Sarbanes-Oxley Act Title VIII Corporate and Criminal Fraud Accountability By Justin Bost

Title VIII Sec Short Title Sec Criminal penalties for altering documents Sec Debts nondischargeable if incurred in violation of securities fraud laws. Sec Statute of limitations for securities fraud. Sec Review of Federal sentencing guidelines for obstruction of justice and extensive criminal fraud Sec Protection for employees of publicly traded companies who provide evidence of fraud. Sec Criminal penalties for defrauding shareholders of publicly traded companies.

Section 802 Title “Corporate and Criminal Fraud Accountability Act of 2002”

Section 802 Criminal Penalties For Altering Documents Problem –AA, Martha Stewart, Frank Quattrone –Destroying documents Solution –Sec knowingly destroy evidence –Sec audit records retention Implications –No convictions as of 2008

Section 803 Debts Nondischargeable If Incurred In Violation Of Securities Fraud Laws Problem –Securities fraud judgments Solution –Cannot discharge in bankruptcy Implications –Help collect fines imposed and judgments obtained

Section 804 Statute Of Limitations For Securities Fraud Laws Problem –Within 1 yr of discovery, within 3yrs of occurrence Solution –1 yr to 3 yrs(discovery) and 3 yrs to 5 yrs (occurrence) Implications –Prevent many lawsuits from being dismissed

Section 805 Review of Federal Sentencing Guidelines For Obstruction Of Justice And Extensive Criminal Fraud Problem –Penalties not severe enough Solution –Amend Federal Sentencing Guidelines Implications –Higher courts may review for “reasonableness”

Section 806 Protection For Employees Of Publicly Traded Companies Who Provide Evidence Of Fraud Problem –Whistleblowers not protected Solution –Provide civil damages action Implications –1,273 whistleblower complaints, 17 wins

Section 807 Criminal Penalties For Defrauding Shareholders Of Publicly Traded Companies Problem –“in connection with” purchase or sale of securities Solution –New securities fraud provision Implications –Slightly broadens activities punished