Last Updated 12 May 2020

Security Exchange Commission

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Essay type Research
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Describe how Enron would have been structured differently to avoid such activities. The situation at the organization was characterized by a lot of policies that had loose ends. For instance, there were a lot of interest groups that were not restricted like consultancy firms associated with the organization. A good example is the auditing firm that had the capability of revealing the financial standing of the company. This is a very dangerous trend as it could expose the financial liabilities of the organization.

As at the time of the scandal, the organization should have had consulting firms and auditing firms that were independent and as such could be bound by agreements like non-disclosure that can keep them from revealing important information to competitors and other interest groups that might not be bound by laws that make them liable for their actions (Velasquez, 2010). 2. ) Discuss whether Enron’s officers acted within the scope of their authority. Practices such as insider trading can be evil or not basing on many factors.

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If the management of an organization goes through the authorizing offices, for instance the Security Exchange Commission, it would not be considered bad. On the other hand, doing it without the authority of such offices, it would lead to its downfall like it did affect Enron. Therefore, we find that the officers at Enron did not act within the scope of their authority. They allowed interest groups to do business with the firm which meant that the organization’s information was leaked out leading to practices such as insider trading.

This in turn denied the other share holders a chance to buy and trade in the firms stocks. On the other hand, the officers might also have acted in good faith only to end up doing the opposite. There was a chance that a few people might have known the loopholes necessary to exploit without the knowledge of a few others. Therefore, in as much as we can say that they acted in a manner that was against the law, it was the management that was aware of the goings on (Berenbeim, 2002). 3. ) Describe the corporate culture at Enron.

The corporate culture at Enron was a dynamic one that allowed for more freedom to exercise your abilities without considering so many outlying factors. For instance, the management was not guided by a more powerful group of officers. This meant that there was little of supervision that was carried out within the circles of management. To add on to this, the management insisted on the results and output but ignored the manner through which the results had been obtained. This means that so many managers tended to carry out procedures unethically leading to results but exposing the organization to big risks.

In this culture, we also find practices that led to the sale of stocks to the interest groups who were positioned within the management (Buondonno et al, 2005). 4. ) Discuss two alleged irregularities in the Actions between Sellers of Securities and Enron. The banks that were involved in the sale of Enron stocks were fully aware and took part in organizing the fraudulent scheme that brought the organization to its knees. The bank officials formed part of a ring of the people who knew what was going on at the time the scandal was taking place. To add on to this, most of them were directly involved.

Therefore, both the management at Enron and the bank officials who were the dealers in Enron securities worked in cohort intent on fleecing the organization and its shareholders of their stocks. Secondly and most outrageously, the banks acted as financial advisors of the organization instead of the other way round. This implies that the financial institutions responsible for the organization’s securities had inside information on the organization’s plans and as such could act in ways that would make them profit a lot from the likely steps that the bank would take in any venture (Davis, 2006).

5. ) Discuss whether or not Enron was liable for the actions of its agents and employees. As an organization that has principles that govern it, we can conclusively say that Enron is liable for all the actions of its employees. This is due to the fact that we look at the organization to provide rules within which it runs and as such protects its interests. For instance, the regulations could have provided the management with a certain mechanism that could be used to supervise their actions.

Secondly, these rules would have ensured that they do not involve in such practices as insider trading. When allowed to involve in insider trading, the organization would have provided a manner through which the managers registered at the Security Exchange Commission. Thirdly, every organization has regulations that bar employees from involving in competing business or businesses that clash with its goals. A good example is when firms that were important in the organization’s consulting and auditing issues were owned by groups with clashing interests.

This is a clear implication that they could exploit the chance to make their firms reap maximal benefits from the organization without anyone realizing. In conclusion, the scandal denied Enron the chance to exploit its profits for expansion. The scandal occurred during a time when the organization was riding high and reaping from the efforts it had put before. This is a clear indication that the scandal was an organized scheme to fleece the organization. As seen from the manner in which the managers and officials from the banks acted, it can be concluded that they acted in bad faith and unethically.

The blame can then squarely be laid on the Enron board of directors who failed to come up with regulations that could have made the management to act within ethical restrictions in dealing in the organization’s securities. References Velasquez, M. (2010). What Really Went Wrong With Enron? A Culture of Evil? Santa Clara University. Buondonno, J. , David, N. , Pufky, R. & Rollings, M. 2005. The Enron Accounting Scandal. Berenbeim, R. E. (February, 2002). The Enron Ethics Breakdown. Executive Action no. 15. Davis, T. (26th September, 2006). UC Says Fastow Implicated Brands in Enron Fraud. University of California, San Francisco.

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Security Exchange Commission. (2018, Sep 18). Retrieved from https://phdessay.com/security-exchange-commission/

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