The Sarbanes-Oxley Act
The Sarbanes-Oxley Act focused on public companies because the Enron and other scandals concerned public companies. In a public company, public investors can buy and hold shares of company stock, thereby putting some responsibility on the company to act in the interests of its shareholders, as well as in its own interests.
The fact that such scandals arose in public companies stood out, as such scandals were especially damaging to those stockholders who had put their trust and money into the company and were rewarded only with losing everything they had invested, thanks to the duplicity of the company's directors. Sarbanes-Oxley, then, was an attempt to prevent such damage from being wrought against the stockholders in the future.
The passing of Sarbanes-Oxley was led by Representative Mike Oxley of Ohio and Senator Paul Sarbanes of Maryland, who presented the bill in the Senate. Their two names were attached to the final version of the bill when it was voted on by both the House and the Senate.
In general, the goal of the Sarbanes-Oxley Act was to prevent the same kinds of unethical procedures that had allowed for these scandals in the first place. By limiting the conflicts of interest of investigative auditing bodies, the Act would hopefully lead to a greater reliability of financial awareness and reporting.
Sarbanes-Oxley also put a fair degree of the onus for providing accurate reports of company finances on specific individuals within a given company, which means that if those financial reports were found to be inaccurate, then those individuals who had held responsibility for putting out such reports would be held accountable for the reports' falsehood.
The Sarbanes-Oxley Act also made it specifically criminal to prevent the very type of document destruction or alteration that had allowed Enron and similar companies to commit such fraudulent scandals. The Act also increased the penalties for such crimes as a form of deterrence.
In the end, the Sarbanes-Oxley Act remains a model for the enforcement of business ethics in America. It takes many practices which should be held as very basic, standard ethical procedures in any given business and puts the full strength of the law behind them, ensuring that businesses will not be able to dodge such practices in the future.
