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EU and U.S. Data Regulations

By Chris Getner
July 28, 2005

You have likely already read a great deal more about the implications and requirements of Sarbanes Oxley (SOX) legislation than you would have otherwise liked. The new reporting, data retention and accountability regulations are of obvious import both legally and financially. What is of equal interest, however, for firms that are either multinational or do business overseas is the conceptual differences between this recent U.S. legislation and privacy legislation and regulations adopted in the EU. Essential in understanding where U.S. and EU data regulations conflict or compliment each other is understanding the root motivations behind each set of rules.

U.S.

Created in reaction to the embarrassing corporate defaults and excesses of Enron and WordCom, the U.S. regulations focus on issues of corporate accountability and reporting. Aside from the details about implementation strategies and for SOX compliance, it is important to maintain perspective as to what the intent was of these regulations. Specifically, SOX was about augmenting corporate transparency. The perception had been that a veil of 'deniability' had grown between senior corporate officers and shareholders. SOX strives to remove this veil and ensure that traceable document trails could be preserved regarding all material corporate decisions and forecasts. One may debate the efficacy of the legislation, but the core intent was to increase accountability, preserve a data/document trail, and more rigidly link individuals in a corporate structure to outward communications and actions.

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