SOX Sarbanes–Oxley

If you are thinking of investing in the market and you've never heard of the SOX Sarbanes-Oxley Act, it is probably worth looking into before you place your money in a particular company or brokerage. The SOX act, as it is commonly referred to, was created in July of 2002, and it was formed in reaction to a string of corporate trading scandals that have rocked investors in the last decade, namely Enron, WorldCom, Adelphia, and Tyco International.

The scandals that these companies were involved in had a huge impact on the investment market, and made many people very skeptical about the integrity of the companies that still remained on the market. Of course, a healthy market depends on the fact that investors are willing to supply the capital needed in order for new and existing companies to raise the capital that they need, so the government saw that it was necessary to create new legal requirements that would help restore the public's confidence in the market. The SOX Sarbanes-Oxley Act was also known as Public Company Accounting Reform and Investor Protection Act in the Senate.

One of the most important provisions of the SOX Sarbanes-Oxley Act was that it created the Public Company Accounting Oversight Board, or PCAOB. This organization is charged with inspecting, overseeing, auditing and disciplining the companies that are publicly traded in the United States. If you are thinking about taking your company public, you should realize that you will be subject to inspection by this entity and required to satisfy its demands for documentation about your financial practices. You can learn more about what it means to take your company public at www.tcc5.com.