In response to the Enron bankruptcy
and other accounting and corporate
governance scandals (e.g., Tyco
International, Adelphia), Congress began
working on a corporate governance bill—
the Sarbanes-Oxley Act (SOX), which it
rushed to pass after WorldCom filed for
bankruptcy in July 2002. Prior to this, the
bill’s passage was far from certain; the
House of Representatives and the Senate
were in different stages of passing proposals
that substantially differed and that
faced significant opposition from lobbyists
and trade groups representing accounting
and business interests. But after the
WorldCom scandal, “everyone in
Washington wanted to do something—anything—to
show they were cracking down
on corporate fraud” (Joseph Nocera, “For
All Its Costs, Sarbanes Law Is Working,”
New York Times, Dec. 3, 2005, p. 1)