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Challenges are part and parcel of corporate life. As a result of the competitive environment, enterprises and organizations today face many challenges. For any enterprise or organization, the greatest challenge is in being prepared for litigation. Even as globalization of operations became the order of the day, new players came into the scene ensuring enhanced competition among diverse enterprises. This has resulted in an increase in the number of corporate investigations, lawsuits and regulatory audits. Hence, new eDiscovery laws were enacted to amicably resolve lawsuits. If eDiscovery was proving to be quite a challenge, the implementation of new rules and regulations within eDiscovery are making the going even tougher for most enterprises and organizations.

Sarbanes-Oxley Act

The Sarbanes-Oxley Act, also known as the ‘Public Company Accounting Reform and Investor Protection Act’ and the ‘Corporate and Auditing Accountability and Responsibility Act,’ was enacted on July 30, 2002. It got its name from U.S. Senator Paul Sarbanes and U.S. Representative Michael G. Oxley, who voiced their opinions for the enactment of the law.
The Sarbanes-Oxley Act is a United States federal law that is mandatory for all U.S. public company boards, management, and public accounting firms. The idea to implement an IT regulatory compliance act came on the wake of major corporate scandals such as Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom, which cost investors billions of dollars.

Important Aspects of the Sarbanes-Oxley Act

As part of the Sarbanes-Oxley Act, standards were set for the protection and preservation of business records from corruption and destruction. This act insisted on the implementation of proper and secure electronically stored information management policies to ensure transparency of business practices and accountability in the face of litigations and regulatory audits. Per this act, enterprises and organizations are required to retain electronically stored information for a period of seven years. If they fail to comply, companies would have to face sanctions and penalties in the form of heavy fines, cancelled licenses, business closure, legal liabilities and even jail terms.

Sarbanes-Oxley Act and eDiscovery

The implementation of the Sarbanes-Oxley Act has led to the necessity of increased regulatory compliance and eDiscovery preparedness among enterprises and organizations. Since the Sarbanes-Oxley Act mandates the preservation and retention of critically important data for a period of seven years, preparation for eDiscovery starts even before a request is made. Hence, there is increased pressure on enterprises and organizations to ensure that details such as the location of electronically stored information, the location where it is backed up, how long it has been stored and so on, are known so that when a request is made, the ESI can be readily accessed and provided.
Though several arguments exist both in favor of and against the Sarbanes-Oxley Act, the regulatory environment it has brought about has definitely helped the electronic discovery process. Since the implementation of this act, there has been increased focus on the proper and secure management of electronically stored information.