An Overview of Corporate Criminal Scandals
How Can We Stop Corruption at a Company?
During the 1920's companies would often sell stocks and bonds with on the basis of promising high profits. Companies using this practice contributed to the market crash of the 1920's. Thus the U.S. Congress enacted the federal securities laws and created the Securities and Exchange Commission (SEC) to administer them.
The Securities Act requires disclosing of all material facts.
·The Securities Act of 1933 (Securities Act), and
·The Securities Exchange Act of 1934 (Exchange Act).
The Exchange Act requires publicly held companies to disclose information continually about their business operations, financial conditions, and managements.
More recently, in 2002, President Bush, after a shaken market due to bankruptcy by companies like Enron, Adelphia, and World Com, President Bush established a corporate fraud task force to in President Bush's words, to "use the full weight of the law to expose and root out corruption."
How can we stop corruption at a company? We can comply with all laws in regards to disclosure of financial records that is required as we issue common stock. We can also be sure that the information needed gets in our investors hands in a timely fashion. In addition to Federal Law in the United States, there are laws governing in other countries that a company is doing business in.
References:
U.S. Securities Exchange Commission, 9/19/2005, "Q&A, Small Business and the SEC", [Electronic Version] retrieved on January 22, 2006 from http://www.sec.gov/info/smallbus/qasbsec.htm
Thompson, Larry D., Senior Fellow, Governance and Economic Studies, Chautauqua Institution Lecture, July 13, 2004, "The Corporate Scandals, Why They Happened And Why They May Not Happen Again", [Electronic Version] retrieved on January 22, 2006 from http://www.brookings.edu/views/speeches/thompson/20040713.htm
Published by Sheri Taylor
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- More recently, in 2002, President Bush, after a shaken market due to bankruptcy by companies like Enron, Adelphia, and World Com
- The Exchange Act requires publicly held companies to disclose information continually about their business operations, financial conditions, and managements.
- The Securities Act requires disclosing of all material facts.