BusinessCompany NewsFormer chief executive takes on Sarbanes-Oxley

Former chief executive takes on Sarbanes-Oxley

A former high-profile chief executive, due to face trial for offences relating to the Sarbanes-Oxley Act, is taking the SEC to court claiming the law is 'unconstitutional' and 'overly vague'.

Link: Trace Sarbanes-Oxley to its origions

Richard Scrushy, former CEO and founder of healthcare provider HealthSouth, filed a motion with the US District Court of Birmingham, Alabama after the SEC brought a civil complaint against him accusing him of conducting financial fraud dating back 18 years.

Scrushy has pleaded not guilty to all the charges and a trial date was set for the 23 August, but has now been postponed to September.

Lawyers for Scrushy will argue that Sarbanes-Oxley, introduced in the wake of the Enron and WorldCom scandals, is unconstitutional because it makes certification of an erroneous SEC filing a possible criminal offence for a corporate officer, but does not fault other employees involved in the filing of these documents.

But experts predict Scrushy will fail because the act was enacted under Congress’ power.

The effectiveness of Sarbanes-Oxley is due to be reviewed this summer.

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