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Following is a list of ways that the Private Securities

Reform Act of 1995 (Reform Act will !otentially change
au"itor#s legal lia$ility. %he Reform Act&
'sta$lish a ca! on "amages which woul" otherwise
re"uce the ma(imum amount that au"itors are lia$le for.
Re)uires !lainti*s to com!ensate the "efen"ant+s
attorney fees an" other e(!enses which are "irectly
relevant to litigations foun" $y the court that are sai" to
$e frivolous an" unwarrante".
Provi"es a state of "iscovery throughout a !erio" were
the motion is "ismisse", an" therefore re"ucing the cost
which commonly forces innocent !arties to esta$lish
frivolous class action suits.
Re"uces !unitive "amages throughout the !rocess of
eliminating securities frau" with the intent of acting on
the Racketeer Infuenced and Corrupt Organization Act
which !rovi"es for tre$le "amages. %he limits of sai"
!unitive "amages shoul" imme"iately re"uce the cost of
"amages for the au"itors.
'sta$lish limits on the rights of thir" !arties through a
!rocess of limiting the amount of !lainti*s so there is no
more than -ve class actions throughout a three year
!erio". Furthermore, a !rocess of im!osing stricter
!lea"ing stan"ar"s which are met $y mere !lainti*s. %his
limits the amount of in"ivi"uals which may sue the
au"itors an" re"uce the li.elihoo" of suit $y /!rofessional
Alterations were the court assigns a lea" !lainti* in class
actions will favor institutional investors that are li.ely to
have a signi-cant in1uence on the largest -nancial state.
%his !rocess also limits the amount of in"ivi"uals which
may sue au"itors an" limits the li.elihoo" of suit $y
/!rofessional !lainti*s0.
4-12. a. Following is a list of .ey changes for au"itors as a result of
the Sar$anes 3 4(ley Act of 5665.
A signi-cant amount of non-attest services are
!revente" from au"itors an" !u$lic com!anies.
%he Act allowe" the P7A48 to have the authoritative
control of esta$lishing au"iting stan"ar"s, )uality
control stan"ar"s, an" in"e!en"ence stan"ar"s for
au"itors of !u$lic com!anies.
$. Following is a list of .ey changes for au"itors as a result of
the Sar$anes 3 4(ley Act of 5665.
Section 965 re)uires a !u$lic com!any#s 7'4 an" 7F4 to
!re!are a statement to accom!any the au"it re!ort to
certify the a!!ro!riateness of the -nancial statements
an" "isclosures.
Section 969 it illegal for any o:cer or "irector of
any issuer to ta.e any action on frau"ulent coerce,
mani!ulation, or the mislea"ing acts of any au"itors.
Section 965 re)uires the 7'4 an" 7F4 of a com!any
which re-instates -nancial statements $ecause of
/material non-com!liance0 were -nancial re!orting
re)uirements /reim$urse the com!any for any $onus or
other incentive $ase", or e)uity-$ase" com!ensation
receive" throughout the 15 months following the
issuance or the -ling of the non-com!liant "ocument.
Finally, any !ro-ts reali;e" from the sale of securities of
the issuer throughout that !erio".
%itle <=== of the Act, the Corporate and Criminal Fraud
Accountability Act of 2002&
A felony is recogni;e" as /.nowlingly0 "estroying
or creating "ocuments which /im!e"e, o$struct or
in1uence0 as well as e(isting or contem!late"
fe"eral investigation.
'nsures that all au"itors will maintain the !rocess
of au"iting or reviewing wor. !a!ers for -ve years.
'(ten"s the statute of limitations on securities
frau" claims to -ve years of frau", or two years
after the frau" was esta$lishe".
'(ten"s /whistle$lower !rotection0 to em!loyees
of !u$lic com!anies an" their au"itors that woul"
!rohi$it the em!loyer from certain actions
against em!loyees who lawfully "isclose !rivate
em!loyer information to, among others, !arties in
a >u"icial !rocee"ing involving a frau" claim.
?histle$lowers are also grante" a reme"y of
s!ecial "amages an" attorney#s fees.
7reates a new crime for securities frau" that has
!enalties of -nes an" u! to 16 years im!risonment.
%itle =@ of the Act enhances !enalties for a variety of
white-collar crimes.