
Contents
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I. The Sarbanes-Oxley and Dodd-Frank Acts—Entrenchment of Federal Corporate Governance I. The Sarbanes-Oxley and Dodd-Frank Acts—Entrenchment of Federal Corporate Governance
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II. Key Provisions of the SOX and Dodd-Frank Acts II. Key Provisions of the SOX and Dodd-Frank Acts
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A. CEO and CFO Certifications A. CEO and CFO Certifications
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B. Audit Committees B. Audit Committees
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C. Executive Clawback Provisions C. Executive Clawback Provisions
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1. Sarbanes-Oxley § 304 1. Sarbanes-Oxley § 304
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2. Dodd-Frank § 954 2. Dodd-Frank § 954
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D. Equitable Relief D. Equitable Relief
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E. Officer and Director Bars E. Officer and Director Bars
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F. Insider Trading During Blackout Periods F. Insider Trading During Blackout Periods
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G. Director Independence G. Director Independence
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H. Leadership Structure H. Leadership Structure
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I. Independent Compensation Committees I. Independent Compensation Committees
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J. Nominating Committees J. Nominating Committees
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K. “Federalizing” Corporate Codes of Ethics K. “Federalizing” Corporate Codes of Ethics
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L. Bifurcation Disclosure: CEO and Board of Directors’ Chair Roles L. Bifurcation Disclosure: CEO and Board of Directors’ Chair Roles
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M. Say-on-Pay and Golden Parachutes—Advisory Votes M. Say-on-Pay and Golden Parachutes—Advisory Votes
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1. “Say on Pay” 1. “Say on Pay”
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2. “Golden Parachutes” 2. “Golden Parachutes”
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N. Internal Pay Equity Disclosure N. Internal Pay Equity Disclosure
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O. Pay versus Performance Disclosure O. Pay versus Performance Disclosure
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P. Loans to Insiders P. Loans to Insiders
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Q. Equitable Relief and Money Penalties Q. Equitable Relief and Money Penalties
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III. Conclusion III. Conclusion
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5 The SOX and Dodd-Frank Acts—Modern Federal Corporate Governance Initiatives
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Published:March 2018
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Abstract
In response to several corporate scandals, the Sarbanes-Oxley Act of 2002 (SOX) implemented substantive corporate governance mandates that were adopted as federal law. It focused on restoring financial disclosure transparency and revitalizing investor confidence in the financial markets’ integrity. A few years thereafter, the 2008 financial crisis precipitated the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act). This Act aimed at forestalling another financial crisis through enhanced corporate governance regulation and placing meaningful restraints on undue risk-taking conduct. The chapter focuses on several key provisions of the SOX and the Dodd-Frank Acts, as well as SEC rules and regulations promulgated thereunder. Among these provisions as covered in this chapter are: CEO and CFO certifications, audit committees, executive clawback provisions, director independence, nominating and corporate governance committees, codes of ethics, corporate governance disclosures, say-on-pay and golden parachute provisions, loans to insiders, and equitable relief.
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