Sarbanes-Oxley hasn't cleaned up the accounting practices ofcorporate America enough to improve loss costs for directors andofficers liability insurers, and might in fact be prompting moreexposures than it prevents for carriers, experts contend.
The so-called “SOX” law–The Public Company Accounting andInvestor Protection Act of 2002–set rules of corporate governanceand financial disclosure for public companies, as well as penaltiesfor executives involved in corporate fraud, in the wake of largecorporate meltdowns such as Enron.
However, while SOX “has cleaned up some of the transparency andquality-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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