Sarbanes-Oxley hasn't cleaned up the accounting practices of corporate America enough to improve loss costs for directors and officers liability insurers, and might in fact be prompting more exposures than it prevents for carriers, experts contend.
The so-called “SOX” law–The Public Company Accounting and Investor Protection Act of 2002–set rules of corporate governance and financial disclosure for public companies, as well as penalties for executives involved in corporate fraud, in the wake of large corporate meltdowns such as Enron.
However, while SOX “has cleaned up some of the transparency and quality-of-earnings issues,” it's also creating some new ones, according to Marc Siegel, director of research for Rockville, Md.-based CFRA, a forensic accounting firm.
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