[Public Papers of the Presidents of the United States: George W. Bush (2002, Book II)]
[July 30, 2002]
[Pages 1319-1321]
[From the U.S. Government Publishing Office www.gpo.gov]



Remarks on Signing the Sarbanes-Oxley Act of 2002
July 30, 2002

    Thank you very much. Welcome to the White House, and welcome to this 
historic occasion.
    During the past year, the American economy has faced several sudden 
challenges and proven its great resiliency. Terrorists attacked a center 
and symbol of our prosperity. A recession cost many American workers 
their jobs, and now corporate corruption has struck at investor 
confidence, offending the conscience of our Nation. Yet, in the 
aftermath of September the 11th, we refuse to allow fear to undermine 
our economy, and we will not allow fraud to undermine it either.
    With well-timed tax cuts, we fought our way out of recession and 
back to economic growth. And now with a tough new law, we will act 
against those who have shaken confidence in our markets, using the full 
authority of Government to expose corruption, punish wrongdoers, and 
defend the rights and interests of American workers and investors.
    My administration pressed for greater corporate integrity. A united 
Congress has written it into law. And today I sign the most far-reaching 
reforms of American business practices since the time of Franklin Delano 
Roosevelt. This new law sends very clear messages that all concerned 
must heed. This law says to every dishonest corporate leader: ``You will 
be exposed and punished. The era of low standards and false profits is 
over. No boardroom in America is above or beyond the law.''
    This law says to honest corporate leaders: ``Your integrity will be 
recognized and rewarded, because the shadow of suspicion will be lifted 
from good companies that respect the rules.''
    This law says to corporate accountants: ``The high standards of your 
profession will be enforced without exception. The auditors will be 
audited. The accountants will be held to account.''
    This law says to shareholders that ``the financial information you 
receive from a company will be true and reliable, for those who 
deliberately sign their names to deception will be punished.''
    This law says to workers: ``We will not tolerate reckless practices 
that artificially drive up stock prices and eventually destroy the 
companies and the pensions and your jobs.''
    And this law says to every American: ``There will not be a different 
ethical standard for corporate America than the standard that applies to 
everyone else. The honesty you expect in your small businesses or in 
your workplaces, in your community

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or in your home, will be expected and enforced in every corporate suite 
in this country.''
    I commend the Congress for passing a strong set of reforms. I 
particularly thank Senator Paul Sarbanes 
and Congressman Mike Oxley. Both are very 
thoughtful and were persistent voices for reform. They are true 
advocates of corporate integrity. I appreciate their working together to 
send a signal to the rest of the country that it's possible in 
Washington, DC, to set aside partisan differences and to do what's right 
for the American people. I also appreciate the bipartisan leadership in 
the Congress, and I particularly thank Senator Daschle and Senator Lott who are with us 
here today.
    I want to thank members of my Cabinet who worked on this bill: 
Secretary of Treasury O'Neill and Attorney 
General Ashcroft, Secretary Evans, Secretary Chao. I 
appreciate the FBI Director being 
here, along with the Chairman of Securities and Exchange Commission, 
Harvey Pitt. I appreciate the Corporate Fraud 
Task Force members who are here. I want to assure the American people, 
they're just getting started.
    America's system of free enterprise, with all its risk and all its 
rewards, is a strength of our country and a model for the world. Yet, 
free markets are not a jungle in which only the unscrupulous survive or 
a financial free-for-all guided only by greed. The fundamentals of a 
free market--buying and selling, saving and investing--require clear 
rules and confidence in basic fairness.
    The only risks, the only fair risks are based on honest information. 
Tricking an investor into taking a risk is theft by another name. 
Corporate executives must set an ethical tone for their companies. They 
must understand the skepticism Americans feel and take action to set 
clear standards of right and wrong. Those who break the rules tarnish a 
great economic system that provides opportunity for all.
    Their actions hurt workers who committed their lives to building the 
company that hired them. Their actions hurt investors and retirees who 
placed their faith in the promise of growth and integrity. For the sake 
of our free economy, those who break the law, break the rules of 
fairness, those who are dishonest, however wealthy or successful they 
may be, must pay a price.
    Today we are taking practical steps to encourage honest enterprise 
in our Nation. Under this law, CEOs and chief financial officers must 
personally vouch for the truth and fairness of their companies' 
disclosures. Those financial disclosures will be broader and better, for 
the sake of shareholders and investors.
    Corporate officials will play by the same rules as their employees. 
In the periods when workers are prevented from buying and selling stock 
in their pensions or 401(k)s, corporate officials will also be barred 
from any buying or selling.
    Corporate misdeeds will be found and will be punished. This law 
authorizes new funding for investigators and technology at the 
Securities and Exchange Commission to uncover wrongdoing. The SEC will 
now have the administrative authority to bar dishonest directors and 
officers from ever again serving in positions of corporate 
responsibility. The penalties for obstructing justice and shredding 
documents are greatly increased. Corporate crime will no longer pay. 
CEOs who profit by betraying the public trust will be forced to return 
those gains to investors. And the maximum prison term for common types 
of fraud has quadrupled from 5 to 20 years.
    For the first time, the accounting profession will be regulated by 
an independent board. This board will set clear standards to uphold the 
integrity of public audits and have the authority to investigate abuses 
and discipline offenders. And auditing firms will no longer be permitted 
to provide consulting services that create conflicts of interest.

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    This law gives my administration new tools for enforcement. We will 
use them to the fullest. We will continue to investigate, arrest, and 
prosecute corporate officials who break the law. The Corporate Fraud 
Task Force I established is now hard at work, overseeing investigations 
of alleged fraud and insider trading. More than 200 Federal prosecutors 
are at work detecting and punishing corporate crimes. Every corporate 
official who has chosen to commit a crime can expect to face the 
consequences. No more easy money for corporate criminals, just hard 
time.
    As the work of enforcement proceeds, I hope Congress will join me in 
other important efforts to protect the savings and investments of 
Americans preparing for retirement. We've seen how workers can lose a 
lifetime of savings overnight, locked into pension plans without 
adequate choices and information.
    Workers should be able to sell company stock and diversify into 
other investments after 3 years in their own company's plan. They should 
receive updates on their retirement accounts, not once a year but every 
3 months. They should have access to sound investment advice. I have 
proposed pension protection reforms. The House has passed them. I hope 
the Senate takes them up soon.
    We must also work together to promote more growth in the economy and 
jobs for the American people. The fundamentals of our economy are sound. 
After all, sales of automobiles and new houses are on the rise. New 
unemployment claims have been falling since April. Inflation is low. 
Productivity is increasing, and growth continues. Those are signs of 
strength in our economy, and with the right policies, we can build on 
it.
    We must continue to work to control Federal spending and make the 
tax cuts permanent, so Americans can save and plan for their own future. 
We must tear down trade barriers, so people everywhere can buy American. 
We must make terrorism insurance available to spur more construction. 
And on energy, we must encourage conservation through new technology and 
produce more energy at home, to give our economy safe and steady sources 
of power and make our country less reliant upon foreign sources of 
power.
    The attacks against our economy in the last year have caused deep 
hardship and highlighted the economy's fundamental strength. The 
American economy is more diverse and more innovative than ever before, 
and its greatest strength, the people who make it work, are better 
trained and more productive and more highly skilled than ever before.
    Whenever we face challenges, from the fear that threatened our 
economy after September the 11th to the fraud that threatens investor 
confidence today, we've tackled them head on. The American economy 
depends on fairness and honesty. The vast majority of businesses uphold 
those values. With this law, we have new tools to enforce those values, 
and we will use those tools aggressively to defend our free enterprise 
system against corruption and crime.
    It is now my honor to sign the Sarbanes-Oxley Act of 2002.

Note: The President spoke at 10:15 a.m. in the East Room at the White 
House. H.R. 3763, approved July 30, was assigned Public Law No. 107-204.