The Enron scandal
One of the main reasons governance has become an important part of how a business operates is because of the scandals at the beginning of the last decade. The most prominent was the Enron scandal. Enron, which was an energy corporation from Houston, at its peak had a value of $111 billion; a year later it filed for bankruptcy. In the nineties the energy market in California was deregulated, and Enron quickly became
one of the largest energy companies in the United States. But in 2001 investigations were initiated to look into the financial position of Enron, and all kinds of fraudulent practices were discovered. For instance, Enron stored its debts in foreign accounts and used its political influence to raise the price of energy. To makes matters even worse, high-ranking Enron executives sold most of their stock when the shares were at $90, the highest the shares reached. They did this because they knew Enron was accruing massive losses. On the other hand, the public was encouraged to buy Enron stock, which within a few months dropped to 30 cents per share. The Enron executives were charged with bank fraud, securities fraud, wire fraud, money laundering, conspiracy, and insider trading. As a result of the Enron scandal, the federal government passed the Sarbanes-Oxley act (SOX for short), which forces companies to follow a set of policies with regard to reporting information to their investors and mandates that companies have strict internal financial control mechanisms in place.
One of the main reasons governance has become an important part of how a business operates is because of the scandals at the beginning of the last decade. The most prominent was the Enron scandal. Enron, which was an energy corporation from Houston, at its peak had a value of $111 billion; a year later it filed for bankruptcy. In the nineties the energy market in California was deregulated, and Enron quickly became
one of the largest energy companies in the United States. But in 2001 investigations were initiated to look into the financial position of Enron, and all kinds of fraudulent practices were discovered. For instance, Enron stored its debts in foreign accounts and used its political influence to raise the price of energy. To makes matters even worse, high-ranking Enron executives sold most of their stock when the shares were at $90, the highest the shares reached. They did this because they knew Enron was accruing massive losses. On the other hand, the public was encouraged to buy Enron stock, which within a few months dropped to 30 cents per share. The Enron executives were charged with bank fraud, securities fraud, wire fraud, money laundering, conspiracy, and insider trading. As a result of the Enron scandal, the federal government passed the Sarbanes-Oxley act (SOX for short), which forces companies to follow a set of policies with regard to reporting information to their investors and mandates that companies have strict internal financial control mechanisms in place.
Nenhum comentário:
Postar um comentário