What is the Sarbanes-Oxley Act and how does it related to securities fraud?

The Sarbanes-Oxley Act (SOX) is a federal law that was passed in 2002 in response to a number of corporate scandals involving securities fraud. The law seeks to protect investors by improving the accuracy and reliability of corporate disclosures. It also increases the accountability of corporate executives, who must now certify the accuracy of financial statements. The main provisions of the SOX impose strict regulations on auditing, financial disclosure, corporate governance, and executive accountability. For example, it requires auditors to be independent of the company they are auditing and restricts their involvement in other services that might affect their objectivity. In terms of securities fraud, SOX has increased the penalties for misrepresentation or omission of material facts about the company or its financial condition. It also imposes tougher sanctions for insider trading. On top of that, it requires CEOs and CFOs to certify the accuracy of the financial statements. Overall, the Sarbanes-Oxley Act has significantly strengthened the regulation of public companies in the United States by introducing a system of corporate governance and disclosure. As a result, investors now have greater protection from financial manipulation and fraud.

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What is the Sarbanes-Oxley Act and how does it related to securities fraud?

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