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Sarbanes Oxley
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SEC. 705.
STUDY OF INVESTMENT BANKS.
(a) GAO STUDY.—The
Comptroller General of the United States
shall conduct
a study on whether investment banks and
financial
advisers
assisted public companies in manipulating
their earnings
and
obfuscating their true financial condition.
The study should
address the
rule of investment banks and financial
advisers—
(1) in the
collapse of the Enron Corporation, including
with respect
to the design and implementation of
derivatives
transactions,
transactions involving special purpose
vehicles,
and other
financial arrangements that may have had the
effect
of altering
the company’s reported financial statements in
ways
that obscured
the true financial picture of the company;
(2) in the
failure of Global Crossing, including with
respect
to
transactions involving swaps of fiberoptic
cable capacity,
in the
designing transactions that may have had the
effect
of altering
the company’s reported financial statements in
ways
that obscured
the true financial picture of the company; and
(3)
generally, in creating and marketing
transactions which
may have been
designed solely to enable companies to
manipulate
revenue
streams, obtain loans, or move liabilities off
balance
sheets without altering the economic and
business risks
faced by the
companies or any other mechanism to obscure
a company’s
financial picture.
(b) REPORT.—The
Comptroller General shall report to Congress
not later
than 180 days after the date of enactment of
this Act
on the
results of the study required by this section.
The report
shall include
a discussion of regulatory or legislative
steps that
are
recommended or that may be necessary to
address concerns
identified in
the study.
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