Fair Funds for Investors

What is ‘Fair Funds for Investors’

Provision introduced in 2002, under Section 308(a) of the Sarbanes-Oxley Act. Fair Funds for Investors was put into place to benefit those investors who have lost money because of the illegal or unethical activities of individuals or companies that violate securities regulations. Essentially, this provision enabled the Securities and Exchange Commission (SEC) to add civil money penalties to disgorgement funds for the relief of the victims of stock swindles.

Explaining ‘Fair Funds for Investors’

The SEC anticipates that fair funds will play an important role in encouraging investors to continue to place trust in U.S. stock markets. Fair funds are playing an increasing role in the SEC’s enforcement of regulations, and they are particularly favored when investors who have lost money can be identified and their financial losses can be calculated. So far, however, these funds have paid out little of their value.

Further Reading

  • Did fair-value accounting contribute to the financial crisis? – www.aeaweb.org [PDF]
  • Disgorgement Plans under the Fair Funds Provision of the Sarbanes-Oxley Act of 2002: Are Creditors and Investors Truly Being Protected – heinonline.org [PDF]
  • Financial reporting quality: is fair value a plus or a minus? – www.tandfonline.com [PDF]
  • An experiment in fair value accounting: UK investment vehicles – www.tandfonline.com [PDF]
  • The reliability of fair value versus historical cost information: Evidence from closed-end mutual funds – journals.sagepub.com [PDF]
  • Fair value accounting for financial instruments: some implications for bank regulation – papers.ssrn.com [PDF]
  • How did financial reporting contribute to the financial crisis? – www.tandfonline.com [PDF]
  • The financial fair play regulations of UEFA: an adequate concept to ensure the long-term viability and sustainability of European club football? – search.ebscohost.com [PDF]
  • Assessing the impact of fair value upon financial crises – academic.oup.com [PDF]
  • French DNCG management control versus UEFA Financial Fair Play: a divergent conception of financial regulation objectives – www.tandfonline.com [PDF]