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Compliance: Sarbanes-Oxley: Have Non-Compliance Penalties Really Been that Bad?
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 |
Reason/Description | |
| 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 |
