SARBANES-OXLEY ACT OF 2002
Sarbanes-Oxley § 302
Corporate Responsibility for Financial Reports
KEY FACTS
- Statutory provision: Sarbanes-Oxley § 302 under the Sarbanes-Oxley Act of 2002.
- Scienter standard: Knowledge of Inaccuracy / Willful False Certification.
- Standard statutory remedies: Civil enforcement against certifying officers, criminal penalties under 18 USC § 1350 for false certification.
Statutory Scope & Legal Description
Requires principal executive and financial officers (CEO and CFO) to personally certify under oath that periodic reports contain no material misstatements and that internal disclosure controls have been reviewed.
Legal Elements Required for Enforcement Liability
- 1 Personal written certification signed by CEO and CFO
- 2 Affirmation that financial statements fairly present in all material respects
- 3 Evaluation of disclosure controls and procedures within 90 days of filing
Legal Standards Profile
Scienter Burden: Knowledge of Inaccuracy / Willful False Certification
Statutory Remedies: Civil enforcement against certifying officers, criminal penalties under 18 USC § 1350 for false certification.
Jurisdiction: United States Federal Law
Enforcement Precedents Charging Sarbanes-Oxley § 302
3 Selected Precedents| Case | Status | Overstatement | Penalties |
|---|---|---|---|
| Computer Associates: $2.2B '35-Day Month' Revenue Backdating Routinely kept corporate accounting books open past quarter ends to backdate hundreds of millions in software license sales. | Adjudicated | $2.2B | $225.0M |
| Brocade Communications: Criminal Options Backdating Scheme CEO Gregory Reyes retroactively selected dates when stock traded at historic lows to grant heavily in-the-money executive stock options. | Adjudicated | $150.0M | $7.0M |
| UnitedHealth Group: Decades-Long Options Backdating and $400M Clawback Systematically backdated stock option awards to historical quarterly trading lows, avoiding compensation expense. | Settled, neither admitted nor denied | $1.5B | $400.0M |