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Compliance: Sarbanes-Oxley: Have Non-Compliance Penalties Really Been that Bad?

By Dick Weisinger

Compliance with Sarbanes-Oxley (SOX) has had companies worried for 8 years since it was passed in the summer of 2002.  Is it worth the worry and the huge effort that it entails to comply?  A study out this month from NERA Economic Consulting shows that companies’ worries have been fully  justified.  The number of cases brought by the SEC have been rising and the monetary value of the penalties imposed have been very steep.

The NERA report found that the number of settlements of individuals with the SEC increased 25 percent in 2010 to 526, and the number of settlements in 2010 made with companies was 168.  The third largest  settlement since the passage of SOX was made in 2010 with Goldman Sachs for $550 Million.

The NERA report lists the highest 10 penalties paid because of violation of SOX since the inception of the law:

Company Year Amount of Settlement
in $Million
1 American International Group, Inc. 2006 $800 Public Company Misstatements/Omissions
2 WorldCom, Inc. 2003 $750 Public Company Misstatements/Omissions
3 Goldman, Sachs & Co. 2010 $550 Misrepresentations to Financial Services Customers
4 Citigroup Global Markets Inc. 2003 $400 Analyst Fraud
5 Federal National Mortgage Association 2006 $400 Public Company Misstatements/Omissions
6 Siemens Aktiengesellschaft 2008 $350 FCPA
7 Invesco Funds Group, Inc. 2004 $325 Market Timing/Late Trading
8 State Street Bank and Trust Company 2010 $314 Misrepresentations to Financial Services Customers
9 Time Warner Inc. 2005 $300 Public Company Misstatements/Omissions
10 Prudential Equity Group LLC 2006 $270 Market Timing/Late Trading
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