The ultimate goal is to protect investors. Reason Many acts of corporate corruption in the 1990s and early 2000s brought on this regulation. There were many loopholes that allowed for accounting errors without any legal incentive to correct the problem. Due to the accounting practices at companies such as Enron, Tyco, and WorldCom investors lost billions. The accounting practices created a scandal in which the companies were able to hide information from investors.
Executives and insiders knew about these offshore accounts that were mainly used to hide losses with the investors completely left in the dark. As a result their stock price was driven up. In their fallout, company executives began to liquidate their assets, trading millions of dollars worth of Enron stock. As the scandal unraveled, shares in Enron dropped from $90.00 to merely just pennies. The liquidity of most of Enron’s assets was apparent when the company reported its third-quarter results on October 17, 2001 as negative due to one-time charges of over $1 billion.
Their bankruptcies became inevitable as the Securities and Exchange Commission (SEC) and financial analysts began to see the signs of irregularities among numerous companies. When the SEC ordered the restatement of their financial reports in accordance with the GAAP rules, it turned out that these companies were mostly founded by inflated revenues and negative financial conditions. Short after, companies reputations and financial credibility began break like bubbles, in the wake of the ensuing investigations. The result of these action caused investors once again lost their trust and confidence in America’s publicly traded companies, which eventually led to more bankruptcies. As a result, multitudes became jobless, and the trend went from bad to worse throughout the decade.
Answer to questions: The ethical issues involved in the Madoff case was his misconduct and deceitful activity. He lied to investors, cheated out his financial interests, and stole from thousands of people around the world. He took money from new clients and paid it out to existing clients. I don't believe that Madoff worked alone. Even if nobody helped him deceive investors, people knew about it, and the act of knowing and not reporting a white-color crime is guilty by association.
It was clearly a company riddled with fraud and excess and its conduct drove it into bankruptcy. The text argues that individual behavior was not at the core of Enron’s problems. What were the problems with this corporation from an organizational architecture point of view? 4. (10 pts.)
Business Research Ethics RES/351 May 28, 2012 Negussie Nega, M.A., DM What unethical research behavior was involved? In 2002 Citigroup Inc. was part of a lawsuit where analyst released biased information concerning stocks to the investors causing many individuals to lose money. The memo stated the analyst was reluctant to release the information because they fear a backlash from the investment bankers. The unethical behavior in the article was that several securities firm violated a basic ethics code when the research department doctored number that misleads the investors. The investors purchased stock based on tainted research.
Most bought their stocks on margin which means they still owe money. When the stock market crashed, the value of their stocks went down but they still had to pay every penny that they owed before even though the value went down. Many people panicked and tried to all sell their stocks at the same time which brought the prices and values down even more. The Great Depression had a huge effect on businesses because it they lost their fortune and many went bankrupt. They were forced to lay off all of their workers and close down.
In addition to that, the stock market crashed because of a weak-banking system and because of the fact that the Government allowed businesses to make decisions even if it hurt everyone else. If people did not take advantage of loans, then the Great Depression would have never happened
Employment assurance wavered due to the negligence of the organization failing to adhere to policy and procedures which resulted in employees and volunteers practicing deceitful and unethical things. Investor loyalty was severely damaged by inside personnel stealing donated funds and financial misconduct of company records. Customer fulfillment was depleted based on the untimely actions of the American Red Cross along with the consumer fraud, and the organization attempting to deceive the donor’s for their own personal gain. Today’s business world needs leaders who can make ethical decision while making sure the action can have a lasting effect on the organization as a
How much the banks could lend were not reviewed. Because of the lack of federal arrangements, by 1929 banks came crashing down almost as fast as they came up. (“The Stock Market Crash of 1929." . N.p., n.d.