Paul Sarbanes’ legacy: landmark reforms in company accountability
1 min reading
By: Jeffrey Rubin
4 days ago
The Department of Business Law mourns the death of former Senator Paul Sarbanes with deep mourning. As chairman of the Senate Committee on Banking, Housing, and Urban Affairs and author of the landmark Sarbanes-Oxley Act of 2002, Senator Sarbanes, along with Representative Michael Oxley, was a true investor friend. The Sarbanes-Oxley Act significantly reformed corporate accountability by strengthening the independence and responsibilities of public company audit committees and establishing the Public Company Accounting Oversight Board (PCAOB), which is responsible for the sound oversight of accounting firms that Public companies and brokers check dealer deals. The changes made by the Sarbanes-Oxley Act were seismic and many, such as the whistleblower regulations and the requirement for assessments and audits of internal control over financial reporting, were initially seen as significant challenges by the business community. From the perspective of 18 years since the Sarbanes-Oxley Act came into effect, however, it is clear that Senator Sarbanes’ diligence and wisdom has not only significantly improved the quality of disclosure to investors, but has also led public companies to conduct internal corporate controls and Financial risk assessment procedures that improve organizations’ ability to identify and remediate vulnerabilities before they become significant at the organization level.
We mourn Senator Sarbanes not only because of his groundbreaking contributions to investor protection, but also for much more. His voice was polite and reasonable, and he never hesitated to work across the aisle to achieve a common goal. His manner was an understatement, but its impact was considerable. In today’s political landscape, voices like Senator Sarbanes are very much missed. Our deepest condolences go to his family and friends.