Sarbanes Oxley Survives First Challenge

In the first court test of the Sarbanes Oxley Act U.S. District Judge Karen O. Bowdre rejected Richard Scrushy's argument that the act is unconstitutionally vague and should not be a part of the indictment accusing him of extensive fraud while he was cheif executive at HealthSouth.

Attorney's for Scrushy claimed that by using such phrases as "willfully certifies" and "fairly represents," the act makes it virtually impossible for corporate officers to tell if they are complying with the law and it is therefore unconstitutionally vague.  In rejecting Scrushy's argument, Bowdre stated that jurors, not a judge should decide the key issues raised in Scrushy's case.

"If the jury finds that the reports did not fairly present, in all material aspects, the financial condition and results of operations of HealthSouth, the jury must then determine whether Mr. Scrushy willingly certified these reports knowing that the reports did not comport with the statute's accuracy requirements," she wrote.

Originally indicted last year, Scrushy became the first  CEO charged under the Sarbanes Oxley Act.  When asked to comment on Bowdre's ruling, the defense admitted that they were not surprised and stated that do not intend to appeal the ruling.