Publically Traded Companies Have New Limitations

The world of high finance has many rules and regulations to follow. In July of 2002 the Sarbanes Oxley (SOX) Section 402 legislation added enhanced conflict of interest provisions and disclosures which amended the Securities and Exchange Act, Section 13.


This company watched its stock fall from $90 per share on the New York Stock Exchange to a measly $0.10 in 2001. The Sarbanes Oxley Section 301 has been implemented as an addition to the Sarbanes Oxley Act of 2002 in an attempt to eliminate the fraudulent auditing practices and opaque financial disclosures that eventually caused this painful loss to so many.

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Among other restrictions, the new legislation prohibits loans or extensions of credit by publicly traded companies to insiders such as company executives. These include directors and executive officers of the companies.

Another aspect of this legislation is that the criminal penalties from the Securities Exchange Act, section 13 now apply to violations of section 402 of SOX. Enforcement actions have already been brought against offending companies.

Every large publicly traded company needs very good legal and accounting services to keep them in compliance with Sarbanes Oxley Section 402 and the rest of the SOX legislation. The legislation is very complicated and open to various interpretations. There are interpretive issues for executive compensation surrounding the section 402 loan prohibitions.

With the criminal penalties that are now attached, caution is more than an option. Reading the legislation involved, doesn't mean it is correctly understood. Financial institutions are under a lot of public scrutiny in this economy and need to protect themselves from any appearance of wrong-doing, as well as insuring compliance with all of the SOX regulations.

Because of this very important and far reaching legislation, there are accounting and legal firms that specialize in Sarbanes Oxley Section 402 compliance as well as the rest of the SOX regulations, restrictions and other related government legislation.

These companies have studied all the legislation extensively so they can offer the best advice possible to the publicly traded companies who make up their clientele.

These consulting firms are worth their fees if they insure SOX compliance and avoid financial penalties and criminal charges that may be leveled on companies in violation of this legislation.

A good web-based software program to collect needed information from all parts of a company and compile it in correct form for compliance and reporting is essential. The consulting firm a company may be using needs the information from the company to do its job.

The company's officers need to know if the institution is in compliance with Sarbanes Oxley Section 402 and the rest of the SOX restrictions and reporting requirements. A good software program will make needed information available to those in a company that need it.

Executives will be able to retrieve information quickly from all parts of the company when required.

Sarbanes Oxley Compliance Articles

Is Your Business Compliant With Sarbanes Oxley Standards?

By John Morris
This methodology allows you to define in a quantifiable manner the compliance tasks involved in your company. All of the companies which use a type of Sarbanes Oxley software have the same financial data collection and their reporting needs are not really one and the same...
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Enabling Sarbanes Oxley Compliance

by Earl Powers
Sarbanes Oxley compliance is not a one-day, a one-month, or even a one-year project - instead, Sarbanes Oxley compliance should be built into your corporate infrastructure as early as possible when you begin making changes. The more quickly you transition your business into long-term strategy change, the better you're going to be able to control Sarbanes Oxley compliance issues.
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Serbanes Oxley and Other Compliance Training Bugaboos

By KK Arora
Compliance training gets no respect. Training managers view it as something of a bugaboo. Most trainees greet it with about as much enthusiasm as they would a parallel parking contest. So what is it, why do we need it, and how can we best go about it?
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Sarbanes Oxley Act 404 - An Auditor's Nightmare

by Betty Hope
In the midst of corporate scandals that took the U.S. government by storm, Sarbanes Oxley Act was passed by the U.S. Congress and signed by President George W. Bush into a law on July 30, 2002. The act was passed to ensure transparency and accountability in the working procedures of the corporate world in order to restore the investor's confidence in the shaken market. Simply put, the Sarbanes Oxley Act 404 is an auditors nightmare.
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Sarbanes Oxley Act

by Ross Bainbridge
The Sarbanes-Oxley Act is an act passed by the U.S. House of Representatives in 2002. The act covers issues such as auditor independence, corporate responsibility and establishes new or enhanced standards for all U.S. public company boards, management and public accounting firms. It is considered as one of the most significant changes in United States securities laws. The act was designed to review all legislative audit requirements. The act gives additional powers and responsibilities to the U. S. Securities and Exchange Commission.
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Centralizing Project Data = Streamlined Governance Auditing

By Ty Kiisel
Thanks to legislation like Sarbanes-Oxley, the terms "audit" and "headache" have become synonymous for many organizations. Most companies are forced to track disparate software (that is function specific) with email and spreadsheets to create an audit trail that verifies compliance to an established process. Just describing it sounds like a convoluted mess to me. I can only imagine the hassle associated with trying to keep email strings and different software logs updated-no wonder compliance audits are so expensive.
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Is Sarbanes-Oxley Really Having an Effect on Fraud?

By Ashley Ricks
When Sarbanes-Oxley regulations were created, their sole purpose was to restore the integrity and faith back with corporations and executives that were caught up in the many fraud scandals brought on by Tyco, Enron, and such. Yet, surprisingly to learn, many companies have done little to change their prevention and monitoring of fraudulent acts. This makes many wonder, "Is Sarbanes-Oxley an effective tool where fraud prevention is concerned?"
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