Corporate Fraud
Categories: Ethics/Morals
Evern seen the film The Smartest Guys in the Room? The story details the amazing rise and fall of energy giant Enron. The company’s epic collapse helped create new accounting standards, and led to the passage of the Sarbanes-Oxley Act of 2002.
What fueled the downfall?
Just a lil' bit o' corporate fraud.
Corporate fraud is a broad term that defines illegal or dishonest activities meant to benefit certain individuals, or the company at large. Enron engaged in accounting fraud, a scheme that cost its investors $74 billion, bankrupted the firm, and led to extensive job and retirement pension losses for the company's employees. Executives like CEO Jeff Skilling pocketed millions of dollars from off-balance-sheet schemes and reported inflated profits.
Skilling received 18 years in prison for his crimes. So now he's the smartest guy in his cell.
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Finance: What are Insider Trading And th...11 Views
Finance a la shmoop what is insider trading and the securities fraud
Enforcement Act of 1988? all right well the Securities and Exchange Act of 1934
aka the 34 Act made it formally illegal to use inside information in trading
stocks amazingly that used to not be illegal or at least not explicitly so [People gambling]
and it wasn't enforced investing was well a clubby white man's insiders gig
and the boys took care of the boys well since people could make a lot of
money with insider information and thought they wouldn't get caught like [Boy peeing at a urinal]
well who's gonna know that I overheard the CEO of big company talking about a
merger in a Denny's washroom you know some folks pretty much ignored
the law well the 1988 law was basically Congress saying you guys were really [Congressman discussing the 1988 law]
serious about this so this new legislation added some hefty penalties
if you get caught as an inside trader people still trade on insider
information though and they still get caught and they go to jail and they lose [Jail door closes on man]
everything they have so he's got to realize some of us were just born to be
bad...