Sarbanes-Oxley Act Of 2002 - SOX

What Does Sarbanes-Oxley Act Of 2002 - SOX Mean?
An act passed by U.S. Congress in 2002 to protect investors from the possibility of fraudulent accounting activities by corporations. The Sarbanes-Oxley Act (SOX) mandated strict reforms to improve financial disclosures from corporations and prevent accounting fraud.

Investopedia explains Sarbanes-Oxley Act Of 2002 - SOX
The rules and enforcement policies outlined by the SOX Act amend or supplement existing legislation dealing with security regulations. The basic outline is as follows:

1. Establishment of a Public Company Accounting Oversight Board, where public companies must now be registered.

2. Strict auditor regulation and control by means of auditing committees and inspecting accounting firms.

3. Heightened corporate responsibility for any fraudulent actions taken.

4. Stricter disclosure within company financial statements, and ethical guidelines to which senior financial officers must adhere.

5. Guidelines for analyst conflicts of interest.

6. Authorities available to the Commission and the Federal Court, as well as required broker and dealer qualifications.

7. Enforcement methods available for punishment of activities deemed criminal by the Act.