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Sarbanes-Oxley Resources

President Bush signed into law the sweeping legislation known as the Sarbanes-Oxley Act of 2002 (the "Act") on July 30, 2002. The Bill passed by the House (422-3) and Senate (99-0) on July 25, 2002 provided that it was "designed to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws and for other purposes."

The legislation is complicated, breaks new ground in many areas and affects corporate America (as well as certain foreign entities) in many different and substantial ways: It amends the Securities Act of 1933, the Securities Exchange Act of 1934, the Employee Retirement Income Security Act of 1974, the Investment Advisers Act of 1940, Federal fraud, criminal law and bankruptcy statutes, and directs and requests the U.S. Sentencing Commission to make certain reviews of and amendments to the Sentencing Guidelines. It calls for major U.S. Government studies and reports on numerous business and accounting issues relating to public companies. It impacts in significant ways accountants, accounting firms (U.S. and foreign), accounting practices and principles, public companies (U.S. and foreign) and, individually, the officers, directors, employees and advisors of such persons (including attorneys appearing and practicing before the SEC), ERISA plan administrators, securities analysts, and brokers and dealers.

See Below for Direct Links to The SEC's Implementing Rules and Studies Required By The Act, The U.S. Sentencing Commission's Amended Guidelines Required By The Act, and More

While certain provisions of the Act took effect upon its enactment, the Act calls for extensive implementing rulemaking by the SEC, and requires that the SEC undertake certain special studies and make reports thereon.

Set out below are direct links to:

  • Summary of the SEC's Final Rules, Special Studies, Orders and Releases Relating to the Act;
  • the rules proposed by the SEC since the enactment of the Act;
  • the final rules published by the SEC since the enactment of the Act; and
  • the Special Studies that the Act required the SEC to undertake that have been published to date by the SEC.

The lists of the SEC proposed rules and final rules contain cross-references which facilitate review of the history of each of the rules. Each of the entries also contains links to electronically available comments and to related releases.

Internet Links to The U.S. Sentencing Commission's Amended Sentencing Guidelines Responsive to The Directives of The Act

The Act contains three provisions directing the United States Sentencing Commission to review and amend the Federal Sentencing Guidelines and related policy statements:

  1. Section 805 ("Review of Federal Sentencing Guidelines for Obstruction of Justice and Extensive Criminal Fraud"), which calls for review and amendment of guidelines relating to obstruction of justice, including where there is destruction or fabrication of evidence under certain circumstances;
  2. Section 905 ("Amendment to Sentencing Guidelines Relating to Certain White-Collar Offenses"), which calls for review and amendment of guidelines, as appropriate, to implement the Act; and
  3. Section 1104 ("Amendment to the Federal Sentencing Guidelines"), which calls for review of guidelines applicable to securities and accounting fraud and related offenses and for consideration of new guidelines to provide an enhancement for officers or directors of publicly traded corporations who commit fraud and related offenses.

In accordance with Section 1104(a)(3) of the Act, the Sentencing Commission issued a report to Congress in January, 2003 entitled "Increased Penalties Under the Sarbanes-Oxley Act of 2002".

On January 8, 2003, the Sentencing Commission approved an emergency temporary amendment implementing the Act's congressional directives; the effective date of the emergency temporary amendment was January 25, 2003.

The Sentencing Commission submitted to Congress a permanent, superseding amendment on May 1, 2003; it becomes effective November 1, 2003.

As the Sentencing Commission's press release announcing the permanent amendment stated, the amendment to the Sentencing Guidelines

      "significantly affects offenses such as wire fraud and mail fraud by increasing the base penalties that apply to these crimes [and] . . . it expands the scope of the recently enacted sentencing enhancement that targets officers and directors of publicly traded corporations so that it now also applies to registered brokers, dealers, and other investment advisors who defraud investors or employers.
      [It] establishes significant sentencing enhancements for white collar offenses that affect a large number of victims or endanger the solvency or financial security of publicly traded corporations, other large employers, or 100 individual victims. Officers and directors of publicly traded corporations who commit securities violations were targeted for particularly substantial increases in penalties. For example, an officer of a publicly traded corporation who defrauds more than 250 employees or investors of more than $1 million will receive a sentence of more than 10 years in prison (121-151 months) . . . almost double the term of imprisonment previously provided by the guidelines.
      The amendment also increases penalties significantly for offenders who obstruct justice by destroying documents or records. Defendants who substantially interfere with the administration of justice by shredding a substantial number of documents or especially probative documents will receive a guideline sentencing range of approximately three years' imprisonment (30-37 months). Prior to the amendment, such an offender could receive a sentence as low as 18 months of imprisonment."

Note that Kaye Scholer partner Gregory J. Wallance is a member of the Ad Hoc Advisory Group to the Sentencing Commission on the Organizational Sentencing Guidelines.