The Sarbanes-Oxley Act of 2002 is a U.S. federal law also known as the "Public Company Accounting Reform and Investor Protection Act of 2002." It is the most significant change to U.S. securities law since 1934. The necessity for such an Act became apparent after a series of disastrous and by now, well-known corporate financial scandals including those of Enron, Tyco International, and WorldCom (now MCI). Their lack of corporate oversight resulted in losses in the billions of dollars. The resulting domino effect detrimentally affected financial markets and investor trust. The Act covers such issues as establishing a public company accounting oversight board, auditor independence, corporate responsibility and ensuring accurate financial disclosure. The Act gives additional powers and responsibilities to the U.S. Securities and Exchange Commission to oversee, monitor, and if necessary, prosecute violators. The purpose of the Act was to put into place legislation that would help to restore public and investor confidence and to deter fraud by having better control over corporate governance, disclosure and accurate financial accounting.

This monumental Act will have a significant, long-term impact on corporate governance, periodic disclosure, the regulation of auditors, nonaudit services, SEC enforcement, securities litigation, research analysts, and benefits for directors and executive officers. Implementation of the rigorous requirements of the Sarbanes-Oxley Act and compliance with its provisions is mandatory.

Covered Companies

Companies covered are companies with a class of securities registered under section 12 of the Securities Exchange Act and companies required to file reports under section 15(d) of the Securities Exchange Act.

Bringing A Claim Under Sarbanes-Oxley

An employee that is eligible for protection may file a complaint with the Secretary of Labor within 90 days of the alleged discrimination. Any party adversely affected by an order issued by the Secretary of Labor can appeal the decision to the appropriate U.S. Court of Appeals. If the Secretary of Labor does not issue an opinion within 180 days of receiving the employee's complaint, the employee has the right to bring a claim in the appropriate federal district court. In either court or before the Secretary of Labor, the employee need only show that the whistle-blower activities were a contributing factor to the unfavorable employment action taken and that the whistle-blower reasonably believes that there has been a violation of Federal law.

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