Summary of SEC Actions and SEC Related Provisions
Pursuant to the Sarbanes-Oxley Act of 2002
July 30, 2003
Restoring Confidence in the Accounting Profession
The Act established the Public Company Accounting Oversight Board.
Section 108(b) - On April 25, 2003, the SEC recognized the Financial Accounting Standards Board as the accounting standard setter.
Section 108(d) - On July 25, 2003, the SEC issued a study on principles-based accounting.
Section 109 - The Act established an independent funding source for the FASB.
Title II - On January 22, 2003, the SEC adopted rules improving the independence of outside auditors.
- Section 303 - On April 24, 2003, the SEC adopted rules forbidding the improper influence on outside auditors.
Section 802 - On January 22, 2003, the SEC adopted rules governing the retention of audit records by outside auditors
Improving the "Tone at the Top"
Section 302 - On August 27, 2002, the SEC adopted rules requiring CEOs and CFOs to certify financial and other information in their companies' quarterly and annual reports.
Section 304 - This section requires management to return bonuses or profits from stock sales received within 12 months of a restatement resulting from material non-compliance with financial reporting requirements as a result of misconduct.
- Section 306 - On January 15, 2003, the SEC adopted rule prohibiting company officers from trading during pension fund blackout periods.
Section 402 - This section prohibits companies from making loans to insiders.
- Section 403 - On August 27, 2002, the SEC adopted rules that accelerated deadlines and mandated electronic filing of disclosures of insider transactions in company stock.
Section 406 - On January 15, 2003, the SEC adopted rules requiring companies to disclose whether they have a code of ethics for their CEO, CFO and senior accounting personnel.
Improving Disclosure and Financial Reporting
- Section 401(a) - On January 22, 2003, the SEC adopted rules requiring disclosure of all material off-balance sheet transactions.
Section 401(b) - On January 15, 2003, the SEC adopted Regulation G, governing the use of non-GAAP financial measures, including disclosure and reconciliation requirements.
- Section 404 - On May 27, 2003, the SEC adopted rules requiring an annual management report on and auditor attestation of a company's internal controls over financial reporting.
Section 408 - This section requires that the Commission review the Exchange Act reports of each company no less frequently than once every three years.
Improving the Performance of "Gatekeepers"
Section 301 - On April 1, 2003, the SEC adopted rules directing the SROs to adopt listing standards for audit committees Audit Committee Provisions.
Section 407 - On January 15, 2003, the SEC adopted rules requiring the disclosure about financial experts on audit committees.
Section 307 - On January 23, 2003, the SEC adopted rules governing standards of conduct for attorneys appearing and practicing before the Commission.
Section 501 - On July 29, 2003, the SEC approved new SRO rules governing research analyst conflicts of interest.
Enhancing Enforcement Tools
Section 106 - This section addresses SEC access to foreign audit workpapers.
Section 305 - This section sets standards for imposing officer and director bars and penalties.
Section 308 - This section establishes FAIR Funds for Investors and requires a study of the same, which the SEC issued on January 24, 2003.
Section 602 - This section addresses the SEC's authority over professionals who appear and practice before the Commission.
Section 603 - This section grants federal courts the ability to impose penny stock bars.
Section 703 - On January 24, 2003, the SEC issued a study on aiding and abetting liability under the federal securities laws.
Section 704 - On January 24, 2003, the SEC issued a study of enforcement actions involving violations of reporting requirements and restatements.
Section 803 - This section provides that debts are not dischargeable in bankruptcy if they were incurred as a result of securities fraud.
Section 1103 - This section allows the SEC to temporarily freeze certain extraordinary payments made to securities law violators.
Section 1105 - This section gives the SEC the authority in administrative proceedings to prohibit persons from serving as officers or directors.