District Court Judge Karen O. Bowdre issued a ruling upholding …

District Court Judge Karen O. Bowdre issued a ruling upholding the constitutionality of the Sarbens-Oxley Act of 2002. The decision was rendered in response to a direct challenge filed by former HealthSouth Corp. Chairman and Chief Executive Richard M. Scrushy. Mr. Scrushy faces a 58 count indictment for alleged accounting fraud at HealthSouth. Three of the 58 counts are based on the Sarbanes-Oxley statute. The law, among other things, requires executives of publicly traded companies to swear to the accuracy of their corporate financial statements.

Mr. Scrushy was the first major executive charged for violations of the law. His lawyers have attacked the statute on constitutional grounds as being “vague.” The main focus of the consitutional attack has been on the absence of any definition of “willful” in the statute which sets forth criminal penalties for an executive who “willfully certifies” a false financial statement. The judge rejected the challenge, ruling that jurors, rather than judges, should determine key questions of a defendant’s intent when the corporate office signes the certification.

(Prepared by: Stuart Silverman, Co-chair of the Sarbanes-Oxley Task Force)

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