ABSTRACT The first major court test of the Sarbanes-Oxley (SOX) Act of 2002 is in trial in Birmingham, Alabama. The defendant in the case is Healthsouth Corporation's founder and chairman, Richard Scrushy, who has pleaded innocent to all charges. We obtained the Complaint from the SEC website and searched Lexis-Nexis database for articles relating to the case. Motions filed by the defense were obtained from the defendant's website. The focus of our analysis is on SOX Section 906 relating to the certification of financial statements by the CEO and CFO and the criminal penalties for certifying false financials. We discuss the SEC's 58 count complaint, (reduced from 85 counts on defense motion), the defense challenge under the "void-for-vagueness doctrine,"(won by the prosecution) and the legal arguments/strategies. We also discuss the implications of the case to the accounting and legal professions. An abiding question in this case is whether the entrepreneurial, risk taking skills necessary to found a company are the same skill set needed to successfully lead the company through public offering and beyond.
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