioneers of the Securities Exchange Act of 1934 saw a close connection between protecting investors and maintaining a healthy economy. In the past years, the SEC did not provide the regulation and control that might have prevented the worst results of the first decade of the twenty-first century. Its failures were of two kinds. First, succumbing to the deregulatory environment that pervaded the government since the 1980s, the SEC dismantled crucial parts of the regulations established to protect investors and the markets. Second, the SEC failed to detect and stop widespread abuses by securities firms, costing investors billions of dollars. Many congressionalist introduced bills to reform the SEC to prevent such scandals to happen. However, new reforms was not as a concern because everyone was making money, the markets was good and nobody was complaining. The ignorance of the cooking of the books a deregulatory was definitely another one of Wallstreet’s quiet before the storm. (1)
Currently, the Securities and Exchange Commission continues to create legislation tightening reporting standards and providing more transparency. Unfortunately, then SEC increasing standards came after a failure of the system. The Sarbanes-Oxley Act of 2002 is a primary example of legislation following financial market failure. Then came a second wave of scandals, led by WorldCom and Adelphia in the summer of 2002. As the stock market continued to plummet only a few months before the fall elections, Congress and the White House saw the need for action. This time, Congress rushed to pass the complicated Sarbanes-Oxley Act before the August recess. The previously controversial proposal had suddenly become very popular, passing 99-0 in the Senate and 423-3 in the House. President Bush, who had earlier expressed skepticism about some of the bill’s main provisions, signed