Corporate-reform act impacts RIM professionals.

• Author: Swartz, Nikki
• Position: News, Trends & Analysis

Voter anger over corporate scandals, a floundering stock market, and lost retirement funds spurred the U.S. Congress to overwhelmingly approve, and President Bush to sign into law, H.R.3763, the Sarbanes-Oxley Act of 2002, which is intended to curtail corporate wrongdoing and rein in the accounting industry.

The law attempts to address many of the issues raised by the Enron and Arthur Andersen scandal. It creates an independent oversight board to monitor accountants auditing publicly traded companies, toughens penalties against executives who commit corporate fraud, and increases the Securities and Exchange Commission's (SEC) budget to aid auditors, investigators, and defrauded investors. It also addresses auditor independence; corporate responsibility at publicly traded companies, financial disclosures of publicly traded companies, and conflicts of interests of financial analysts. Sarbanes-Oxley also creates protections for "whistleblowers" at publicly traded companies and imposes new criminal penalties relating to fraud, conspiracy, and impeding investigations.

It establishes harsh penalties for wrongdoing not only by accountants and corporate officers, but also by anyone "who corruptly alters, destroys, mutilates, or conceals a record, document, or other object, or attempts to do so, with the intent to impair the object's integrity or availability for use in an official proceeding" or "otherwise obstructs, influences, or impedes any official proceeding, or attempts to do so."

The Act also amends Chapter 73 of title 18 of the U.S. Code dealing with obstruction of justice within the context of crimes and criminal procedure. These amendments, which may apply to any person who violates the new sections to Chapter 73, impose and include:

* A fine and/or imprisonment of not more than 20 years for "whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence" an...