Paul Sarbanes
Former Senator and Co-Author of the Sarbanes-Oxley Act
Thursday, April 17, 2008

Former Senator and Co-Author of the Sarbanes-Oxley Act At the beginning of the 21st century, corporate scandals involving Enron, Worldcom, Tyco, and many other firms, rocked the American business landscape, ruined the lives of many workers and stockholders, and caused the world to lose confidence in American business. In order to regain investor confidence, and monitor corporations and their activities, Paul Sarbanes, Maryland’s senior senator, led the charge to reform the business world. His work in creating the Sarbanes-Oxley Act has transformed the business world, and restored public confidence in Wall Street by holding companies liable for unethical actions.

The principles of fairness and opportunity instilled in Sarbanes by his parents from a very early age led to his life of public service. In 1966, Sarbanes ran for the Maryland House of Delegates in Baltimore City and won. During his four years as a state legislator in Annapolis he served on the Judiciary and the Ways and Means Committees. He was then elected to the US House of Representatives, followed by his five terms in the US Senate.

In response to the failure of Enron Corporation in 2001, which, at the time, was the 7th largest corporation in the United States, he held a series of comprehensive hearings resulting in the passage of Sarbanes-Oxley. The act was designed to reform the accounting industry and restore the investor confidence that had been eroded following the collapse of Enron and subsequent corporate scandals.

“The Public Company Accounting Reform and Investor Protection Act” was signed into law on July 30, 2002, and has been referred to as “the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt.” The law is now known as the “Sarbanes-Oxley Act,” named for Senator Sarbanes and his House co-sponsor Michael Oxley. It creates a strong independent oversight board to oversee the auditors of public companies and enables the board to set accounting standards, and investigate and discipline accountants. It addresses conflicts of interest, ensures auditor independence, strengthens corporate governance, by requiring corporate leaders to be personally responsible for the accuracy of their company’s financial reports, and establishes safeguards to protect against investment analysts’ conflicts.

As a result of his work in shepherding this historic legislation through the Congress and into law, Sarbanes was honored in June 2003 with the prestigious Paul H. Douglas Ethics in Government Award from the University of Illinois. The award was designed to honor individuals who have made a substantial contribution to promoting ethics.

Sarbanes work has created a lasting impact on the world of business. Through his actions and legislation, ethical behavior must now be standard practice for all companies, creating a positive business environment for employees and the public.

Note: Alhough these speaker are contracted to appear, unforeseen circumstances could alter plans for these events. Please refer to www.krannert. purdue.edu/events/ethics for the most current information.