Home > West's Encyclopedia of American Law > Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 (Public Company Accounting Reform and Investor Protection Act, Pub.L. 107-204, July 30, 2002, 116 Stat. 745, July 30, 2002) was enacted by Congress in the wake of corporate and accounting scandals that led to bankruptcies, severe stock losses, and a loss of confidence in the STOCK MARKET. The act imposes new responsibilities on corporate management and criminal sanctions on those managers who flout the law. It makes SECURITIES fraud a serious federal crime and also increases the penalties for WHITE-COLLAR CRIMES. In addition, it creates a new oversight board for the accounting profession.

During the 1990s, the stock market rose dramatically in value, fueled by the promise of the INTERNET...