SOX Does Not Expand Liability for Directors

It has become increasing popular to complain that SOX expanded the liability of corporate directors and federalized portions of what was previously state law.  In a recent speech SEC Commissioner Roel C. Campos disputed this point in comments that should be welcomed by corporate directors.  In a speech entitled “How to be an Effective Board Member” delivered to the HACR Program on Corporate Responsibility in Boston, Commissioner Campos stated that “[t]his concern [that SOX increased legal duties and responsibilities of directors] is unwarranted.  There have not been any new or different theories or standards of liability imposed on directors in the aftermath of Sarbanes Oxley by Commission or SRO rules.  The bottom line is – if directors act reasonably and in good faith, they will be protected from liability.”  Commissioner Campos went on to note that “[t]he situations where directors have to be worried about an SEC action against them are where they act very unreasonably and in bad faith.” (emphasis added). See Speech by SEC Commissioner: How to be an Effective Board Member, Commissioner Roel C. Campos, August 15, 2006,