When corruption occurs it damages the reputation of the employees and the business. Society relied upon this firm to assist in making them money but the firm was more concerned with their bottom line. Many of the individuals doing business with these firms lost their life savings and destroyed some of the trust that investors have with the Wall Street firms. It makes people have second thoughts about investing in the stock market. Another effect this unethical behavior had on these organizations been they agreed to pay a penalty of over $1.43 billion dollars as compensation to the victims.
Sarbanes-Oxley Act Article Analysis Susana Hernandezvargas ACC/340 June 07, 2013 David De La Calzada Sarbanes-Oxley Act Article Analysis There have been multiple business scandals surrounding internal control such as those associated with WorldCom, Enron, and many others. These events led to Congress passing the Sarbanes-Oxley Act of 2002. The commonality in all of these cases was the false reporting of financial transactions. In addition, all these company’s shareholder’s experienced heavy losses as a result of transactions being misinterpreted. With the Sarbanes-Oxley Act in place investors are now protected through the improvement of reliability and accuracy of corporate disclosures made in accordance with the securities laws money (Bagranoff, Simkin, & Strand-Norman, 2008).
Under the direction of Monus, the company had many accounting issues that could be easily caught by any auditor. The issues stemmed from embezzlement by Monus for both personal and professional pursuits and fictitious inventory on the books that covered the company’s losses. By 1992, three of the company’s four financial executives had previously worked for Phar-Mor’s auditor, Coopers & Lybrand. Therefore, Monus and other executives used their knowledge of the audit process to cover up their fraud (Williams, 2011). First, the company created “bucket accounts” where cover-up activities were recorded and then moved and divided between inventory of existing stores.
The purpose of the SOX Act in response to the fraudulent and misleading activities of large corporations such as Enron, Health South, Xerox, Global Crossing, and almost one thousand publicly traded companies. Fraud is defined as “a dishonest act by an employee that results in personal benefit to the employee at a cost to the employer” (Kimmel, Weygandt, & Kieso, 2011). The afore mentioned companies and many others committed fraud when they willingly published false and/or deceptive financial statements making their companies look like they were making huge profits, therefore causing their stock prices to soar and enticing the public to by more and more shares of their companies. Unfortunately, when the truth came out, the fraudulent actions of a few resulted in the loss of almost $5 trillion of stock market value and an undetermined amount for stockholders. Because of this fraudulent action, Congress had no choice but to intervene and pass legislation that would curtail this illegal
Citigroup Inc. had chosen to allow greed to take over their responsibility to provide honest and forthright financial advice. As more and more months passed, by the end of 2002, the aftermaths of multiple accusations played a toll on the company’s financial stability, so much so that, they had no choice but to face their accusations of selling false financial information and choosing to implement unethical behavior to gain financial advantages. Citigroup Inc. was facing allegations, which carried a penalty of billions of dollars, due to the costs of regulatory ad private litigations. Citigroup Inc. had single-handedly managed to ruin people’s lives, ruin their reputation, and damaged the credibility of other Wall-Street financial
In October of 1929, the worst and longest depression of American History began. The Great Depression marked the end of the roaring twenties and the beginning of what would become a very long economic struggle. The depression began when the stock market crashed. Many investors dumped their stocks and ran for the banks to clean out their bank accounts because most of them bought stocks on margin and were going to lose all of their money. So many people were afraid and did this that there were many banks that ran out of money to give people and had to close.
This was because unemployment was rising fast (Doc. E), which meant people were spending less to the point that it caused a huge shortage of income to many companies and businesses. The stock exchange was a replacement of work, where people risked their money on what they speculated would do well (Doc. F). Since the unemployment rate was high and businesses were failing, the stock market went through a dramatic crash causing many people and companies to go bankrupt.
People would do this of hope of becoming rich. After the crash small shack started coming into heavily populated cities. (The Great Depression) Many people believed that there was criminal action going on behind the scenes that made the stock crash. (The Stock Market Crash of 1929) People also believed that the stocks prices were tampered with that made them higher than they were supposed to be. (The Stock Market Crash of 1929) Because of the crash people could not get jobs, because factories shut down, They were homeless due to debt, and hungry but couldn’t afford
The Great Depression was one of the hardest times that the American economy has gone through. The Great Depression began with the Wall Street Crash of October, 1929 and quickly spread throughout the world. The stock market crash marked the beginning of a many years of high unemployment, low profits, horrific farm incomes, lost opportunities for economic growth, and insufficiency of money. Reasons of the Great Depression include numerous things, especially high consumer debt, badly controlled markets that permitted loans that were given out to frivolously by banks and investors, the lack of high-growth new industries, all working together to create a downward economic spiral of reduced spending and lowered production (Rosenberg, Jennifer).
Capitalism was involved causing money to disappear and a lot of citizens became broke which effected most of the communities people to become homeless or broke. When Roosevelt took all of the gold it caused the stock market to crumble and this effected the where abouts of missing money and the start of the Great Depression. Roosevelt's New Deal was to influence capitalism with the economic health; they would try to side with businesses and attempt to forge a new social-democratic coalition of workers-poor and