SOX Compliance for Financial Advisors
Registered Investment Advisers (RIAs) and broker-dealers that serve or are affiliated with public companies face SOX compliance obligations. SOX mandates robust internal controls over financial reporting, audit trail integrity, and executive certification of financial statements.
Regulatory Authority: 15 U.S.C. §§ 7201–7266 (Public Law 107-204)
Penalty Range: Up to $5,000,000 fine and 20 years imprisonment for individuals
Penalty Range: Up to $5,000,000 fine and 20 years imprisonment for individuals
Key SOX (Sarbanes-Oxley) Requirements for Financial Advisors
- Section 302: CEO/CFO certification of financial statement accuracy
- Section 404: Annual assessment of internal controls over financial reporting
- Audit trail retention — trade records, communications, and financial data for 7 years
- Whistleblower protection program for employees who report violations
- IT general controls (ITGCs) covering access management and change management
- Independent external audit of internal control assessment
Common Violations & Pitfalls
- Inadequate documentation of internal controls
- Insufficient segregation of duties in financial processes
- Failure to retain electronic communications for required periods
- Lack of IT access controls over financial systems
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Take the Quiz →More SOX (Sarbanes-Oxley) Resources
- Complete SOX (Sarbanes-Oxley) Framework Guide
- SOX Section 302 & 906 Penalties
- SOX Audit Interference Penalties
- SOX (Sarbanes-Oxley) for Private Companies
- Upcoming SOX (Sarbanes-Oxley) Compliance Deadlines
- SOX (Sarbanes-Oxley) Gap Analyzer
- Find a SOX (Sarbanes-Oxley) Compliance Consultant
- Get Weekly Compliance Intelligence Briefs