DSST Business Ethics & Society The Sarbanes–Oxley Act of 2002 was primarily enacted to restore stakeholder confidence . It is also known as the 'Public Company Accounting Reform and Investor Protection Act' (in the Senate) and 'Corporate and Auditing Accountability and Responsibility Act' (in the House) and commonly called Sarbox or SOX , • United States federal law enacted on July 30, 2002. It is named after sponsors U.S. Senator Paul Sarbanes (D- MD) and U.S. Representative Michael G. Oxley (R-OH). • Enacted as a reaction to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom. These scandals, which cost investors billions of dollars when the share prices of affected companies collapsed, shook public confidence in the nation's securities markets. • The legislation set new or enhanced standards for all U.S. public company boards, management and public accounting firms. It does not apply to privately held companies. The act contains 11 titles, ranging from additional corporate board responsibilities to criminal penalties, and requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the new law. • President George W. Bush signed it into law, stating it included "the most far-reaching reforms of American business practices since the time of Franklin D. Roosevelt." • Debate continues over the perceived benefits and costs of SOX. Supporters contend the legislation was necessary and has • played a useful role in restoring public confidence in the nation's capital markets by, among other things, strengthening corporate accounting controls Martha Stewart was sentenced to 5 months in prison in 2004 after being convicted of obstruction of justice, lying about a stock sale, and conspiracy. Stewart ordered the sale of 4,000 shares of ImClone stock, one day before public information about ImClone caused the stock price to drop. ImClone was a biomedical firm owned by a family friend of Stewart’s and the sale caused accusations of insider trading . Karen Gay Silkwood (1946 –1974) - A famous example of whistle blowing- was an American labor union activist and chemical technician at the Kerr-McGee plant near Crescent, Oklahoma. Silkwood's job was making plutonium pellets for nuclear reactor fuel rods. She died under mysterious circumstances after investigating claims of irregularities and wrongdoing at the Kerr-McGee plant. After being hired at Kerr-McGee, Silkwood joined the Oil, Chemical & Atomic Workers Union local and took part in a strike at the plant. After the strike ended, she was elected to the union's bargaining committee and assigned to investigate health and safety issues. She discovered what she believed to be numerous violations of health regulations, including exposure of workers to contamination, faulty respiratory equipment and improper storage of samples. She also believed the lack of sufficient shower facilities could increase the risk of employee contamination Dukes v. Wal-Mart Stores, Inc.
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