Thursday, March 21, 2024

 


To answer your question there are two important laws governing securities, the Securities Act of 1933 and the Sarbanes-Oxley Act of 2002.


The goal is to provide accurate and complete financial information.  


Violations to securities laws happen when there are material omissions or misrepresentations resulting in incomplete or inaccurate information to investors.  


This includes providing the SEC with inaccurate Financial Statements, such as presenting financials that don't reflect the true financial position of a company.


Sarbanes-Oxley Act, SOX, violations include:


Corporate responsibility for financial reports:


Inaccurate Reports – providing false financial reports.


Certification Failure – executives not certifying financial statements.



SOX Criminal Penalties



Those penalties are enhanced for executives who "willfully" certify noncompliant financial reports: they face fines of up to $5 million and up to twenty years imprisonment.





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