July 30, 2002, marked the start of a new era for the world of finance – this was the day that US President George W. Bush signed the Sarbanes-Oxley Act.
The Act was named after its authors: Democrat Senator Paul Sarbanes and Republican Congressman Michael Oxley.
It was enacted in response to the financial scandals involving the two American companies Enron and Worldcom in 2001, which led to horrendous losses for investors.
Both crises were caused by the groups having non-transparent information policies as well as manipulating their annual reports.
The Sarbanes-Oxley Act is applicable not only to US companies, but also to all foreign companies registered with the Securities and Exchange Commission (SEC).
The Act restructured internal and external financial reporting and created a neutral body for legitimately documenting business transactions in the form of the Public Company Accounting Oversight Board.
The core ideas behind the Act include the obligation of disclosure for financial information, the prevention of conflicts of interest among analysts and harsher penalties for financial crime.
The Sarbanes-Oxley Act of 2002 was translated into German and Bulgarian by EVS Translations.