Compensation and profits on stock sales if the issuer

compensation and profits on stock sales if the issuer is required to
issue a restatement due to misconduct (§304).
37. The SEC can bar “unfit” officers and directors: The Act gives the SEC
authority to bring administrative proceedings to bar persons who are
found to be “unfit” from serving as officers or directors of publicly
traded companies. (Note: Under prior law, the SEC had to go to court
to obtain such a bar, and the standard was “substantial unfitness.”)
(§305 and §1105).
38. Officers and directors are prohibited from trading during pension
“blackout” periods: The Act prohibits corporate officers and directors
from trading company securities during a pension fund “blackout”
period (§306).
39. The CEO and chief legal counsel must receive corporate attorneys’
reports of evidence of a material violation of securities laws or
breaches of fiduciary duty: The SEC established rules for attorneys
appearing before it that require them to report evidence of a material
violation of securities laws or breach of fiduciary duty or similar
violation by the company to the chief legal counsel or the CEO. If
management does not appropriately respond to the evidence, the
attorney must report the evidence to the audit committee (§307).
40. The Act gives the SEC authority to temporarily freeze the pay of
corporate officers: The Act gives the SEC authority to temporarily
freeze the pay of corporate officers pending an investigation of
securities fraud (§1103).
IV. Audit firms
The Act’s regulatory board provisions require audit firms to:
41. Be subject to oversight by a new accounting oversight board:
The Act established the PCAOB, which has broad powers over the
profession. The PCAOB has five full-time members, appointed
for staggered five-year terms. Two (and no more than two) of the
members must be or have been CPAs. The SEC appoints PCAOB
members (after consultation with other agencies) (§101).
42. Register with the PCAOB: Audit firms that perform audits of public
companies must register with the PCAOB. The registration form
requires firms to disclose: the names of audit clients; annual fees
received from each issuer for “audit services, other accounting
services, and non-audit services;” a statement of the firm’s quality
control policies; a list of all the firm’s auditors, and licensing
information; information relating to criminal, civil, or administrative
actions or disciplinary proceedings pending against the firm or
associated persons in connection with any audit report; copies of
any SEC reports disclosing accounting disagreements between the
firm and an issuer in connection with an audit report; any additional
information the PCAOB specifies as necessary or appropriate in the
public interest or for the protection of investors; consent to cooperate
in and comply with any testimony or document production request
made by the PCAOB; and an agreement to secure and enforce similar
consents from “associated persons” of the firm (§102).