...corporate disclosures made pursuant to the securities laws, and for other purposes. July 30, 2002 [H.R. 3763] Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, Sarbanes-Oxley SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) SHORT TITLE.—This Act may be cited as the ‘‘SarbanesOxley Act of 2002’’. (b) TABLE OF CONTENTS.—The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Definitions. Sec. 3. Commission rules and enforcement. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. TITLE I—PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD 101. Establishment; administrative provisions. 102. Registration with the Board. 103. Auditing, quality control, and independence standards and rules. 104. Inspections of registered public accounting firms. 105. Investigations and disciplinary proceedings. 106. Foreign public accounting firms. 107. Commission oversight of the Board. 108. Accounting standards. 109. Funding. 201. 202. 203. 204. 205. 206. 207. 208. 209. 301. 302. 303. 304. 305. 306. 307. 308. TITLE II—AUDITOR INDEPENDENCE Services outside the scope of practice of auditors. Preapproval requirements. Audit partner rotation. Auditor reports to audit committees. Conforming amendments. Conflicts of interest. Study of mandatory rotation of registered public accounting firms. Commission authority....
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...pursuant to the securities laws, and for other purposes. July 30, 2002 [H.R. 3763] Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, Sarbanes-Oxley SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) SHORT TITLE.—This Act may be cited as the ‘‘SarbanesOxley Act of 2002’’. (b) TABLE OF CONTENTS.—The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Definitions. Sec. 3. Commission rules and enforcement. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. TITLE I—PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD 101. Establishment; administrative provisions. 102. Registration with the Board. 103. Auditing, quality control, and independence standards and rules. 104. Inspections of registered public accounting firms. 105. Investigations and disciplinary proceedings. 106. Foreign public accounting firms. 107. Commission oversight of the Board. 108. Accounting standards. 109. Funding. 201. 202. 203. 204. 205. 206. 207. 208. 209. 301. 302. 303. 304. 305. 306. 307. 308. TITLE II—AUDITOR INDEPENDENCE Services outside the scope of practice of auditors. Preapproval requirements. Audit partner rotation. Auditor reports to audit committees. Conforming amendments. Conflicts of interest. Study of mandatory rotation of registered public accounting firms. Commission authority. Considerations by appropriate State regulatory...
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...History and Evolution of the Securities and Exchange Commission The Securities and Exchange Commission was created at the conclusion of the Senate Banking and Currency Committee’s 1932–1934 investigation of stock exchange practices, usually called the Pecora Hearings, in recognition of the decisive role played by the committee’s counsel, Ferdinand Pecora.(Macey, 2010) Between September 1, 1929, and July 1, 1932, the value of all stocks listed on the New York Stock Exchange shrank from a total of nearly $90 billion to just under $16 billion, a loss of over 80 percent.(Macey, 2010) In a comparable period, bonds listed on the New York Stock Exchange declined from a value of $49 billion to $31 billion.(Macey, 2010) These figures, staggering as they were, fully gauge the extent of the 1929–1932 stock market crash.(Wiesen, 1979) During the post-World War I decade, approximately $50 billion of new securities were sold in the United States approximately half, or $25 billion, would prove near or totally worthless.(Wiesen, 1979) Leading securities, including General Electric, Sears, Roebuck, and U.S. Steel common stock, would lose over 90 percent of their value between selected dates in 1929 and 1932.(Zimmer, 2009) Formally, the purpose of Pecora’s stock exchange hearings was to determine why these staggering decreases in security values had occurred and to propose legislation to prevent another stock market crash. (Wiesen, 1979) The Pecora hearings also had an obvious...
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...be overstated by $5 million (Knapp, M., 2009). The company’s auditors Deloitte, Barry, and Baker included the false information in JFF’s 1998 financial reports. These false reports were prepared for public filing with the Securities and Exchange Commission, which resulted in shareholders of JFF to be defrauded. Ruttenberg, Deloitte, Barry, and Baker were brought to justice, and the company’s shareholders settled for $32.4 million in a class-action lawsuit (Knapp, M., 2009). Just for Feet Based in Birmingham, Alabama, Just for Feet (JFF) was established in 1977 and became a publicly traded company in 1994. Despite a period of slow growth in the retail industry, JFF expanded rapidly from 1994 to 1999. By 1998, the company’s exceptional revenue growth deemed it as the top-selling retailer of athletic shoes and apparel in the United States. In JFF’s 1998 financial statements, the company reported $689.4 million in assets, $774.9 million in revenue, and $26.6 million in net income (Securities and Exchange Commission v. Deloitte & Touche, LLP, 2005). However, shortly after presenting this positive financial growth, JFF filed for protection under Chapter 11 bankruptcy in November, 1999. According to the Securities and Exchange Commission v. Deloitte & Touche, LLP (2005), “Just for Feet’s bankruptcy case was converted to a...
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...SECURITIES ACT OF 1933 [AS AMENDED Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. THROUGH P.L. 112-106, APPROVED APRIL 5, 2012] TABLE OF CONTENTS 1. Short Title. 2. Definitions. 2A. Swap Agreements. 3. Exempted Securities. 4. Exempted Transactions. 4A. Requirements With Respect to Certain Small Transactions. 5. Prohibitions Relating to Interstate Commerce and the Mails. 6. Registration of Securities and Signing of Registration Statement. 7. Information Required in Registration Statement. 8. Taking Effect of Registration Statements and Amendments Thereto. 8A. Cease-And-Desist Proceedings. 9. Court Review of Orders. 10. Information Required in Prospectus. 11. Civil Liabilities on Account of False Registration Statement. 12. Civil Liabilities Arising in Connection With Prospectuses and Communications. Sec. 13. Limitation of Actions. Sec. 14. Contrary Stipulations Void. Sec. 15. Liability of Controlling Persons. Sec. 16. Additional Remedies; Limitation on Remedies. Sec. 17. Fraudulent Interstate Transactions. Sec. 18. Exemption From State Regulation of Securities Offerings. Sec. 19. Special Powers of Commission. Sec. 20. Injunctions and Prosecution of Offenses. Sec. 21. Hearings by Commission. Sec. 22. Jurisdiction of Offenses and Suits. Sec. 23. Unlawful Representations. Sec. 24. Penalties. Sec. 25. Jurisdiction of Other Government Agencies Over Securities. Sec. 26. Separability of Provisions. Sec. 27. Private Securities Litigation. Sec....
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...Accounting Profession Robin M. Holdgate BA-507 Advanced Business Law and Ethics Upper Iowa University Richard Healy, A.B., J.D. October 14, 2012 Abstract Sarbanes-Oxley Act of 2002 was hailed as “the most far-reaching reforms since the time of Franklin D. Roosevelt” by President George W. Bush when he signed it into law. The act contains 11 titles, or sections, ranging from additional corporate board responsibilities to criminal penalties, and requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the law. The act also covers issues such as auditor independence, corporate governance, internal control assessment, and enhanced financial disclosure. The bill was enacted as a reaction to a number of major corporate and accounting scandals including those affecting Enron, Tyco, WorldCom and Arthur Andersen LLP. These scandals cost investors billions of dollars when the share prices of affected companies collapsed and shook public confidence in the nation's securities markets. The Sarbanes-Oxley Act of 2002 and Its Effect on the Accounting Profession Enron, World Com and Arthur Andersen LLP, three names that have long become synonymous with deceptive accounting practices and lack of transparency, were but a few of the catalysts to the hastily enactment of the Sarbanes-Oxley Act of 2002. More commonly known as SOX, it was enacted on July 29, 2002 and signed into law on July 30, 2002 by President Bush. It’s also known as...
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... The Securities and Exchange Commission (SEC) was provided falsified first quarter reports that concealed this massive loss. Discuss how administrative agencies like the Securities and Exchange Commission (SEC) or the Commodities Futures Trading Commission (CFTC) take action in order to be effective in preventing high-risk gambles in securities / banking, a foundation of the economy. The foundation of the United States economy is the banking industry and the American people need protection from the high risk gambles that these securities participate in. We need to understand how the Securities and Exchange Commission provides that protection. The SEC creates laws and rules that govern the banking industry in order to be effective in protecting the public. These regulations are derived from a simple and straightforward concept: all investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it, and so long as they hold it. In order to accomplish this, the SEC requires public companies to disclose meaningful financial and other information to the public. The SEC also oversees the key participants in the securities world to include: securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. The SEC is concerned with encouraging the disclosure of important market-related information, maintaining fair dealing, and protecting against fraud, in the United States. (U.S...
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...investment decisions made by its Chief Investment Office (CIO) of $5.8 billion. The Securities and Exchange Commission (SEC) was provided falsified first quarter reports that concealed this massive loss. Now we are going to discuss how administrative agencies like the Securities and Exchange Commission (SEC) or the Commodities Futures Trading Commission (CFTC) take action in order to be effective in preventing high-risk gambles in securities / banking, a foundation of the economy. The foundation of the United States economy is the banking industry and the American people need protection from the high risk gambles that these securities participate in. We need to understand how the Securities and Exchange Commission provides that protection. The SEC creates laws and rules that govern the banking industry in order to be effective in protecting the public. These regulations are derived from a simple and straightforward concept: all investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it, and so long as they hold it. In order to accomplish this, the SEC requires public companies to disclose meaningful financial and other information to the public. The SEC also oversees the key participants in the securities world to include: securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. The SEC is concerned with encouraging...
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...Abstract This report allows the facts to be known concerning the still mysterious case of Bernard L. Madoff and his longtime investment securities activities, which eventually turned into an enormous fraud of incomparable size. In this report, you will begin to understand how Bernard Madoff was able to execute such an elaborate fraud. The illegal business behavior found in this case is too numerous to count however, quite a few will be identified. In addition, the roles of the perpetrators, accomplices, and their involvement in this scheme will be made known. This fraud had such an enormous impact on the victims, we will examine several implementations that the private investors could have implemented to protect themselves. An assessment of the perpetrators motives and the identity of some internal controls that could have deterred or prevented the fraud from occurring will be explored also. We will discover the action of the SEC and document how the fraud was discovered and investigated, including what should have been identified as “red flags”. And finally, a variety of legal actions arose when the Madoff fraud was uncovered, which is leading to more litigation currently and in the future. The Bernard Madoff’s Fraud Introduction Bernard L. Madoff was the mastermind and the admitted operator of the biggest Ponzi scheme in American History. His Ponzi scheme is considered to be the largest financial fraud in U.S. history. He stole millions maybe billions...
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...ANALYSIS OF SUCCESS FACTORS OF GOOGLE INC. We know that today, Google is the number 1 search engine in the world with millions and billions of search results available in any part of the world. There are certain factors that have made Google a success since its inception. “Some of the key success factors of Google are Technology, Innovation, Building a Brand, User Experience, Acquisition” 1. Technology: The reason behind the google’s success of providing the fastest search on the internet is its “Pigeon Rank” technology. With the help of Pigeon rank, google can provide the user the fastest result of the desired information. Pigeon Rank works much faster than the technology developed by Yahoo and Microsoft. The reason why PigeonRank works so efficiently is that it has been developed in such a way that it can identify the objects related to the specific search from the content lying anywhere on the internet. The Pigeon Rank can also distinguish the results even with the mere difference between them. Google’s technology has two parts working efficiently namely the “Software Engineering and the Hardware Engineering”. The Software Engineering part deals with the Page ranking, which essentially ranks the sites based on the links associated to them. Software Engineering means writing some query and then to think how the computer works in order to give the data in a fraction of second. Hardware Engineering part deals with the decreasing of the cost by building its own servers....
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...in the United States is using US-GAAP. While the differences do not outweigh the similarities, GAAP and IFRS standards have caused some concerns in financial reporting. These concerns have led to the evaluation of these two reporting standards and the discussion on whether to move IFRS worldwide. This paper will outline a few of the differences between GAAP and IFRS as well as review the discussion of standardized reporting using IFRS. Introduction Historically, accounting and reporting standards in the United States have been set by the AICPA (American Institute of Certified Public Accounts) as laid out by the regulations set by the Securities and Exchange Commission (SEC). In 1973, the Financial Accounting Standards Board (FASB) was developed by the AICPA as a council for establishing standards for reporting for all United States companies. Under FASB, GAAP was reorganized into approximately 90 accounting standards offering concise methods to follow for financial reporting. This not only allowed for ease of access when reading US financials statements, but also allowed for comparison of documentation for investments, credits, and other financial decisions. On the other hand, the International Financial Reporting Standards (IFRS) were developed by the International Accounting Standards Board (IASB) based in London. Currently, about 120 nations require the use of IFRS for financial reporting by public companies. Discussions have been underway to converge the United States...
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...Federal Savings Washington Federal Savings is a financial institution that has served communities statewide since 1917. As a savings and loan institution, Washington Federal offers checking and savings accounts and mortgage loans. Defining itself amongst competitors, Washington Federal provides customers with the “human touch” in its simplest form - quality customer service. Operating in eight states, Washington Federal maintains a relatively small staff of 885 employees. As a financial institution, Washington Federal is highly regulated by certain federal agency regulations. This paper will explore the regulations currently in effect for financial institutions, as well as the origin, evolution, and efficacy of these regulations within Washington Federal Savings. Federal Deposit Insurance Corporation The Federal Deposit Insurance Corporation [FDIC] is an independent agency of the United States government. The FDIC protects depositors against the loss of deposits if an FDIC-insured bank or savings association fails. FDIC insurance is backed by the credit of the United States government. An insured bank is any bank or savings association with FDIC insurance (Federal Deposit Insurance Corporation [FDIC], 2007). The FDIC was created in 1933 by the Glass-Steagall Act. This was a merging of two separate acts which were created by the U.S. government in reaction to the stock market crash of 1929 following which 4004 banks, with an average of $900,000 in deposits, closed. The...
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...Introduction The stock market is the most active financial market in the U.S., which includes more than 5000 securities companies, trade associations, the stock exchange, investment banks and other institutions. The stock market can be divided into two level. The primary market including corporation, government agency, and investment bank sells securities to initial buyers, in other words called securities issue. The secondary market resell securities which have been previously issued in primary market. Secondary market can be organized in two ways. One ways is to organize exchanges, “where buyers and sellers of securities (or their agents or brokers) meet in one central location to conduct trades.”(Mishkin Eakins) The other way is to have an over-the-counter (OTC) market. The participants in OTC market trade through telecommunications networks such as telephone, email, and electronic system without a regular location. One of the importance network is the National Association of Securities Dealers Automated Quotation System (NASDAQ). Beyond those, Electronic Communications Networks (ECNs) have been challenging both the organized exchanges and NASDAQ for years. ECNs is a large quantity of stock trading electronic network that connect brokerages and traders so that they can trade directly without intermediaries. There are tens of billions of dollars of stock trading in the market every day. The management of the stock market of U.S. government is to regulate the issue and trading...
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...Starbucks’ Ethics and Compliance Paper Ethical behavior within a company is very important to its future and success. This type of behavior is not just important for the employees to follow, but for the entire company. In 2001, a failing company called Enron was involved in numerous unethical behaviors. For example, Enron’s Chief Financial Officer temporarily suspended their “code of ethics” not once, but twice in order to partake in personal financial gain. Enron’s actions eventually resulted in bankruptcy and assisted with the creation of a new set of guidelines for companies to follow. The so-called guidelines were called the Sarbanes-Oxley Act (Titman, S., Keown, A.J., & Martin, J.D. 2011). The SOX helped institute a set of rules for companies to follow, one being the creation and compliance of a code of ethics within every company. One company that seems to do a very good job with complying with the guidelines of SOX is Starbucks Corp. They have a strong program set in place to support their mission of making ethical decisions at work. The use of their program “Business Ethics and Compliance” might just be the very reason why their SEC filings show a relatively successful business. Financial Environment In regards to the finance environment, Starbucks plays an active role in ethics and compliance. Not only are their employees offered ways to voice concerns of unethical issues in the work place, but also Starbucks’ partners as well. Starbucks holds a meeting...
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...After a careful study of what has been achieved within the current infrastructure of Gene One, the founding members of Gene One and the current board members are in agreement with the idea that Gene One is prepared and capable of becoming a public entity. Gene one has revolutionized the manner in which farmers preserve tomatoes and potatoes. Gene One is currently conducting research that will rapidly expand the crops that can benefit from Gene One’s gene technology that prevents crops from becoming diseased and is hopeful that their research will speed up the growth rate of multiple crops. The success that Gene One has had in eight short years has presented several questions concerning the strategic path of Gene One’s future. The path chosen is to move forward with its initial public offering. In this study I will examine the steps gene one will have to take in order to complete the initial public offering and to look at two companies and how they approached their initial public offerings. First, I want to show the steps Gene One must follow to prepare for its initial public stock offering: Step One Start planning well in advance, Gene One has set a goal of thirty six months which should give them plenty of time. Step Two Ensure your product is beyond the prototype phase before you proceed. Gene One is well beyond the prototype phase of the core products. Step Three Network. Get to know other entrepreneurs in your community and your industry who know the lawyers...
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