Congressman Leaves Behind Legacy of Corporate Reform Legislation

Michael Oxley

Michael Oxley

Michael Oxley, the former Ohio Republican congressman who was instrumental in the landmark corporate reform bill that bore his name, died of lung cancer Jan. 1 at the age of 71.

Oxley served 12 terms in the House of Representatives, retiring in 2007. As chairman of the Committee on Financial Services, Oxley pushed legislation, along with Democratic Sen. Paul Sarbanes of Maryland, that aimed to curb abuses that led to the implosion of former energy giant Enron Corp. and telecom provider WorldCom Inc., among others, in the early 2000s.

The Sarbanes-Oxley Act established the Public Company Oversight Board (PCAOB), subjecting auditors of public companies to independent oversight for the first time, and sought to protect investors from further governance abuses.

The law requires officials to certify that financial statements are true and fair, report on the adequacy of internal controls, and give timely disclosure on material changes. The legislation also provides for whistle-blower protection and clawbacks of executive pay in cases of wrongdoing. It bans auditors from doing consulting work for a public company for which it serves as an auditor and imposes criminal penalties for destroying, concealing or falsifying records, Bloomberg reported.

Some critics said that complying with the law was too costly. Oxley told Fortune magazine years later that he wished the law had treated smaller companies differently from larger ones, but continued to defend the overall impact of the law. “No law is perfect,” he said.