Sarbanes-Oxley Act of 2002

(Sec. 2) Directs the SEC to prescribe the criteria that would permit recognition of a PRO for purposes of this Act, including: (1) a five member board composed of three non-accountants and two accountants; (2) the capacity to review work product and potential conflicts of interest; (3) the authority to impose sanctions for intentional or knowing misconduct, including a determination that an accountant is not qualified to certify a financial statement or certain categories of financial statement; and (4) procedures for notifying the relevant organizations or persons of review procedures and results and any other relevant information.

Requires such organization to be self-funded and not solely dependent on members of the accounting profession. Requires the SEC to comply with the PRO's requests to compel testimony or production of records unless it determines that to do so would not be in the public interest.

Directs the SEC to revise auditor independence regulations so as to exclude financial information system design or implementation or internal audit services from activities permissible for an independent auditor. Requires the periodic review of services by auditors to determine if any affect their independence and should therefore be added to the prohibited nonaudit services list. Directs the SEC to report to the appropriate congressional committees on its conduct of any reviews, including recommended regulatory or legislative steps.

Prescribes procedural guidelines for: (1) prompt notification of PRO sanctions to the SEC; (2) SEC review of such sanctions, including nondisclosure of any accountant review proceedings except as otherwise authorized; (3) review, approval, revision, or abrogation of a PRO's rules or proposed rule changes by the SEC; and (4) a PRO's annual report and budget submission to the SEC and, subsequently, to Congress.

(Sec. 3) Prohibits an officer, director, or affiliated persons of an issuer of a registered security from exerting improper influence upon the conduct of audits.

(Sec. 4) Mandates, upon SEC request, rapid disclosure of an issuer's financial condition or operations, including electronic disclosure of insider and affiliate transactions.

(Sec. 5) Prohibits a ten percent beneficial owner from engaging in insider trades during pension fund blackout periods. Requires disgorgement of profits realized in violation of this prohibition. Exempts certain such owners from this proscription. Bars a lawsuit for violation of such insider trades two years after the date the insider trade profit was realized.

(Sec. 6) Directs the SEC to modify regulations governing corporate disclosures, requiring adequate and appropriate disclosure of off-balance sheet transactions and relationships with unconsolidated entities or other persons. Requires an analysis of the need for disclosure of additional information to improve transparency, completeness, or usefulness, including identifying key accounting principles, the trading of non-exchange traded contracts, and format.

(Sec. 7) Directs the SEC to propose rule changes to improve the transparency and clarity of the financial reporting information available to investors as it concerns the issuer, its officers, directors, employees and/or affiliates, including insider relationships and transactions, relationships with philanthropic organizations, insider-controlled affiliates, joint ownerships, and the provision of professional services by related persons.

(Sec. 8) Requires the New York Stock Exchange, the American Stock Exchange, and the NASDAQ Stock Market to file with the SEC proposed rule changes prohibiting the listing of any security whose issuer has not adopted a senior financial officers code of ethics. Authorizes the SEC to require the same rule changes for other national securities exchanges. Requires the SEC to revise regulations to require immediate disclosure by an issuer of any change in or waiver of their code of ethics.

(Sec. 9) Requires the SEC to review issuers' disclosures on a more regular and systematic basis, based on a confidential SEC-established risk rating system, but in no event less than once every three years.

(Sec. 10) Requires the retention of records for no less than seven years after an audit.

(Sec. 11) Permits the SEC to prohibit any person who committed fraud or deception in the purchase or sale of securities in violation of the Securities Act of 1933 and the Securities Exchange Act of 1934 from serving as an officer or director of a public company if such person's conduct demonstrates substantial unfitness to serve in such capacity. Requires the SEC to consider a person's degree of scienter, economic gain, the severity of the conduct, and its likelihood of recurrence when determining substantial unfitness.

(Sec. 12) Requires the SEC to analyze when an officer or director of an issuer must disgorge profits gained or losses avoided in the sale of securities of such issuer during the six-month period preceding the filing of a restated financial statement. Requires the SEC to prescribe a rule requiring disgorgement if necessary to the public interest or for the protection of investors.

(Sec. 13) Provides for the disgorgement and allocation of funds resulting from SEC administrative or judicial proceedings brought against Enron, Arthur Anderson L.L.C., and any of their subsidiaries, officers, directors, or principal shareholders.

(Sec. 14) Directs the SEC to review and report to the appropriate congressional committees on any final rules by any registered self-regulatory organization related to equity research analyst conflicts of interest, including any recommendations for additional rulemaking.

(Sec. 15) Directs the SEC to review, report, and make recommendations on: (1) current corporate governance practices and whether they serve the best interests of the shareholders; (2) SEC enforcement actions, focusing on areas of reporting that are most susceptible to fraud, manipulation, or inappropriate earnings management; and (3) credit rating agencies in the operations of the securities market, including their role in evaluating securities issuers and any impediments, barriers, or conflicts of interests.

(Sec. 18) Directs the Comptroller General to study and report to Congress on: (1) the role played by investment banks and financial advisors in assisting public companies in manipulating their earnings and obfuscating their true financial condition through transactions which may have been designed solely to enable them to manipulate revenue streams, obtain loans, or move liabilities off balance sheets without altering the economic and business risks they faced, with particular attention to the collapse of Enron and the failure of Global Crossing; and (2) Model Rules of Professional Conduct for attorneys of issuers promulgated by the American Bar Association and related SEC rules, and whether current ethical guidelines are sufficient to guide such attorneys and protect corporate shareholders.

(Sec. 20) Extends existing SEC enforcement authority to the provisions of this Act.

(Sec. 21) Excludes specified investment companies registered under the Investment Company Act of 1940 from certain financial disclosure and corporate governance review requirements of this Act.