Convincing Americans to Invest

951 Words4 Pages
When considering whether or not to invest money, many Americans have become hesitant. Shock waves of the Enron, Tyco, and WorldCom scandals can still be felt more than ten years later. As Americans witnessed the loss of thousands of dollars by Enron investors and employees, they became timid about investing their life savings not knowing if they too would receive nothing in return. With the knowledge of how a decline in Financial Marketing would greatly affect the U. S. economy, Congress eagerly began pursuing ways to reinforce America’s faith in investing their hard earned money. Government officials wanted to more accountability for a company’s principal officers, a line of separation between the company and its auditing firm, and defined punishments for non-compliance. The U.S. Congress passed the Sarbanes-Oxley Act of 2002 with the anticipation of restoring America’s confidence in investing.
The fall of Enron
Enron was a large corporation that marketed natural gas and electricity in North America. The once corporate giant, which was headquartered in Houston, Texas, was listed on Fortune’s “Most Innovative” in the United States for several years and was ranked #7 on the Fortune 500 list in 2000 (Frontain). The company had reported earnings of $100 million dollars in the year 2000 and was believed to be worth billions in the stock market exchange (Lehrer). As company officials of Enron used secret investments and fraudulent mathematics to increase the company’s value, the company’s stock prices drastically increased. Company insiders who were aware of the inflated stock prices quickly sold their stocks while prices were high. However In 2000, the company hit rock bottom. PBS.org reports that “When word got out that Enron...

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...guilty of this type of wrong doing. Congress wanted companies to understand that anyone wishing to operate in the manner that Enron chose to operate would be heavily prosecuted for their actions in hopes of restoring faith in the criminal justice system.

Works Cited

A Guide To The Sarbanes-Oxley Act. 2006. 13 November 2013 .
Frontain, Michael. ENRON CORPORATION. n.d. 11 November 2013 .
Lehrer, Jim. Not Business as Usual. 30 January 2002. 11 November 2013 .
Sarbanes-Oxley Essential Information. 2012. 11 November 2013 .
Sridharan, Uma V., Lori Dickes and W. Royce Caines. The Social Impact of Business Failure: Enron. 2006. 2013 13 November .
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