Sarbanes-Oxley is a U. S. federal law, also known as the Public Company Accounting Reform and Investor Protection Act of 2002, that was sponsored by Senator Paul Sarbanes (D-Md.) and Representative Michael G. Oxley (R-Ohio). Enacted by a Senate vote of 99-0 and a House vote of 423-3, the act was signed into law by President George W. Bush on July 30, 2002. This federal law was a response to a number of corporate and accounting scandals, particularly those involving companies such as Enron and WorldCom. In 2001 it was revealed that much of Enron’s recorded assets and profits were inflated and even nonexistent. The company collapsed, declaring bankruptcy on December 2, 2001. The collapse of Enron led to charges against the accounting firm of Arthur Andersen, and that trial led to exposure of accounting fraud at WorldCom, which went bankrupt. That bankruptcy set off a wave of other accounting scandals. These scandals contributed to the passage of Sarbanes-Oxley, which has been called one of the most significant changes to U. S. securities law since the New Deal.
The act established a new quasi-public entity, the Public Company Accounting Oversight Board, charged with overseeing, regulating, inspecting, and disciplining accounting firms in their roles as auditors of public companies. Other major provisions included requiring public companies to evaluate and disclose the effectiveness of their internal controls of financial reporting and that CEOs and CFOs certify their company’s financial reports. The act enhanced auditor independence by banning certain types of work for audit clients, established fully independent audit committees, banned most personal loans to executive officers and directors, accelerated reporting of insider trading, and prohibited insider trading during pension fund blackout periods. The act also enhanced employee protections for corporate fraud whistle-blowers and provided for significantly longer jail sentences and larger fines for corporate executives who knowingly and willfully misstate financial statements.
While some in the business community have conceded the necessity of the act, critics have questioned its effectiveness and cost. The costs of compliance have been high, as companies have had to update their information systems and personnel to comply with the new control and reporting requirements, expenses that are difficult for smaller companies to meet. Businesses responded by leaving New York for London, where the Financial Services Authority regulations are considerably less onerous. The Economist pointed out that the New York Stock Exchange dwarfed both London and Hong Kong in initial public offerings (IPOs) in 2001, but by 2006 both had surpassed New York.
Further reading: Guy P. Lander, What Is Sarbanes-Oxley? (New York: McGraw Hill, 2004); Robert R. Moeller, Sarbanes-Oxley and the New Internal Auditing Rules (Hoboken, N. J.: John Wiley & Sons, 2004); Michael Ramos, Internal Control Reporting: Implementing Sarbanes-Oxley Act Section 404 (New York: American Institute of Certified Public Accountants, 2004).
—Stephen E. Randoll
Scalia, Antonin (1936- ) associate justice of the Supreme Court
Born March 11, 1936, in Trenton, New Jersey, Scalia became an associate justice of the U. S. Supreme Court in 1986. Scalia’s outlook owes much to his father, Eugene Scalia, a devout Roman Catholic, Italian immigrant, and distinguished romance languages professor at Brooklyn College. His mother was a schoolteacher. When he was five, the family moved to Queens, New York, where Scalia attended public school and St. Francis Xavier, a military prep school. He received his B. A. in history from Georgetown University in 1957, where he was class valedictorian.
He graduated from Harvard Law School. At Harvard, he married Maureen McCarthy in September 1960 and had nine children.
Scalia began his legal career at a firm in Cleveland, Ohio, before becoming a law professor at the University of Virginia in 1967. In 1971 he entered government, becoming general counsel for the Office of Telecommunications Policy. In 1972 he served as chairman of the administrative Conference of the United States, an independent agency charged with improving the effectiveness of the administrative process. From 1974 to 1977 he served President Gerald R. Ford as assistant attorney general for the Office of Legal Counsel in the Justice Department.
After he left government he returned to teaching, at the Georgetown Law Center, and then at the University of Chicago, from 1977-82. From 1981 to 1982 he served as chairman of the American Bar Association’s section on administrative law. In 1982 President Ronald W. Reagan appointed Scalia to the U. S. Court of Appeals in the D. C. Circuit. He served in this position for four years. On June 17, 1986, Reagan nominated him to the Supreme Court to fill the seat of William H. Rehnquist, who had become chief justice of the Court. During his confirmation hearing, he said that the most important part of the Constitution was its “checks and balances.”
The first Italian American on the Court, Scalia received unanimous Senate confirmation after President Reagan’s nomination. He immediately began applying his legal philosophy to the Court’s docket. Scalia wrote a vitriolic lone dissent in Morrison v. Olson (1988), shunning all the case law on independent counsel and terming his friend Chief Justice Rehnquist’s majority opinion “an exercise in folly” for overlooking the independent counsel statute’s clear separation of powers violation. Congress ended up agreeing with Scalia’s prophetic dissent. It refused to renew the independent counsel law 11 years later.
Scalia displayed his libertarian leaning in free speech and property rights cases. He joined narrow liberal majorities in the flag burning cases, Te:xas v. Johnson (1989) and U. S. v. Eichman (1990). In R. A.V. v. City of St. Paul (1992), Scalia wrote a broad majority opinion excoriating laws aimed at racist “hate speech.” In Lucas v. South Carolina Coast Council (1992), he authored a landmark majority opinion, upholding “just compensation” for a property holder suffering a state government “taking” under the Fifth and Fourteenth Amendments. This opinion overruled many decades of case law justifying government expropriations of private property. Scalia encountered much less success discarding state decisions on abortion. In Bush v. Gore (2000), Scalia wrote a concurring opinion explaining why the Court stopped the Florida vote count, while also criticizing two of his concurring and four of his dissenting colleagues.
Further reading: Richard Brisbin, Justice Antonin Scalia and the Conservative Revival (Baltimore, Md.: Johns Hopkins University Press, 1997); The Oyez Project. Justices. Antonin Scalia. Available online. URL: Http://www. oyez. org/justices/antonin_scalia/. Accessed January 8, 2009; Melvin I. Urofsky, Biographical Encyclopedia of the Supreme Court (Washington, D. C.: CQ Press, 2006).
—Christopher M. Gray
Schlafly, Phyllis (1924- ) political activist, author As a conservative movement activist, author, and spokesperson for the “pro-family” movement and conservative cultural values, Phyllis Schlafly played a critical role in the transformation of the political right-wing in America from isolated groups in the 1950s into a powerful movement that elected a president in 1980 and continues to exert considerable influence in local and national politics. As head of the Eagle Forum, a grassroots activist organization that promotes pro-family opinion, Schlafly continues to head a powerful grassroots movement of women involved in state and local politics. She has authored 20 books. Schlafly was instrumental in defeating ratification of the Equal Rights Amendment (ERA) in 1982. Schlafly was born August 15, 1924, in Saint Louis, Missouri, and educated at the Convent of the Sacred Heart. Her father lost his job in 1930, and her mother, a librarian, had to support the family throughout the depression. Schlafly grew up in a loving Roman Catholic family where she saw women treated with respect. She was valedictorian of her high school class and received a full scholarship to a local Catholic college but, believing she was not getting the education she needed, she transferred to Washington University in Saint Louis. To pay for tuition, she took a full-time night job in a local ordnance plant, testing ammunition. She graduated from Washington University in 1944, where she was admitted to Phi Beta Kappa, an honorary society. Following graduation, she accepted a graduate fellowship at Radcliffe College, where she earned an M. A. in government in 1945. (Later, at the age of 54, while heading the anti-ERA movement, she enrolled in law school and received a degree from Washington University.)
After leaving Radcliffe, she moved to Washington, D. C., where she worked at the American Enterprise Institute, and then returned to Saint Louis to manage at the age of 24 a successful campaign for a Republican congressional candidate in Saint Louis, while working full time as a research assistant and librarian at a local bank. In 1949, she was, as she later put it, “rescued from the life of a working girl” when she married 39-year-old-bachelor John
F. Schlafly, scion of a prominent family in Saint Louis and a conservative Republican. After their move to Alton, Illinois, across the river from St. Louis, she became active in the YWCA and the Community Chest. They had six children in the following years.
While raising her family in Alton, Illinois, she became involved in local civic affairs, grassroots anticommunist education, and Republican politics. She ran for Congress in 1952 and 1970, as a conservative Republican, but lost both races. During these campaigns, reporters invariably referred to her as “the good-looking blonde candidate” or the “powder-puff candidate.” She served as a delegate or alternate to Republican national conventions in 1956, 1960, and 1964, and ran for president of the National Federation of Republican Women in 1967, but was defeated in a hotly contested national election. She became a celebrity in 1964 with the publication of her best-selling book, A Choice, Not an Echo, in support of Republican Barry Goldwater’s candidacy for the presidency.
In the 1970s Schlafly gained further national attention for her active opposition to the Equal Rights Amendment, which declared, “Equality of rights under the law shall not be denied or abridged by the United States or by any State on account of sex.” She founded and was chairperson of STOP ERA, and she was president of the Eagle Forum, a conservative political-activist organization. She argued that the ERA would force women into combat and mean the abolition of laws protecting women as workers and wives. While she did not deny that discrimination toward women occurred, she argued that legislation already on the books should be enforced to prevent illegal discrimination toward women. Furthermore, she argued that ERA would “liberate” husbands from obligations toward their wives and children. In addition, she maintained that ERA, if ratified, would allow abortion on demand. Feminists, she charged, wanted to “brainwash” women into believing that there was something wrong with being “just a housewife.” She went on to say, “The claim that American women are downtrodden and unfairly treated is the fraud of the century,” given the special status that women enjoyed in the United States compared with other countries in the world and with past history. While critics often accused her of being a hypocrite who wanted to keep women at home, while she built a successful career as a national spokesperson for conservative causes, Schlafly was not opposed to women working outside the home. After all her own mother had worked as a professional librarian. Instead, Schlafly argued that the primary responsibility of mothers should be toward their children and family, and not their professional careers.
Schlafly rallied opposition to the ERA and through years of hard work, speeches, and debates, the Equal Rights Amendment fell short of ratification in 1982. Schlafly was the single most influential person in preventing the ratification of the ERA. As Illinois Republican congressman Henry Hyde said, “Without her, I can say without a twinge of doubt, ERA would be part of the Constitution—unquestionably.” Together with her Eagle Forum, she continues to crusade on the social issues of pornography and abortion, literacy, immigration reform, and big government.
See also ABORTION; conservative movement; Amendments to the U. S. Constitution; Equal Rights Amendment.
Further reading: Carol Felsenthal, The Sweetheart of the Silent Majority: The Biography of Phyllis Schlafly (New York: Doubleday, 1981).
—Elizabeth A. Henke and Donald T. Critchlow
World History
