How does the Sarbanes-Oxley Act affect bank governance?

The Sarbanes-Oxley Act, also known as the Public Company Accounting Reform and Investor Protection Act of 2002, is a federal law that sets new standards and regulations for public companies, including banks, in the United States. In California, this law affects bank governance by requiring banks to establish robust internal controls and processes to ensure their compliance with the act and other laws and regulations. One of the most important provisions of the act is its requirement that banks, like all other public companies, must issue regular financial statements that are certified by independent auditors. Such certifications, which are required on a quarterly and annual basis, help verify that the financial statements are correct, honest and free from any manipulation. The Sarbanes-Oxley Act also requires banks to have audit committees who are responsible for overseeing the accuracy of the financial statements. These committees are composed of independent directors, who are not executives at the banks and therefore less likely to manipulate financial information for personal gain. Other provisions of the act address issues such as corporate responsibility of senior executives, criminal and civil penalties for non-compliance, and enhanced disclosure requirements. In addition, the act mandates stronger security measures to protect customer and investor information, as well as creating additional rules on insider trading and establishing a whistleblower protection program. In summary, the Sarbanes-Oxley Act affects bank governance in California by setting a higher standard of financial reporting and accountability, creating audit and oversight committees, requiring stronger security measures, and imposing civil and criminal penalties for non-compliance.

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How does the Sarbanes-Oxley Act affect bank governance?

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