Changing the Security and Exchange Commission Regulations

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Recommended: Ethical and legal issues that faced Enron

I would like to propose the following changes and/or additions to the Security and Exchange Commission’s regulations. These changes are in regards to the last ten years of corporate fraud in the financial world involving such companies as Enron, WorldCom, Tyco, and Xerox. The primary changes include the addition of a Reserve Bond and an adjustment in the Bounty Payment program. Secondary changes include a Board of Directors mix-up program for securities companies, and SEC involvement in external auditing.

Reason / Background

The major downfall and/or reorganization of companies have cost: lost securities, downsized or vacancies in employment, lost or minimized retirements, and assisted in the economic recession. The following companies have been involved in varying experiences that led to financial improprieties and unethical decisions.

Enron “Boosted profits and hid debts totaling over $1 billion by improperly using off-the-books partnerships; manipulated the Texas power market; bribed foreign governments to win contracts abroad; manipulated California energy market” (Brag, 2002, para. 9). The behavior exhibited by Enron’s former CEO Kenneth Lay showed that large and successful appearing companies are not exempt from human error. This human error caused unethical decisions to be made that adversely affected thousands of lives.

WorldCom’s lack of corporate governance and questionable financial follies led to “Overstated cash flow by booking $3.8 billion in operating expenses as capital expenses; gave founder Bernard Ebbers $400 million in off-the-books loans” (Brag, 2002, para. 21). This unethical behavior led to even more financial losses after further investigations, and resulted in billions of dollars in losses...

... middle of paper ...

... (2008). Retrieved from http://www.caslon.com.au/whistlecasesnote.htm#xerox

Hansen, K. O., Valesquez, M., Moberg, D., & Calkins, M. (n.d). What Really Went Wrong With Enron? A Culture of Evil?. Retrieved from http://www.scu.edu/ethics/publications/ethicalperspectives/enronpanel.html

Kotz, D. H. (2010, March 29). Assessment of the SEC’s Bounty Program (Assessment United States Security and Exchange Commission 474). Retrieved from Security and Exchange Commission: http://www.sec-oig.gov/reports/auditsinspections/2010/474.pdf

Lyke, B., & Jickling, M. (2002, August 29). WorldCom: The Accounting Scandal (Report). Retrieved from U.S Department of State: http://fpc.state.gov/documents/organization/13384.pdf

Retrieved from http://money.cnn.com/2005/06/17/news/newsmakers/tyco_trialoutcome/index.htm

Retrieved from http://www.forbes.com/2002/07/25/accountingtracker.html

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