Strengthening corporate accountability: SOX compliance and white-collar crime penalties

Title IX of the Sarbanes-Oxley Act (SOX), also known as the White-Collar Crime Penalty Enhancements, introduces amendments to existing laws to enhance penalties for various financial crimes. It includes provisions such as increasing penalties for attempts and conspiracies related to criminal fraud offenses, raising penalties for mail and wire fraud, and amending penalties for violations of the Employee Retirement Income Security Act of 1974.

It also mandates the United States Sentencing Commission to reassess and modify sentencing guidelines about specific white-collar crimes while also establishing criminal consequences for corporate officers who neglect to certify financial reports.

Section 901: Short title

This title may be cited as the Corporate and Criminal Fraud Accountability Act of 2002.

Section 902: Attempts and conspiracies to commit criminal fraud offenses

• Section 902 of SOX introduces penalties for attempts and conspiracies to commit criminal fraud offenses.
• It amends Chapter 63 of title 18, United States Code, by adding section 1349, which states that any person who attempts or conspires to commit an offense under this chapter shall face the same penalties as those prescribed for the offense they attempted or conspired to commit.
• Additionally, a clerical amendment is made to the table of sections at the beginning of Chapter 63 to include the new item, 1349, which addresses an attempt and conspiracy.

Section 903: Criminal penalties for mail and wire fraud

• Section 903 of SOX increases the criminal penalties for both mail and wire fraud.
• It amends Section 1341 of title 18, United States Code, by replacing the previous penalty of five years with 20 years for mail fraud.
• Similarly, it amends Section 1343 of title 18, United States Code, by replacing the previous penalty of five years with 20 years for wire fraud.

Section 904: Criminal penalties for violations of the Employee Retirement Income Security Act of 1974

• Section 904 of SOX increases the criminal penalties for violations of the Employee Retirement Income Security Act (ERISA) of 1974.
• It amends Section 501 of ERISA by raising the fines from $5,000 to $100,000, increasing the imprisonment term from one year to 10 years, and elevating the maximum fine from $100,000 to $500,000.

Section 905: Amendment to sentencing guidelines relating to certain white-collar offenses

• Section 905 of SOX directs the United States Sentencing Commission to review and amend the Federal Sentencing Guidelines to align with the provisions of the act.
• The Commission is required to ensure that the guidelines reflect the seriousness of the offenses and the penalties outlined in the act, consider whether existing guidelines are sufficient to deter and punish offenses, maintain consistency with other directives and guidelines, and make necessary changes to meet the purposes of sentencing.
• The Commission is requested to enact these amendments promptly, within 180 days of the Act's enactment, using emergency authority procedures.

Section 906: Corporate responsibility for financial reports

• Section 906 of SOX introduces corporate responsibility for financial reports, requiring periodic reports filed with the Securities Exchange Commission (SEC) to be accompanied by a written certification from the chief executive officer and chief financial officer (or equivalent).
• The certification must confirm compliance with SEC requirements and the accurate presentation of financial condition and results of operations.
• Failure to comply with certification requirements may result in significant fines or imprisonment.