Congressman Michael G. Oxley '69 Authors Recent Corporate Accountability Legislation
In a White House bill-signing ceremony that took place in the East Room, President George W. Bush signed the Sarbanes-Oxley Act of 2002 into law. The Act addresses the range of corporate accountability issues by increasing the transparency of corporate financial statements, reforming oversight of accounting, and restoring investor confidence.
Prior to the bill signing, Bush said, "I commend the Congress for passing a strong set of reforms. I particularly thank Senator Paul Sarbanes and Congressman Mike Oxley. Both are very thoughtful, and were persistent voices for reform. They are true advocates of corporate integrity. I appreciate their working together to send a signal to the rest of the country that its possible in Washington, D.C. to set aside partisan differences and to do what's right for the American people."
At the bill-signing, House Financial Services Committee Chairman Michael G. Oxley (OH) said, "Our American free enterprise system has offered more opportunity and more success to more people than any other system in history. Its based on honor and trust, and we will not tolerate those whose greed and deception damage not only our financial marketplace but also our good will. Not just money, but character counts in America."
Along with Capital Markets Subcommittee Chairman Richard H. Baker (LA), Oxley authored the House of Representatives version of the bill that passed in April. He was the chairman of the House-Senate conference committee that worked out the differences between the two chambers versions of the bill. Oxley began work on the legislation immediately after the collapse of Enron in December.
Bush also said, "This law says to corporate leaders: your integrity will be recognized and rewarded, because the shadow of suspicion will be lifted from good companies that respect the rules. This law says to corporate accountants: the high standards of your profession will be enforced without exception; the auditors will be audited; the accountants will be held to account. This law says to shareholders that the financial information you receive from a company will be true and reliable, for those who deliberately sign their names to deception will be punished. This law says to workers: we will not tolerate reckless practices that artificially drive up stock prices and eventually destroy the companies, and the pensions, and your jobs. And this law says to every American: there will not be a different ethical standard for corporate America than the standard that applies to everyone else. The honesty you expect in your small businesses, or in your workplaces, in your community or in your home, will be expected and enforced in every corporate suite in this country."
The House Financial Services Committee has been at the forefront of the corporate accountability debate. In June and July of 2001, Baker's Capital Markets Subcommittee was the first panel in any legislature to hold hearings on financial analysts conflicts of interest. The hearings resulted in new rules on analysts compensation and disclosure. The rules were proposed at a news conference in February that included: representatives from the New York Stock Exchange and NASD; SEC Chairman Harvey Pitt; Oxley; Baker; LaFalce and Kanjorski. The rules went into effect July 9, 2002.
After 9/11, the Committee immediately turned its attention to returning the capital markets to order. It successfully passed anti-money laundering legislation that became part of the USA PATRIOT Act.
On December 12, 2001, ten days after Enron declared bankruptcy, Oxley commenced hearings and the corporate accountability legislative effort. A hearing on the Global Crossing bankruptcy was held in Kelly's Oversight and Investigations Subcommittee on March 21, 2002. Oxley subpoenaed WorldCom officials as well as Salomon Smith Barney analyst Jack Grubman to appear before the Committee on July 8, 2002.
This past February, Oxley and Baker introduced comprehensive legislation to enhance investor confidence, improve corporate responsibility, reform accounting oversight and increase the availability of real-time financial information. The legislation was passed by the House on April 24 of this year and was conferenced with the Senates version, culminating in today's bill-signing.
To hear what Moritz law faculty have to say about the crisis in corporate America, see http://moritzlaw.osu.edu/webcast/.