...near-collapse of the stock market (Prentice, 2010, p. 17). The companies were able to hide, scam or misrepresent their earnings due to the dot-com boom, soaring investments, and auditor fraud. The Sarbanes-Oxley Act contains many sections, sub-sections and creation of other agencies to enforce it. It was a sweeping change to standard reporting practices and was created to restore investor confidence, hold corporations and auditors financially and criminally accountable, and protect whistleblowers. Prior to the creation of SOX the whistleblower had no protection from retaliation by the organization. Whistleblowers had fears of criminal prosecution, bodily harm and job loss if they reported the misdeeds of their employer both publicly and privately. The Sarbanes-Oxley Act of 2002 redefined the whistleblower. An examination of the characteristics of a whistleblower, the Global Capital Markets Advisors whistleblower case, and whistleblower protection guaranteed by the Sarbanes-Oxley Act will demonstrate the benefits, setbacks, and drawbacks of SOX and whistleblowers. Characteristics of a Whistleblower There have been many studies on who is a whistleblower and what are the characteristics of a whistleblower. There is no easy answer to either...
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...of Chancellor or Equity: arising due to the rigidity of Common Law. To relief and Satisfaction * Examples: specific performance and injunctions * Courts of Equity merged with Common Law Courts in around 1875. Statute * Parliament enacted Bills, with Royal consent becomes Statutes * Court cannot override but judges can: i. Interpret the law (whether violate constitutions) and determine the scope of applications ii. Identify special factors and distinguish different facts (judge-made laws) Law in Canada Constitution Act 1867 | Constitution Act 1982 | also known as British North American Act | included Charter of Rights and Freedoms | Division of legislative powers % federal and provincial government | | Sec. 91 Federal power set out in 91(P.O.G.G.) residual power to make law not mentioned in Constitution Act 1867Sec. 92 Provincial power set out in 92 | | Principle of Paramountcy: Federal and Provincial overlapped but consistent,...
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...Job was to fix the SEC. She didn’t stop there. Vision SEC aims to act as an agency that was high functioning, agile and intelligent, and committed to investor protection and market integrity. Mission: Restoring SEC’s vigour and credibility within the financial regulatory Community. Value: vigor, credibility, high functioning, agile, intelligent, commitment, integrity. Goal: Financial Customer Internal process Learning and growth Mary set up three strategic themes/priorities to pursue • Operational levers, • People, • and organization levers that assisted in achieving those options. Three priorities a) Assessing what needed to be done within the organization (internal assessment) [ First get the right people and then lead the strategy ] 1. Schapiro recruited analysts and people who understood trading, market structure, corporate governance and a whole range of skill sets that would be important for the future. 2. She recruited people from Wall Street to restructure the SEC’s largest division – enforcement and examination - “to make this regulator more responsive, more agile and clever and capable of seeing around corner to figure out where the next problems were before they hit us in the face”. 3. Schapiro leveraged the SEC talent by bringing in new invigorating leadership. 4. Talented staffs on its books were sent to qualify as certified fraud examiners; a whole layer of management was removed and was...
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...Mary Schapiro’s job was to fix the SEC. She didn’t stop there. 1. Kotter’s eight steps As already noted, the SEC was starkly exposed as ill-equipped to deal with the chaos erupting across the globe. It was under strong criticism for the serious fraud of Bernard Madoff and the collapse of Wall Street stalwart Lehman Brothers. Accordingly, Mary Schapiro, a career regulator, was appointed the 29th chairman of SEC to save a languishing SEC. She changed the way they were doing things at the SEC including creating new structures, procedures, and programs to better address the modern financial markets as an urgent need to restore the credibility and public confidence in the SEC. This analysis is based on Kotter’s (1995) eight-step process for leading successful change. a. Establishing a sense of urgency The chairwoman argues that urgency is critical. Schapiro developed a change program with three priorities comprising internal assessment, investor protection focus and mistakes acknowledgement. The mission was to turn the SEC to be a high functioning, agile and intelligent, and committed to investor protection and market integrity. b. Creating a guiding coalition In order to able to manage the change process, she brought in new leadership and new senior team. The new leadership team set about retraining, skilling up and motivating the SEC’s talent staff. In addition, the investor –focused agenda was putting in place. The board and senior management and then all levels of decision...
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...central role in the operation of the financial sector. There are a numerous variances of regulatory agencies, which all serve a different purpose in business law enforcement. Some of which include the Environmental Protection Agency, Occupational Health and Safety Administration, and the Securities and Exchange Commission. For the purpose of this paper, a description of the Securities and Exchange Commission will be given. Further describing the regulations which will protect the public from fraud within corporations and what that represents in the Sarbanes-Oxley Act of 2002. The Securities and Exchange Commission The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation (SEC.gov, 2013). The SEC is the regulatory agency which governs securities markets and protects investors. It is a regulatory agency which oversees securities transactions, activities of financial professionals and mutual fund trading to prevent fraud and intentional deception (SearchFinancialSecurity.com, 2015). The SEC is composed of five commissioners, three of which may not belong to the same political party. The commissioners serve staggered terms of five years. The Divisions of the SEC The SEC consist of five major divisions. The Division of Corporation Finance ensures corporate disclosure of important information to the investing public (SearchFinancialSecurity.com, 2015). The Division of Trading and...
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...------------------------------------------------- Top of Form Bottom of Form This website is currently not being updated due to the suspension of Federal Government services. The last update to the site was October 1, 2013. Updates to the site will start again when the Federal Government resumes operations. If you need to report a workplace fatality, hospitalizations, an imminent danger situation, or you are filing a hazard complaint, please contact our toll free number: 1-800-321-OSHA (6742); TTY 1-877-889-5627 (or contact OSHA’s area and regional offices during normal business hours.) Federal Registers - Table of Contents | • Publication Date: | 02/14/2007 | • Publication Type: | Final Rules | • Fed Register #: | 72:7135-7221 | • Standard Number: | 1910 | • Title: | Electrical Standard; Final Rule | | | | [Federal Register: February 14, 2007 (Volume 72, Number 30)] [Rules and Regulations] [Page 7135-7221] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr14fe07-14] ----------------------------------------------------------------------- Part II Department of Labor ----------------------------------------------------------------------- Occupational Safety...
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...be enough to prevent future fraud in the corporate environment. Regulatory Environment Several laws and regulations have been developed to attempt to control business practices. Corporations must follow rules that were established to protect the public from fraud such as fair practice laws, and regulatory agencies must ensure compliance with these long-standing regulations. The U.S. Securities and Exchange Commission, (SEC), “was developed to help protect investors, maintain fair, orderly, and efficient markets, and facilitate capital information” (U.S. Securities and Exchange Commission, 2015). The SEC was created in 1934 in response to the loss of public confidence in financial markets after the stock market crash of 1929 and the years following the Great Depression. The main goal of establishing the SEC was to restore investor confidence in the markets by providing more precise and reliable information for investors and creating an environment that protected the investor first. Both public and private investors can invest in corporations, and the SEC requires disclosure of meaningful financial...
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...that does not support or protect reporting illegal activities is significantly high. Employees who work in public or private organizations are the first to identify wrongdoings in a workplace since they have up-to-date information. Whistleblowing can be an essential tool to identify and report these actions in the public, private and non-profit sectors. However, by revealing wrongdoings, whistleblowers often take high personal risks. Lacking strong legal protection might increase the change of facing dismissal, harassment and other forms of retaliation (“Whistleblower protection”, 2012). Whistleblower protection is vital to motivate employees to report misconduct. Paying more attention protecting whistleblowers will benefit organizations where employees know how to report a violation and have confidence to report. This will also assist businesses to spot and stop bribery in their transaction deals. Moreover, government and corporate misconduct could be continued if employees were frightened to speak out (“Whistleblower protection”, 2012). Barriers to whistleblowing * Retaliation Retaliation is a negative result experienced by an individual for reporting illegal behaviors. Through history, whistleblowing has been a risky business since it matches between individuals and his or her organization. A relatively few whistleblowers’ cases have survived from this challenge without harm. They usually take over 20 years to be solved placing the employee with no job and a huge amount...
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...Overview of the SEC Primitive economies are basically barter economies (goods and services traded for other goods and services), while in other mature economies, businesses are organized into proprietorships, partnerships, and joint venture. These types of closely held businesses, in which owners manage their own business, do not need external reporting of the results of operations. However, external reports have become essential with the increase in the size and number of business enterprises, along with the increased amount of people investing capital resources in these businesses. The corporate form of business also increases the need for objective verification of data and creates a need for disclosure of more and better information to owners and potential investors. Furthermore, the increase in value, size and activity of capital exchange in security market also increases the opening of taking advantage in lax conditions and to profit by misrepresentation and manipulation. Hence, the main reason for establishing the securities legislation was because large security market requires operating procedures that would protect investors from fraud and guarantee an adequate supply of capital for economic growth. Background of the SEC The Securities and Exchange Commission (“SEC”) is one of several public and private sector rule-making organizations that have an effect on financial reporting for businesses. It plays a crucial role in the development...
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...The Rise and Fall of Arthur Andersen LLP In October 2001, Enron was accused of overstating their earnings in the last few years in excess of $1 billion dollars (Doost, 2001). At the same time, Arthur Andersen, one of the most reputable auditing firms, was responsible for auditing Enron’s financial statements. The Security Exchange Commission (SEC) ordered Arthur Andersen to provide all relevant Enron documentation and auditing files. Going against Arthur Andersen’s impeccable reputation of honesty, David B. Duncan, the Arthur Andersen partner in charge of the Enron account, had his staff destroy thousands of pages of documents and records related to this case of fraud (Oppel & Eichenwald, 2002). Ultimately, the Supreme Court of the United States overturned Arthur Andersen’s conviction of "knowingly...corruptly persuading another person to withhold or alter documents in an official proceeding" (Wojdacz, 2009). However, Arthur Andersen had imploded and was not able to recover. Founder and His Principles Arthur Andersen was founded December 11, 1913. Arthur Andersen had a reputation of exemplary honesty. Arthur Andersen himself came from an immigrant Norwegian family. He worked for Price Waterhouse. At 23, Andersen became the youngest certified public accountant (CPA) in the state of Illinois by educating himself at night (Marotta & Selman, 2009). At this time, CPAs were trying to establish accounting as a profession. Marotta and Selman (2009) stated Integral...
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...actions regarding public safety, health, business practices, fraud, waste, and abuse. Keep in mind that is does not have to be an employee; it can also be a supplier, contractor, client or any individual who somehow becomes aware of the illegal activities. Despite the fact that unethical behavior occurs within the workplace, there are still several employees that are loyal to the law, the community and society as a whole. These people are known as whistleblowers. Publicly Traded Company One case in particular that was settled April 01, 2015, Kellogg Brown and Root – Halliburton (KBR) “a publicly traded, Houston-based energy company, paid $130,000 and agreed to cease-and-desist from practices that violated SEC whistleblower protections. The move is another indication that the SEC is taking the relatively nascent whistleblower program seriously and that companies need to examine...
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...emphasised the vitality of the duty of secrecy or confidentiality, Such a duty [of secrecy] exists not only between solicitor and client, but for example, between banker and customer, doctor and patient and accountant and client. Such a duty of confidence is subject to, and overridden by, the duty of any party to that contract to comply with the law of the land. If it is the duty of such a party to a contract… to disclose in defined circumstances confidential information, he must do so, amend any express contract to the contrary would be illegal and void. In banking, this duty of secrecy is particularly important as it maintains the faith and confidence of the client. More importantly, it serves as a protection for the customer’s dealings and affairs and not for the protection of the bank. The public interest of maintaining stability and confidence in the banking and financial system is very important to help develop a successful economy. People need assurance of the privacy and confidentiality of their banking uses. The duty was first created by the Swiss Banking Act 1934 and has now been adopted as the very basic of private banking, although a higher standard of secrecy may be offered by certain...
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...Mary Schapiro In her role at the SEC, Mary Schapiro was known as one of the world's most powerful female regulators. She was named chair in the midst of the worst financial crisis since the Great Depression. As chairman, she helped strengthen and revitalize the agency by overseeing a more rigorous enforcement program and shaping new rules for Wall Street. During her tenure, the agency's work force brought about a record number of enforcement actions and achieved significant regulatory reform to protect investors. Schapiro leaves behind an agency that has regained its footing, stature, and morale following desultory leadership under its previous two chairmen and its embarrassing lack of action preceding the financial crisis. Under Schapiro, the SEC, which is usually thought to be the most prominent and important financial regulatory body in the country, brought a huge number of enforcement actions against financial institutions. Her job was to assess what went wrong and to ensure it didn’t happen again. During four years as SEC chairman, Schapiro presided over one of the busiest rule-making agendas in the SEC's history, during which the agency also brought a record number of enforcement actions, and executed a comprehensive restructuring program to improve protections for investors. Upon her departure, President Obama praised her leadership, saying the SEC became stronger and the financial system "safer and better able to serve the American people-thanks in large part to Schapiro's...
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...The Sarbanes-Oxley Act of 2002 Presented by: Ibrahim M. Conteh; Ruby Proctor Garcia; Kathleen M. Parry; Joseph M. Schmerling; Jaime Ulloa Auditing Theory and Practice 0902 ACCT422 4021 Due: April 29, 2009 Table of Contents Page Number What is the Sarbanes-Oxley Act of 2002? 3 Why was SOX established? 4 When did SOX take effect? 5 What companies were affected and how? 6 What does SOX compliance require? 9 Conclusion 11 References 13 What is the Sarbanes-Oxley Act of 2002? The Sarbanes-Oxley Act of 2002 – its official name being “Public Company Accounting Reform and Investor Protection Act of 2002” – is recognized to be the most significant U.S. federal disclosure and corporate governance legislation since the Securities Act of 1933 (the Securities Act) and the Securities Exchange Act of 1934 (the Exchange Act), and, the provisions of the Act are significant enough that it is considered by many to be the most significant change to federal securities laws in the U.S. since the New Deal. It is best understood, however, not as a piece of legislation centered on a new concept of regulation, but as a process which mandated that many major reforms be implemented as soon as possible (in some cases, within 30 days) on the precise schedule specified by Congress. In that sense, the Enron and WorldCom debacles provided the impetus of public outrage that...
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...main function of which are to develop and regulate markets and ensure proper issuance of securities. This commission act as a Central Regulatory Agency that guides the entire capital markets. Thus a lot of policies and regulations were framed by the Government through the commission to protect and enhance the securities markets helping channelize savings of different investment opportunities. But now-a-days the dual authority of Bangladesh Bank and Securities and Exchange Commission could jeopardize the development and functions of Merchant Banking policy. There are mainly two players in our country who regulate, make rules, acts, in the security markets. These are the Government and Security and Exchange Commission of Bangladesh (SEC). Beside this the two markets Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) are also enable to make rules, regulations regarding their market affairs. Government Regulation: The government has enacted varieties of laws applicable to the securities markets. These laws were the result of certain abuses that took place during the last decade. The collapse of the stock market of Bangladesh in 1996 provides an impetus for the regulation of securities trading. Securities markets regulating authority of Bangladesh along with the investors recognize that the regulation of securities markets is necessary in order to restore the confidence of the investors in the markets and ensure a continuous flow of capital in business...
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