I was honored to have a front-row seat, working as his Senior Advisor on this legislation.Ī central goal of Sarbanes-Oxley was, once again, to restore trust in our financial system. Paul Sarbanes, my hometown senator from Maryland, was the new chair of the Senate Banking Committee. It had passed almost unanimously in the House and 99 to 0 in the Senate.
Bush signed the Sarbanes-Oxley Act into law. In response to this crisis, 20 years ago this week, President George W. These scandals were followed by other multi-billion dollar accounting frauds at Adelphia and Tyco.
Six months later, the SEC filed allegations against WorldCom, once the largest handler of internet data, whose failure surpassed even Enron’s. Its failure wiped out more than $2 billion in pension plan assets and tens of thousands of jobs, including at Enron’s audit firm, Arthur Andersen. history.Įnron’s management had cooked the books, concealed problems in the business, defrauded investors, and more. Then, in December 2001, it collapsed-the largest bankruptcy in U.S. The energy conglomerate Enron was then the seventh-largest company in the U.S. Nearly 70 years after those first securities laws were established, our system, frankly, was breaking down. Investors needed facts and figures they could trust-figures without the liars. Specifically, these companies had to provide full, fair, and truthful disclosure to the public. They started with requirements for public companies raising money from the public. In the depths of the Great Depression, Congress and President Franklin Delano Roosevelt tried to restore that trust, through the first federal securities laws. Our country learned all too well what happens when liars figure, eroding trust.įinance, ultimately, is about trust. I think of this maxim often-not only because my grandfather Ellis Tilles, an immigrant from Lithuania, often said the same thing, but also because it speaks to so much about the history of finance.įorty years after that statistics conference, in 1929, the stock market crashed. “Figures will not lie,” he said, but “liars will figure.” Commissioner of Labor, used his opening remarks to warn against the abuse of numbers for personal gain. Wright spoke at the Convention of Commissioners of Bureaus of Statistics of Labor in Hartford, Connecticut. In June 1889, the statistician Carroll D. As is customary, I’d like to note I am speaking on behalf of myself and not on behalf of the Commission or the SEC staff.Īs I open my remarks today, I’d like to discuss a speech from a different summertime conference-one that took place 133 years ago. It’s good to be with the Center for Audit Quality.