Sarbanes-Oxley (SOX) is United States law passed by congress that sets policy and regulates the accounting practices of U.S corporations. The primary purpose of the law is to make corporate accounting more transparent, prevent fraudulent corporate accounting and punish potential violators of the law. Some of the criminal penalties that can be charged under Sarbanes-Oxley are:
- Section 802: Criminal Penalties for altering documents- a fine and up to 20 years in prison.
- Section 906: Criminal Penalties for CEO/CFO false financial certification- a fine of up to $5 million and up to 20 years imprisonment.
- Section 1107: Criminal Penalties for retaliation against whistleblowers- a fine and possible imprisonment up to 10 years.
The penalties for knowingly violating the Sarbanes-Oxley law are very stiff; these hard punishments act as a deterrent to possible illegal activity in corporations. In an effort to keep in line with the law, corporations end up acting ethically and promote ethical behaviour within their organizations.