Sarbanes-Oxley's CEO and CFO certification requires scienter to protect investors

On Jul 30, 2002, Pres George W. Bush signed the Sarbanes-Oxley Act (SOX). One of the major goals of SOX was to create an environment of greater corporate integrity and investor confidence by holding company officers personally accountable for financial misdeeds. Sections 302 and 906 of SOX, the "certification provisions," require that high-level executives personally certify to the SEC the integrity of the corporation's system of internal controls and the fairness and accuracy of the financial statements. Nevertheless, the question remains: Is submitting a false certification under SOX enough to hold an executive personally responsible for subsequent losses? The answer to that question is a resounding no. To date, no court has held that submitting false certifications alone is sufficient to impose liability on corporate executives. The issue is further complicated because the statute itself identifies two different standards for proving scienter, and courts have been inconsistent when it comes to determining what conduct is required to satisfy either of these definitions.