The sox sarbanes oxley act And Consequences_______________________________________Advertisement If you have heard of the sox sarbanes oxley act which was passed in 2002 by the US federal government, you probably also remember the scandals that rocked the early 2000’s in regards to the stock market and companies such as Enron. If you are looking for an exact definition of Sarbanes Oxley, then you need to understand why it was passed in the first place and how these scandals brought about its emergence. In the simplest terms, the definition of sox sarbanes oxley act is a set of rules and regulations that were put in place to control big businesses involved in the securities market holding CEOs legally responsible for their businesses’ financial statements and to protect the interest of the general public. If this does not make sense now, the definition of sox sarbanes oxley act will after you understand what the scandals were about. The early 2000’s were marked by many stock companies such as Adelphia and Enron facing criminal trials for their purposeful deceit and misuse of public shareholders who held stock in their companies. For the sake of understanding the definition of sox sarbanes oxley act, it’s easiest to concentrate on Enron since most people remember this trial most. Enron executives in essence, got caught with their hands in the cookie jar when they utilized insider trading and hedge trading the night before the stock values their company held were slated to drop immensely in value. The CEO’s were away of this knowledge, and so quietly sold out immense numbers of their holdings, so that they came out with a profit, which in turn dropped the remaining share value held by the public even lower, leaving only the general public holders to suffer. Many public holders lost their 401ks and IRAs when the stock market plummeted and since most shares were already sold off by insiders, there was little if any notable value left to their once high stocks. Now the definition of sox sarbanes oxley act may become a little clearer. It was at this point the government stepped in passing the legislation to enforce regulation that would restrict businesses and prohibit insider trading firmly, so that in the future public share holders would be protected. If this case were to occur again, according to the definition of sox sarbanes oxley act, the CEOs of the company at fault would be held criminally responsible and have to face the consequences. Therefore, by using a set of rules and consequences, the federal government hoped to eliminate this situation from occurring before with the passing of Sarbanes Oxley. |