Administered by the Securities and Exchange Commission (SEC) starting in 2002, the Sarbanes-Oxley Act (SOX) regulates corporate financial records and provides penalties for their abuse. It defines the type of records that must be recorded and for how long. It also deals with falsification of data. Affecting data storage capacities and planning, Sarbanes-Oxley was enacted after the Enron and WorldCom scandals of the early 2000s. The bill was sponsored by Paul Sarbanes, Democratic Senator from Maryland and additionally authored before passage by Michael Oxley, Republican Senator from Ohio. See risk mitigation.
Federal legislation signed into law on July 30, 2002, that tightens financial rules governing corporations. It was passed in response to corporate debacles such as those involving Enron Corp. and WorldCom Group Inc. The wide-ranging legislation covers many topics: It requires companies to have audit committees that are made up of independent members, not corporate employees. It limits an auditor’s ability to provide consulting services. Companies also are required to provide more detailed financial information to investors. In addition, chief executive officers and chief financial officers must attest to the accuracy of their financial reports and their internal control systems. If these rules are violated, executives can be subjected to fines and/or jail terms. The legislation was named for Sen. Paul S. Sarbanes, D-Maryland, chairman of the Senate Banking Committee, and Michael G. Oxley, R-Ohio, chairman of the House Financial Services Committee.