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Old corporate loans remain despite Sarbanes-Oxley

Old corporate loans remain despite Sarbanes-Oxley

by Rick Turoczy on February 25, 2006

Corporate loans to executives may seem like relics, remnants of the go-go years when executives such as WorldCom Corp.’s Bernie Ebbers and Tyco International Ltd.’s Dennis Kozlowski treated corporate coffers as personal piggy banks. But the loans haven’t gone away. In fact, a handful of companies with shaky finances forgave millions of dollars in loans to their executives in recent years.

Corporate reform law Sarbanes-Oxley made new loans by a company to its executives illegal. But loans made before the law went into effect July 30, 2002, were allowed to stand. The existing loan agreements cannot be modified in a “material” way, even if the modification benefits the company.

Old corporate loans remain despite Sarbanes-Oxley

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