Essay on Enron Scandal Of The Sarbanes Oxley Act

Essay on Enron Scandal Of The Sarbanes Oxley Act

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Jamie Dimon once said that “doing first class business in a first class way” has led to all of his success at J.P. Morgan because building a business does not only mean to build on profits, but also to make sure business is being done in an ethical way. Enron Corporation, once a great accounting firm, fell under its own weight as it was reaching for greatness. Former CEO Kenneth Lay, made a commitment to business ethics based on communication, integrity, respect, and excellence. However, a once successful American energy, commodities, and financial risk service company made questionable financial practices that ultimately led to their downfall. This essay will focus in the details of ENRON Scandal, how the corporate culture influenced the employees, enactment of the Sarbanes Oxley Act of 2002, the impact Enron has made to the current markets, and ultimately leading to the question whether another Enron scandal can occur again in the future.

I. Summary of ENRON
It began when Enron started the merging of Houston Natural Gas (HNG) and InterNorth. HNG provided gas to retailers in Houston and InterNorth was a national premier pipeline networks. A deal to merge the two companies together was officially announced in 1985 under the management of Kenneth Lay, who became the CEO and chairman of this new company that would soon be the second largest pipeline network in the nation with over 36,000 miles of pipes stretching across the continent (Texas State Historical Association,” 2002). Jeff Skilling, later became ENRON CEO in 2001, played a large role in helping set a strong foundation for Enron to grow and expand. He was a consultant at Mckinsey & Co who developed a concept known as “the Gas Bank” in 1984, which allowed buyers and seller...


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...enforcement laws like SOX are in place to prevent another ENRON Crisis. For instance, the Reform Act of 1995, was passed with the help of lobbies and corporations to reduce the power of the Securities and Exchange Commission and created loopholes to prevent SEC from enforcing certain financial regulations (“CBC”, 2006). The effects of ENRON have encouraged board of directors to pay closer attention to a corporation’s management and playing a bigger role in reading fine prints in proposals. While strict and detailed regulations in place, it is important they are being enforced by upper leadership. As the world continue to advance in technology and businesses continue to expand in global sectors, investors have to ask the right questions to ensure the company they are investing is one that will ultimately put ethical standards on the same level as monetary successes.

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