Eight Years After The Fact Is SOX Working? A Look At The Brooke Corporation

Abstract

In 2002 the Sarbanes-Oxley Act (SOX) was passed; in addition, federal sentencing guidelines have been revamped and the Securities Exchange Act of 1934 has been brushed off, all in an attempt to codify the ethical behavior of companies, their executives, and their management.  The goal was to make companies and employees behave ethically; however, whether that has worked or not is questionable.  Many argue that the implementation and ongoing requirements of Sarbanes Oxley and other laws are costly, time consuming, and as yet ineffective. Recent evidence suggests that for some organizations these requirements and the associated punishments are not a sufficient deterrent. In many instances law has at best led to a culture of compliance rather than a culture of integrity.  Even more disappointing is that too often the very activities Sarbanes Oxley was designed to prevent continue to slip past regulators until it is too late and the damage incurred. Brooke Corporation is one example where these laws have seemingly failed.  With this in mind, this paper will attempt to:  1) provide examples from the Brooke Corporation that demonstrate the evolving culture of compliance vs. one of true integrity, 2) identify areas where the law continues to compete with long-standing corporate culture, 3) discuss those areas where additional work remains for Sarbanes Oxley to achieve its intended impact, and 4) discuss what work remains to be done to make other laws effective.